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New U.S. Drug Tracing Regime Stirs Concern

P&T Journal

July 2014 - for a PDF copy of the published version go HERE.

A mob descended on the big conference room at the Food and Drug Administration (FDA) White Oak campus in Maryland on May 8 and 9. It wasn’t a revolt, but change was in the air and the crowd was on edge. The FDA, at Congress’s direction, was considering how to implement a new law that requires manufacturers, wholesalers, and pharmacies to trace drug products as they move through the distribution chain.
The law kicks in on January 1, 2015. Between now and then, and even afterward, some degree of turmoil will enfold pharmaceutical industry players as they figure out how to comply with the new regulatory regime.
During the May 8 morning session, while discussing the provisions of the Drug Supply Chain Security Act (DSCSA) that Congress passed last November, Connie Jung, RPh, PhD, the FDA official running the workshop, looked up at the audience, stopped, and said, “I hear some snickering.” The unhappy murmuring was directed at some of the drug product tracing provisions in the Pharmacy Distribution and Security Act (PDSA), one of the two titles in the DSCSA.
The FDA held the two-day workshop to get industry input on the draft guidance it is scheduled to release in November. It will guide drug manufacturers, wholesalers, and pharmacies on how to comply with the first wave of DSCSA requirements. Starting January 1, 2015, manufacturers will have to give wholesalers compliance information, either on paper or electronically, in the form of transaction information, transaction statement, and transaction history (TI/TS/TH). That will be a single document called the “DSCSA compliance document.”
The wholesaler, who is next to receive ownership, makes some changes and sends a clean DSCSA document to the pharmacy. If a secondary distributor is part of the chain, he passes along information, too. The pharmacy must verify the document, determining that the drugs it has received are the drugs that originated with the manufacturer. The pharmacy has to record the information, save it for six years, and be able to retrieve it in the event that the manufacturer or the FDA asks the pharmacy to search for “suspect” or “illegitimate” products, which the law defines. Moreover, the pharmacy cannot even accept a product unless it comes with a transaction history.
From January 1, 2015, to November 27, 2017, products will be traced by their lot numbers. After that, manufacturers must imprint unique serial numbers on each unit-level product and package, introducing a much more accurate tracing and tracking system.

Law’s Idiosyncrasies Complicate Compliance

The law contains some idiosyncrasies that will complicate implementation in some instances. For example, the pharmacy’s life will be a little easier when it receives ownership from a primary wholesaler: McKesson, AmerisourceBergen, or Cardinal. In that instance, the primary wholesaler will send a paper DSCSA document to the pharmacy. The TI/TS/TH will be on the document, but the lot number won’t be included. It will be printed on the container of 500 pills or on whatever unit container arrives.
The primary wholesalers were exempted from providing lot numbers because they argued to Congress that it isn’t feasible. That is because they put many different products with different lot numbers into a single container destined for a single pharmacy. The lot numbers are printed on each package. They cannot be individually scanned and uploaded to a database because of the limitations of technology. So considerable manual effort is needed to record those lot numbers and tie them to the DSCSA document. The wholesalers did not want to do that, and they implied there would be a cost impact if they were forced to do so.
Congress, in its wisdom, or in acceding to political pressure, exempted them, thinking that counterfeits are not an issue when the primary wholesaler buys directly from the manufacturer. So why worry about lot numbers? There are not going to be any counterfeits in that shipment. Of course, the absence of lot numbers on documentation makes it harder for the pharmacy to trace a particular container in the event of a recall.
Pharmacies also buy from secondary distributors, who can sometimes provide a product when the primary wholesaler cannot get it. The law says secondary distributors—the broken link in the chain where counterfeits typically come in—do have to send the pharmacy the lot number, but it does not have to be included in the paper documentation. That is a problem for pharmacies, says Susan Pilcher, Vice President of Policy and Regulatory Affairs for the National Community Pharmacists Association:
This is of great concern to the pharmacy community, particularly in light of the fact that during the PDSA discussions about this topic, there were some secondary wholesalers that indicated that the only manner in which they planned to “pass” the lot number information was on the actual bottle of medication that was being sold to the pharmacy. In order to be able to comply with the record retention requirement of the law and in order to respond to requests for information from the FDA, it is essential that pharmacies receive this information in a single document—whether in paper or electronic format.

