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Pharmacists, Attorneys Question Whether Drug Compounding Bill Would Improve Safety, BNA's Daily Report for Executives

November 19, 2013

Reproduced with permission from Daily Report for Executives, 224 DER A-1 (Nov. 20, 2013). Copyright 2013 by The Bureau of National Affairs, Inc. (800-372-1033) <>

Nov. 19 — Although the pharmaceutical industry generally supports the drug compounding bill (H.R. 3204) headed to President Barack Obama's desk, attorneys and pharmacists question whether the bill really would improve the safety of compounded drugs.

Specifically, attorneys and drug compounders take issue with the bill's requiring only voluntary registration with the Food and Drug Administration for large-scale drug compounders. An attorney also said the bill's track-and-trace provisions would be tricky to implement.

The Senate Nov. 18 passed the proposed Drug Quality and Security Act (H.R. 3204) in a voice vote (223 DER A-1, 11/19/13). The House passed the legislation in late September, also by voice vote (190 DER A-10, 10/1/13). Obama is expected to sign the measure into law.

The legislation responds to a deadly outbreak of meningitis from drugs compounded, or custom-made, by the New England Compounding Center (NECC) in Massachusetts in fall 2012. The legislation would define the FDA's role in the oversight of “outsourcing,” or large-scale compounding, facilities. The bill also contains track-and-trace provisions on the drug supply chain that would replace state laws with a uniform standard.

Confusion Over Controls

According to the Senate Health, Education, Labor and Pensions Committee, Title I of the bill would distinguish the compounders engaged in “traditional pharmacy practice from those making large volumes of compounded drugs without individual prescriptions.” The compounders who want to practice outside the scope of traditional pharmacy practice can register voluntarily as outsourcing facilities, but those who choose to remain traditional pharmacies would continue to be primarily regulated by state boards of pharmacy, as they are in current law.

Attorney Donna Lee Yesner, with Morgan, Lewis &  Bockius LLP in Washington, told Bloomberg BNA in a Nov. 19 e-mail that she thinks “the compounding pharmacy piece of the bill is a compromise that depends on market pressure to succeed in regulating large-scale compounding practices; that is, customers of these compounding pharmacies must insist they register as a condition of doing business with them.

“If the pharmacies don't register, the existing confusion as to whether compounding activities are regulated by state boards of pharmacies or the FDA will persist,” Yesner said.

Glenn Engelmann, an attorney with McDermott Will &  Emery's Life Sciences Industry Group in Washington, told Bloomberg BNA Nov. 19 that the bill “is an important step in trying to address a significant public health issue,” but “a lot of questions as to how effective it will be remain since it relies on companies voluntarily opting into the new regulatory system.”

Engelmann said there might still be “a not insignificant gap” in the oversight of compounding pharmacies, and it will be important to see how the bill is implemented over the next year or two.

The International Academy of Compounding Pharmacists (IACP) said in a Nov. 19 statement that “if the goal of this legislation is to prevent another NECC, which has been stated many times over, then the American public must know that this bill will not accomplish that goal.

“A voluntary category of outsourcing facilities is not the answer,” IACP said. “Would NECC, with its alleged myriad violations of law and regulations, have voluntarily enrolled in this new category? We think the answer is clear.”

IACP said that if the bill becomes law, the academy “will educate members as to the law and will provide comment on regulations as they are drafted and published so that the process of registering as an outsourcing facility is as efficient and clear as possible.”

Lee Rosebush, an attorney with Baker &  Hostetler LLP in Washington, told Bloomberg BNA Nov. 19 that some of his pharmacy clients “look forward to registering” with the FDA as outsourcing facilities. However, as it is a voluntary registration process, some of his clients will not be registering, he said.


Title II of the legislation contains the drug supply chain provisions.

Alexis Reisin Miller, an attorney with Morgan, Lewis &  Bockius in Washington, told Bloomberg BNA in an e-mail Nov. 18 that the requirement of a product identifier “obviously will be tricky to implement, as it requires a distinct number to be assigned for each ‘package or homogenous case' (the definition of which likely will have to be further fleshed out in regulations, given the wide variety of product and packaging types), which will be added to the NDC.” NDC refers to the National Drug Code.

“[T]his will have process implications not only for manufacturers, but for upstream suppliers who may be tasked with keeping track of and/or assign these numbers, based on their commercial arrangements,” Miller said.

