The practice of compounding medicines can provide important public health opportunities. The FDA’s compounding program – including implementation of the compounding provisions of the law – is a priority for the agency. We recognize that in delivering on implementation commitments, we must balance the need to preserve access to appropriately compounded drugs for patients who have a medical need for these products with the need to help protect patients from poor quality compounded drugs that could cause harm. We’ve taken steps over the last year to advance this goal and we’ve shared the priority areas that we’re focusing on in the 2018 Compounding Policy Priorities Plan.

The FDA will make even more progress on the implementation of this plan over the next few months. And we’ll soon share new policies relating to insanitary conditions at compounding facilities and a risk-based approach to current good manufacturing practice (CGMP) requirements for outsourcing facilities.

In achieving these goals, the states can play a vital role in reducing the risks associated with compounded drugs, while ensuring appropriate access. In furthering this important partnership and our shared goals, today, we have issued a revised draft memorandum of understanding (MOU) between the FDA and the states.

The goal of the MOU is to collaborate with the states so that, working together, we can have the greatest public health impact while also maximizing our resources.

Toward these goals, the revised draft MOU addresses patient access concerns previously raised by stakeholders, while retaining critical safety provisions. Today’s action is also an important step to increase our collaboration with the states to maximize resources and our collective public health impact, and it marks a significant milestone in the agency’s implementation of federal law on compounding.

Compounded drugs can pose unique risks. They’re not FDA approved. Nor do compounded drugs undergo premarket review for safety, effectiveness or quality. Moreover, if a compounder distributes drugs to multiple states, it can be very difficult to gather information about possible adverse events associated with those drugs, connect them to the compounder and undertake coordinated action to address a potentially serious public health problem. These risks were illustrated by the 2012 nationwide fungal meningitis outbreak. This tragic outbreak led to more than 750 cases of illness and the deaths of 64 individuals. They had used a compounded drug for injection that was supposed to be sterile but had become contaminated before distribution to patients and providers.

Following that public health tragedy, the FDA issued a draft MOU to implement a key public health protection in section 503A of the Federal Food, Drug, and Cosmetic Act (FD&C Act). Section 503A directs the FDA to develop an MOU for use by the states to address certain interstate distributions of compounded drugs by traditional compounders. These traditional compounders are, among others, pharmacies that operate under section 503A. The MOU also covers states’ investigations of complaints associated with compounded drugs distributed out of their state.

We’ve taken steps with this revised MOU to address concerns that pharmacies raised with respect to previous drafts of the MOU, while making sure that we achieve appropriate safeguards for patients.

In response to the draft MOU issued in 2015, we received public comment expressing support for the MOU, as well as concerns about certain aspects of this framework, particularly its implications for access to compounded drugs. We take such stakeholder feedback seriously. Based on this feedback, we revised our draft in consultation with the National Association of Boards of Pharmacy, which provided important perspectives from our state partners. Today, we’re re-issuing this MOU as a revised draft to provide another opportunity for public comment, particularly on the new revisions made by the agency.

The MOU addresses traditional compounders that distribute a certain percentage, known as inordinate amounts, of their compounded drugs interstate. Under the 2015 draft MOU, the states were expected to take action against a traditional compounder that distributed inordinate amounts of its compounded drugs interstate. At the time, inordinate amounts was defined as an amount of compounded drug product distributed interstate by a compounder in a given month that is equal or greater to 30 percent of all drug products dispensed or distributed by the compounder.

This limit caused concern among stakeholders. Some were worried that this provision could impede patients’ access to compounded drugs for which they have a medical need. Specifically, stakeholders noted, as one example, that some compounding pharmacies specialize in drugs to treat certain medical conditions and distribute these drugs to patients nationwide, which would exceed the 30 percent limit.

Instead, under the revised draft MOU being issued today, states would agree to identify compounders that distribute more than 50 percent of their total prescription orders for compounded drugs interstate and report certain information to the FDA about those compounders. This includes information about the volume of compounded drugs distributed interstate and the number of states in which the compounder is licensed. Our hope is that this information will assist both the FDA and the states in developing risk-based oversight priorities to have the greatest public health impact. The revised draft MOU also includes increased flexibilities concerning the mechanism for states to gather information on inordinate amounts. And the revised MOU also removes a previous draft provision requiring the state to take action when a compounder distributes inordinate amounts of compounded drugs interstate. Under the new approach, the state could consider whether to take action according to a more flexible, risk-based approach. The FDA intends to use this information to prioritize its inspections of compounders based on risk.