Initial Tracing Based on Lot Number

The DSCSA defines the elements that need to be included in each of the three items of the TI/TS/TH. For example, a TI must contain 10 pieces of data, including the lot number and the National Drug Code for each item in a particular shipment. Until November 2017, when manufacturers are required to print a unique serialized identifier on each unit package of each drug, the key piece of the TI is the lot number. If a manufacturer sells one million saleable items in a year, and it has 10 packaging events during that year where 100,000 units are packaged, then 10 different lot numbers would be assigned, and that number would be printed on each saleable unit (sometimes on a syringe, for example) packaged during that “event,” on the container the unit is packaged in, on the carton it is shipped in, and often on the pallet the carton is placed on.
The system based on lot numbers, however, is leaky. An unscrupulous distributor could purchase 10 cases of legitimate product from a wholesaler. He now has a record of what he received, including the lot numbers. Nothing prevents him from going out and purchasing 40 cases of counterfeit product. When he sells the counterfeit product to the pharmacy, the bad guy simply shows the legitimate document with legitimate lot numbers he received from the primary wholesaler. The pharmacy is none the wiser.
Compliance with DSCSA requirements starts January 1, 2015, for manufacturers and wholesalers, and six months later for dispensers, primarily pharmacies. Those initial requirements will be spelled out in greater detail based on the FDA’s publication of “Standards for the Interoperable Exchange of Information for Tracing of Human, Finished, Prescription Drugs, in Paper or Electronic Format.”
The FDA is supposed to issue that guidance by November. It will specify in more detail than the congressional bill exactly how documentation must be passed, i.e., in what form, and what that document should include. That will give trading partners precious little time to implement the form of their DSCSA compliance document, including getting software systems up and running (unless, of course, they are using paper). Even before the November deadline, the FDA has to issue separate guidance documents on what constitutes a suspect or illegitimate product. Complicating the issue further, the rules will be “draft” standards, meaning their longevity is in question. The final guidance, whenever that appears, may contain changes. Moreover, “guidance” has minimal legal standing. The FDA cannot fine a company for ignoring guidance.
“There is a lot the FDA has to do to stand this up,” says Anne Marie Polak, a director at FaegreBD Consulting, which represents the Pharmaceutical Distribution Security Alliance.
The short window between publication of draft guidance and the need to comply with that guidance explained why uncertainty was the order of the day at the FDA workshop. No one expects the FDA to issue that draft guidance before November, although there were multiple pleas from the audience to do so. The FDA could move more quickly if it had more staff assigned to this very technical task, and/or it had more technical people with knowledge of pharmaceutical industry distribution channels on its roster. But neither is the case. It was clear that the FDA officials writing the guidance have very little understanding of how each player in the distribution chain creates and receives shipping documents, and the differences within various categories of documents.
But perhaps the FDA cannot be faulted for lacking technical understanding. Even members of the audience were flummoxed over terminology and definitions, both regarding aspects of how the DSCSA document would be passed down the line and what form each of the 10 TI items must take. Differences of opinion from sector to sector were clear. For example, is a shipping document created by computer in PDF form and then sent to a trading partner an “electronic,” interoperable document? How many digits should a National Drug Code (NDC) have?
“What does interoperability even mean?” asked one attendee among the many who grabbed the microphone during the free-for-all discussion on the morning of May 9.