“Moreover, the system will have to be able to be read uniformly by electronic means, requiring development of standards for this purpose. The complexities in this regard (i.e., both technical and commercial) will continue to grow as the lot-level tracking system is layered on, followed by the package- or unit-level tracing system,” Miller said. “As a result, the new requirements will have ongoing implications for manufacturing and distribution activities and arrangements throughout the next couple decades.”

Rosebush added that the supply chain, or track-and-trace, provisions “will be helpful” because companies “will be able to see where their products are entering the gray market.”  

He said although a lot of his clients are happy with the track-and-trace provisions, the provisions “won't stop all diversion of controlled substances.”

Engelmann also told Bloomberg BNA that the track-and-trace provisions “are a good step to securing the pharmaceutical supply chain,” but “the devil is always in the details.”

He said  “exactly what comes out of [the FDA] will determine” how difficult it is to implement and how it is received.

Industry's Support for Bill

The Pharmaceutical Research and Manufacturers of America (PhRMA) Nov. 18 said it is “pleased” that the Senate has passed the legislation.

“The counterfeiting of prescription drugs is on the rise within the United States but oftentimes goes unnoticed or unreported, leaving many Americans unaware of this problem. In fact, some experts have cited the counterfeiting of these medicines as even more lucrative than the trafficking of illegal drugs like heroin and cocaine,” John J. Castellani, PhRMA's president and chief executive officer, said. “This Act will improve the security of the finished drug supply chain and reduce the impact of the patchwork of state laws related to the pedigree requirements for drug distribution.”

He said PhRMA looks “forward to working with the FDA to appropriately implement this Act, which will foster the strong level of protection for pharmaceuticals that our citizens have come to expect.”

The Biotechnology Industry Organization Nov. 18 also praised the passage of the bill.

“We believe this legislation will further strengthen the biopharmaceutical supply chain to protect patients from potentially counterfeit or adulterated drugs,” Jim Greenwood, BIO's president and CEO, said in a statement. “We support the establishment of strong, uniform, scalable national standards for drug serialization and tracing systems contained in this legislation, rather than reliance on inconsistent state mandates.”    

Greenwood said that currently, the pharmaceutical distribution supply chain “is governed largely by a patchwork of state laws and regulations that allows criminals to enter markets with the lowest safety requirements to inject counterfeit, unsafe, and potentially lethal products into the national supply chain.”   

“A single, uniform and national solution will help supply chain stakeholders avoid the costs and complexity of complying with a maze of contradictory laws, and ultimately protect consumers and patients across the country,” Greenwood said. “Patients, physicians, and the pharmaceutical industry all have a vested interest in making sure that patients are getting products as prescribed.”       

Greenwood said BIO “will continue to work constructively with the Congress, FDA and our supply chain partners as we build a national system to prevent counterfeit medicines from reaching patients.”       

BIO also said that once the president signs the legislation into law, the FDA will need to undertake a number of administrative actions in the coming years.

Generic Companies, Hospitals    

The Generic Pharmaceutical Association (GPhA) also commended the Senate's vote in a Nov. 18 statement.

“Establishing a predictable, reliable national standard for electronic prescription medicine tracking further safeguards our nation's prescription drug supply and protects patients,” Ralph G. Neas, GPhA's president and CEO, said. “This bipartisan bill is the culmination of years of hard work from Congress and stakeholders at every level of the supply chain. Modernizing the nation's prescription drug tracking system enhances the ability of regulators to limit risks posed by counterfeit or adulterated products and reassures patients that the generic medicines they receive are secure from the manufacturer all the way to the pharmacy.”

GPhA said it looks forward to the Drug Quality and Security Act reaching the desk of the president, where it is expected to be signed into law. GPhA also said it supports electronic labeling provisions that remain under discussion and encourages continued efforts to finalize the proposed rule on e-labeling.  

Chip Kahn, president and CEO of the Federation of American Hospitals (FAH), said Nov. 19 “the Senate is to be commended for passing the Drug Quality and Security Act.”

“This much-needed legislation will help ensure that consumers have peace of mind about the safety and quality of compounded prescription drugs,” Kahn said. “It also is important that the measure assures the ability of hospitals to provide patients with the safe, reliable and effective pharmaceutical products required for their care.”

To contact the reporter on this story: Bronwyn Mixter in Washington at    

To contact the editor responsible for this story: Brian Broderick at