Section 503A limits distribution of compounded drugs outside the state by a pharmacist, pharmacy, or physician located in a state that has not entered into the MOU to 5 percent of its total prescription orders dispensed or distributed by the compounder. One note of importance is that the MOU and the statutory 5 percent limit do not apply to drugs compounded by outsourcing facilities under section 503B of the Food, Drug, and Cosmetic Act. And they do not apply to drugs that are compounded for animals.

When finalized, the revised MOU will provide clarity on state investigations of complaints associated with compounded drug products that have been distributed out of state. States that enter into the MOU will investigate complaints and advise the FDA when they receive reports of serious adverse drug experiences or serious product quality issues, like drug contamination. We anticipate the MOU will help to facilitate increased collaboration between the FDA and the states that sign it. Working together, we can help promote safe compounding practices and better address emerging public health concerns that may affect patients.

Our expectation is that the states will continue to have day-to-day oversight over traditional compounding pharmacies and physicians located in their state, and that the information that the FDA obtains from the states will enable us to focus our inspection and enforcement resources pertaining to traditional compounders based on risk.

We encourage all interested stakeholders to comment on the revised draft MOU and to review the accompanying Federal Register notice that explains the provisions of the revised draft MOU. We also look forward to discussing the revised draft MOU with state officials during our upcoming intergovernmental working meeting later this month. After the FDA finalizes the MOU, we intend to offer it to the states for signature for a proposed 180-day period. During that time, the FDA does not intend to enforce the 5 percent out of state distribution limitation set forth in the law for compounders located in states that do not sign the MOU.

Looking ahead, we intend to take several more actions in relation to compounding in the coming months. Our goal is to achieve an effective approach that promotes safe, appropriate compounding practices.

For example, one issue that’s been especially concerning to the FDA is that we continue to identify insanitary conditions during many inspections of compounders. These conditions present a serious public health risk. This fall, we plan to issue a revised draft guidance that describes examples of insanitary conditions that the FDA has identified during inspections. These conditions include mold growth and animal hair in areas where sterile drugs are produced. The revised draft guidance will incorporate revisions to address concerns that stakeholders have raised, such as implications for practitioners who compound drugs solely for individual patients in their offices. It’s our hope that this guidance will help promote voluntary compliance by compounders and assist states in identifying insanitary conditions during inspections.

Further, entities that are registered with the FDA as outsourcing facilities are also subject to CGMP requirements. In the coming months, the FDA intends to issue a revised draft guidance, for public comment, describing our policies concerning CGMP requirements for outsourcing facilities. One aim of our guidance is to make it more feasible for compounders to become and operate as outsourcing facilities. So we are proposing a flexible, risk-based approach to CGMP for outsourcing facilities under which we generally would not intend to apply all of the same requirements to lower risk products, or smaller volumes of products, that are produced by outsourcing facilities. By pursuing a flexible approach, our hope is that more pharmacies can find it more feasible to become outsourcing facilities. It’s important to tailor our application of these manufacturing requirements to the nature of the operation, while maintaining the minimum standards necessary to protect patients from the risks of contaminated or otherwise substandard compounded drug products. If more pharmacies can become outsourcing facilities, it will promote greater physician access. Outsourcing facilities are, among other things, able to compound and distribute drugs for “office stock,” without first receiving patient-specific prescriptions, under increased quality standards, routine federal oversight, and other important conditions.

As we implement the compounding provisions of the law, we also maintain a robust inspection and enforcement program. Through our vigorous oversight, we seek to make sure that the compounders that we inspect are operating within the framework that Congress created for “traditional” pharmacies under section 503A and outsourcing facilities under section 503B, and that they aren’t compounding drugs under conditions that could cause contamination or otherwise lead to harm.

Unfortunately, we continue to encounter compounders whose operations present serious public health risks. Sometimes, these involve situations where the compounders have already been warned to correct violations of law. We take our obligations in this area seriously. We’re committed to pursuing measures that promote greater safety. This field is in need of vigilant oversight. In such cases, it’s crucial that the FDA, in collaboration with the Department of Justice, act quickly to protect patients. So, we’re working to streamline our operations to expedite enforcement actions against compounders that threaten public health.

We’ve made important progress over the last few months on putting forth and implementing more effective compounding policies. As the FDA defines and implements these policies, we’re committed to a framework that closely aligns with our mission to protect consumers and promote opportunities to improve health.

The FDA, an agency within the U.S. Department of Health and Human Services, protects the public health by assuring the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices. The agency also is responsible for the safety and security of our nation’s food supply, cosmetics, dietary supplements, products that give off electronic radiation, and for regulating tobacco products.

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