Interoperable Tracing: “How” Will Be Difficult

Although a DSCSA document is supposed to be interoperable starting January 1, 2015, only those passed down in electronic format will be … maybe. The format favored by manufacturers and wholesalers is called the Electronic Data Exchange (EDI) Advanced Ship Notice (ASN), sometimes called an 856 document. EDI documents, including the ASN, are based on standards established by the American National Standards Institute. A second alternative is the Electronic Product Code Information Service (EPCIS) method, which is a GS1 global standard. Both are based on standards, so they offer the promise of uniformity within the drug distribution chain. The third option would be an electronic invoice.
The ASN is the tool of choice because it has been around for decades, there are numerous vendors around who can install the system, and it is being used by the major manufacturers and major wholesalers. But it is not used by the minor wholesalers and definitely not by the pharmacies, which could not receive an ASN. Still, the ASN appears to be the best choice, even though it is not structured to include the transaction statement or transaction history, which for now may be recorded in a text field without a standard format. The ASN is an electronic text document passed from manufacturer to wholesaler.
“While electronic is a favored approach, we are going to have to bend the ASN standard, which was never meant for trade history, in order to include previous transaction, and that may get somewhat unruly. EPCIS on the other hand is designed to provide current and past transactions but must be updated to support tracking by lot number and is much less widely used.” explains Bill Fletcher, Managing Partner at Pharma Logic Solutions, LLC.
The GS1 standard calls for the TI to be encoded in a Datamatrix two-dimensional barcode on the carton and the unit dose package. It was developed so that manufacturers can print a unique serial number on each package. The DSCSA requires this by November 27, 2017. Until them, tracing of products is done via the lot number, which, again, is one of the elements of the TI. The current version of GS1 does not allow for inclusion of lot numbers. Version 2.0 will be out this spring or summer. But that will not give manufacturers enough time to test it and incorporate it into their packaging, to the extent that manufacturers are using GS1 tags now (and few are).
Electronic invoices are problematic for a number of reasons. They could be sent in the form of a PDF. But invoices generally go to accounting offices, not shipping docks. And they arrive after, sometimes long after, a shipment has reached a wholesaler or a distributor. Nor is there a standard for electronic invoices. Lastly, the manufacturers include drug pricing information on an invoice, which they consider proprietary. That information is not in an ASN. The manufacturers are very wary of having their pricing out there for obvious competitive reasons.
But even the ASN and GS1 formats, electronic though they are, are not interoperable between one another. They do not conform to the same standards. For example, a trading partner can only use EDI to communicate directly with other trading partners that also use EDI. Even two trading partners both using ASN may have interoperability trouble. Sarah Spurgeon, Assistant General Counsel for Pharmaceutical Research and Manufacturers of America (PhRMA), says, “For example, even if all of a trading partner’s customers use EDI, each customer may receive unique data sets due to the customization that is allowed by the Healthcare Distribution Management Association’s (HDMA) implementation guideline for the ASN 856. Manufacturers customize their EDI mappings based on trading partner requirements.” But Spurgeon admits customization does not necessarily complicate DSCSA implementation, since mapping, testing, and adjusting of documents with each customer is something that occurs in the regular course of business.

Paper Documents Aren’t a Good Option

Of course, a DSCSA document in paper form isn’t interoperable, either, although that is the least of its limitations. Pharmacies may have to log in hundreds of paper invoices a week, since they are not set up to receive ASNs and are not likely to make the investments to be able to do so. Some manufacturers send paper invoices in the form of packing slips with the shipment, in addition to an ASN, or by mail or fax to transfer relevant information to downstream trading partners. These methods are not based on a standard. But, probably for the benefit of their pharmacy customers, manufacturers are likely to send both ASNs and paper invoices with TI/TS/TH.
Paper packing slips have considerable shortcomings for pharmacies. They currently do not include the name of the manufacturer who initially owns the product; instead, they include the name of the entity shipping the product. Including both the transaction statement and transaction history will be cumbersome, especially for those trading partners that must transmit this information in a single document. There may be timing issues in cases of split shipments (i.e., portions of a single order shipped separately, possibly on different days), since the packing slip would only be attached to one portion of the shipment.
The paperwork burden is significant, too. Fletcher says that pharmacies could scan paper invoices with transaction information, turn them into electronic PDF documents, and search for particular lot numbers. “They might have some false returns but they could likely find documents with a specific lot number,” he states.
Pharmacies will have two alternatives to keeping paper invoices on the premises. They will be able to avoid having to log them in if they opt to subscribe to a cloud-based data supplier such as TraceLink. It counts eight of the 12 major U.S. drug manufacturers among its clients, all of whom connect to the TraceLink Life Sciences Cloud, using it to exchange their DSCSA documents with trading partners. For customers, there are subscription costs involved, of course. But TraceLink offers the advantage of a single connection to a company’s entire supply network while allowing manufacturers, wholesalers, pharmacies, and others to “talk” to one another in different electronic voices, such as ASN versus EPCIS, with TraceLink enabling each company to use its preferred format. One challenge facing the industry is that there is no common standard, as there is for EDI and EPCIS, for portal-based communications that were discussed as a key to exchanging DSCSA compliance documents with independent pharmacies.
The second alternative is for the pharmacy to pay its wholesalers to store the DSCSA documentation and give the pharmacy access to it if need be. Wholesalers aren’t going to do this for free.

Transaction Elements: “What” Is Complicated, Too

Defining the “how” is probably a bigger challenge for the FDA than defining the “what.” One wouldn’t expect a lot of confusion there given that Congress listed the 10 items to be included in the transaction information.
But Anita T. Ducca, Vice President of Regulatory Affairs for the HDMA, says her members are confused about these elements: “number of containers,” “container size,” and “NDC number.” She adds:
It is illogical and unnecessary for the wholesale distributor to inform the dispenser as to the number of containers of the pharmaceutical it received from the previous owner. Including that detail may even be confusing and counterproductive by distracting the dispenser/purchaser from rapidly identifying other, and far more important, TI information for the customer’s purposes.
PhRMA’s Spurgeon says the “date of transaction” requirement could pose a particular challenge to manufacturers. “Industry relies on countless arrangements with complex and varying contractual terms related to sale, shipment, ownership, and billing and invoicing,” she explains. “A single approach to the term ‘date of the transaction’ that is applicable to every arrangement across the manufacturing industry is not feasible.” PhRMA wants the FDA to provide manufacturers with flexibility to determine what date to use for the “date of the transaction” as long as the date used is reasonable for a company’s given business arrangements and ensures the ability to establish the relevant chain of control for a product as part of an investigation consistent with the intent of the DSCSA.
Trading partners are also unenthusiastic, to say the least, about passing along a transaction statement. The DSCSA defines that statement as the sender affirming it:
  1. is authorized as required under the DSCSA;
  2. received the product from a person who is authorized as required under the DSCSA;
  3. received transaction information and a transaction statement from the prior owner of the product;
  4. did not knowingly ship a suspect or illegitimate product;
  5. had systems and processes in place to comply with verification requirements;
  6. did not knowingly provide false transaction information; and
  7. did not knowingly alter the transaction history.
Primary wholesalers recommend that the FDA permit the phrase “DSCSA compliant” to satisfy the transaction statement requirements. Other, longer statements would create enormous data storage burdens that could significantly undermine the adoption and usefulness of electronic transactions.
Whatever new regimen the FDA imposes will be imperfect in many ways. Aside from the holes that Congress either inadvertently created or did not anticipate, the system’s biggest flaw, perhaps, is that it starts with the manufacturer and ends with the pharmacy. There are no security requirements around the chemicals the manufacturers receive as ingredients for their drugs. Nor does a lot number allow a pharmacy to identify which patient received “suspect” or “illegitimate” drugs.
“Ideally, we would want to find the patient who received a particular drug and tell him or her to stop taking the drug, but the law doesn’t drive to that point,” says Fletcher. “We don’t get a true picture of the lineage of the product, just the middle life. There are many examples of ingredients resulting in harm, and if we must recall all of a drug because we cannot pinpoint the recipient, we impact the health of those who are not at risk by denying them their needed medication.”

Author bio: 
Mr. Barlas, a freelance writer based in Washington, D.C., covers topics inside the Beltway.

REFERENCE

1. Food and Drug Administration. Title II of the Drug Quality and Security Act: Drug Supply Chain Security. Available at:  http://www.fda.gov/Drugs/DrugSafety/DrugIntegrityandSupplyChainSecurity/Drug-SupplyChainSecurityAct/ucm376829.htm. Accessed May 29, 2014.

Chicago Metalworking Area One of 12 Newly-Designated Manufacturing "Communities"

The Fabricator
July 2014

There is one metalworking "community" among the 12 the Department of Commerce just announced as the first in what it is calling its Manufacturing Communities Partnership (IMCP) initiative. The program's objective is to accelerate the resurgence of manufacturing in communities nationwide by supporting the development of long-term economic development strategies that help communities attract and expand private investment in the manufacturing sector and increase international trade and exports. Commerce's Economic Development Administration (EDA) is running the new program. Its announcement was made simultaneously with the appointment of a new administrator of the EDA, Jay Williams. He worked in at the Obama White House and prior to that as the Mayor of Youngstown, Ohio from 2006 to August 1, 2011.
    
But exactly what the 12 communities will receive in the way of federal help is, well...way up in the air. They will get their identities disclosed on a website, and each will get a designated federal liaison at each of the 11 federal agencies which have economic assistance grants to hand out. But there is no guarantee that any of the 12 communities will get any of those funds, which the Commerce Department estimates at $1.3 billion.

Secretary of Commerce Penny Pritzker announced the first 12 communities on May 28. Seventy communities applied to the program. They had to submit manufacturing resurgence plans, and compete with other cities before being named as one of the 12 first participants. Besides the metalworking community centered in Chicago, there are mostly aircraft and automotive communities. They are mostly promising to upgrade worker training efforts, in one way or another. Many of those efforts are already underway. So there is some question about what they will be doing additionally as a result of being included in this program, especially since there is no promise of new federal funding.
   
In order to be included in the program, communities had to demonstrate the significance of manufacturing already present in their region and develop strategies to make investments in six areas: 1) workforce and training, 2) advanced research, 3) infrastructure and site development, 4) supply chain support, 5) trade and international investment, 6) operational improvement and capital access. Later this year, the Obama administration plans to launch a second IMCP competition to designate additional communities, as well as convene the 70 communities that applied for designation to share best practices in economic development planning.
    
Chicago's Metro Metal Consortium Manufacturing Community will be headed up by the Alliance for Illinois Manufacturing (“AIM”) and Illinois Manufacturing Excellence Center (IMEC). They will work with metal manufacturers to assess business operational capability and identify key areas for improvement. Sustainability efforts will be coordinated by the Cook County Department of Environmental Control with participation from Illinois Sustainable Technology Center and Elevate Energy. The region’s more than 3,700 firms in the metals industry and supply chains employ more than 100,000 people and generate more than $30 billion in revenues.
  
David Boulay, President, Illinois Manufacturing Excellence Center, notes that Cook County is taking the lead in pulling all the Chicago metal participants together. "They have assembled a great team," he states. "But how this plays out, well, that is always a matter of execution." He hopes the designation as a manufacturing community helps the Chicago metals sector get more federal resources. "But if all the designation does is help us focus existing resources, that is an excellent path in the right direction."

Author bio: 
Mr. Barlas, a freelance writer based in Washington, D.C., covers topics inside the Beltway.

Federal Court Ruling On Mercury Revives Gas-Electric Worries

Pipeline & Gas Journal
June 2014 - for the online version go HERE.

A federal court decision allowing the Environmental Protection Agency (EPA) to move forward with a rule limiting mercury emissions from power plants has heightened concerns in some quarters about interstate pipeline infrastructure inadequacy.

In mid-April, the U.S. Court of Appeals for the District of Columbia said 1,400 coal- and oil-fired electric generating units (EGUs) at 600 power plants must meet air emissions standards finalized in 2011. The plants have up to four years to comply with necessary reductions in emissions of mercury and other air toxics, but the 2011 final rule had been held in abeyance because of a legal challenge.

In September 2013 the EPA issued a proposed rule, which, if finalized, will force newly built power plants to meet stricter standards on emissions of carbon dioxide, a leading greenhouse gas. Taken together, these two EPA actions have persuaded some electric utilities to close coal-and oil-fired power plants, leading some officials at agencies such as the Federal Energy Regulatory Commission (FERC) to worry that natural gas pipelines will have a hard time supplying replacement power plants using natural gas, especially in tough weather such as last winter.

American Electric Power has said it will retire almost a quarter of its coal-fueled generating units in the next 14 months. That is 25% of its capacity. In PJM, 13,000 MW of additional capacity will be retired by mid-2015. "Unless the market structure changes, the capacity replacements for these assets may not provide the same level of reliability we have experienced historically," says Nicholas Akins, chairman, president, and CEO, AEP. PJM is the Regional Transmission Organization (RTO) serving all or parts of the states of Illinois, Indiana, Michigan, Ohio, Kentucky, Tennessee, West Virginia, North Carolina, Virginia, Maryland, Delaware, Pennsylvania, New Jersey and the District of Columbia. AEP, Dominion and Exelon, among others, serve electricity customers within PJM, to name a few.

To the extent that EPA regulations drive some coal-fired generation plants out of business, pressure will be ramped up on pipelines to serve the gas-fired plants that take their place, if in fact gas-fired plants DO take their place. "Natural gas has proven to be the fuel of choice for new generation developing in our region," states Michael Kormos, executive vice president of Operations for PJM Interconnection. "Over 64% of new resources in our queue are proposed gas-fired generation."

A week before the federal court handed down its EPA/mercury ruling, the FERC’s unofficial "pipeline commissioner" told a Senate committee he preferred the EPA present better data before forcing electric utilities to close because of new environmental rules. Philip Moeller told the Senate Energy and Natural Resources Committee, which was meeting to consider issues related to grid reliability, "The sufficiency of our generating resources has been clouded by uncertainties arising from changing environmental regulation. I am not opposed to closing older and less environmentally-friendly power plants, but I am concerned that the compressed timeframe for compliance with the new environmental rules was not realistic given the amount of time it takes to construct new plants and energize transmission upgrades to mitigate plant closures.”

Author bio: 
Mr. Barlas, a freelance writer based in Washington, D.C., covers topics inside the Beltway.

FDA Draft Guidances Compound the Compounding Uncertainty

P&T Journal
June 2014 - for a PDF copy of the published version go HERE.

A New List of 503B Outsourcing Facilities Offers No Guarantee of Anything

On January 8, 2014, Margaret A. Hamburg, MD, Commissioner of Food and Drugs, sent a form letter to hospital pharmacists. That doesn’t happen very often. But Dr. Hamburg had something of critical importance to say: She encouraged the pharmacists to ask the compounding vendors they deal with to register with the Food and Drug Administration (FDA) under a new program called “503B” authorized by the Drug Quality and Security Act (DQSA).
Congress passed the DQSA in November 2013. Its compounding provisions grew out of the catastrophic events of late 2012, when contaminated compounded steroid injections made by the New England Compounding Center (NECC) caused a fungal meningitis outbreak leading to infections in more than 750 individuals and the deaths of 64 people across 20 states. The FDA had inspected NECC facilities and found suspect conditions, but had failed to force the company to make the kind of improvements that would have prevented the fungal meningitis disaster. Part of the FDA’s failure was related to enforcement limitations it faced under provisions in the Food, Drug, and Cosmetic Act.
The new, voluntary 503B program allows compounders who ship nonpatient-specific prescriptions of sterile and (maybe) nonsterile compounded pharmaceuticals to register with the FDA and be held to much higher standards than NECC and others in that category ever had to meet. The FDA will regulate and inspect 503B pharmacies, and the 503B list is supposed to be a de facto FDA “Good Housekeeping” seal of approval. As of early May, 42 compounders were listed on the FDA website as having registered.
But on its website, the FDA provides all sorts of cautionary clarifications as to the reliability of 503B outsourcing facilities. It says purchasers will have “assurance that conditions at that facility met applicable current good manufacturing practice [cGMP] standards at the time of the inspection” if the facility has had “a recent satisfactory FDA inspection.” But only nine of the 42 pharmacies on the list have had an inspection since registering this year. In each case, the FDA issued a Form 483 as a result of the inspection. The FDA website says: “An FDA Form 483 is issued when investigators observe any significant objectionable conditions. It does not constitute a final agency determination of whether any condition is in violation of the FD&C Act or any of our relevant regulations.”  Many of the other 42 have received Form 483s in the past few years, and some of them then got warning letters from the FDA.
So hospital pharmacists looking to the 503B list, per Dr. Hamburg’s urging, can be excused for being a bit perplexed at what looks not so much like a “Good Housekeeping” seal of approval but rather a list of pigs in a poke. Some of the facilities on the list may have floors that one could eat off of. Others may have floors that one wouldn’t want to walk on.

Skepticism Toward 503B Registrants

The International Academy of Compounding Pharmacists (IACP) “is very disappointed with FDA’s current actions on recommending that stakeholders only do business with 503B registered outsourcing facilities even while acknowledging that such registration alone does not guarantee any safer compounded medications or promote public health,” states David G. Miller, RPh, the IACP’s Executive Vice President and CEO. “FDA is blatantly recommending that stakeholders do business with facilities that have fulfilled no other safety requirements except simply filling out paperwork to register with the FDA.”
Some hospitals realize the limitations of the 503B list. Where resources are available, they are double-checking the outsourcing facility’s bona fides.
“We also have an annual on-site evaluation of our compounding vendors,” explains George Hill, RPh, MBA, Catholic Health Initiative’s Director of Pharmacy Services. “We discuss FDA communication specific to their facility at that time. We have developed a checklist of items we evaluate at our on-site inspection. Our annual inspection includes an independent auditor and a pharmacist with expertise in USP 797 standards,” the U.S. Pharmacopeia guidelines that cover compounding of sterile preparations. “Every two years we include an additional inspector who has a microbiology background and consulting experience advising pharma with sterile manufacturing process. We expect corrective action plans based on the on-site inspections and we incorporate resolution of corrective action planning into our vendor agreements.”
Not only did the DQSA change the outsourcing regulatory landscape, it also made some adjustments in the in-hospital or in-retail compounding environment. It did that by making changes to Section 503A of the Food, Drug, and Cosmetic Act, which has been around since 1997. It regulates in-pharmacy compounding, and puts state boards of pharmacy in control of policing that compounding. That will remain the case: State boards will continue to inspect hospital and community pharmacies that compound.
The constitutionality of the provisions originally included in 503A have been challenged in federal court over the years, and some of them were set aside. Given that shaky legal ground, the FDA never clearly defined the 503A provisions over the years they were in effect. That led to confusion, at times, as to whether state boards of pharmacy or the FDA should inspect and/or regulate pharmacies doing various kinds of compounding. The DQSA ostensibly cleared up that confusion. The FDA issued draft guidance on implementation of both 503A and 503B in January 2014. Both draft documents gave pharmacy providers cause for concern and raised as many questions as they answered.
“It is unfortunate the FDA is not moving faster to clarify some of these issues, but I am sure they have a process to follow,” says T.J. Johnsrud, RPh, president of Nucara, a pharmacy company with four 503A pharmacies in three states. Johnsrud explains that he is considering starting a 503B pharmacy but has received conflicting answers on such things as whether they can manufacture nonsterile compounds and which drugs they can make. “It is not clear whether the FDA is going to require compliance with the pharma industry cGMP or something else. It would be helpful if they made it easier to do small-batch, sterile compounding. That is why we haven’t pulled the trigger.”
The DQSA’s key provision established the new 503B federal regulatory program for bulk compounders such as NECC that can voluntarily register as “outsourcing facilities.” Any companies selling bulk compounded drugs without first receiving a prescription for a particular patient theoretically should register voluntarily. If they do not, they are supposedly subject to the same requirements that conventional drug manufacturers such as Pfizer, Merck, and the rest have to meet, and failure to satisfy those requirements, in areas such as GMPs, opens the compounder to heavy penalties, also approved by the DQSA. Again, pharmacies that prepare only patient-specific compounded drugs—although there is some undefined leeway in that regard—will be regulated by each state’s board of pharmacy.

503B List Open to Interpretation

As of early May 2014, 42 pharmacies had registered under 503B. Those 42 are a tiny fraction of the bulk pharmacies that hypothetically, because they provide nonpatient-specific medications, should voluntarily register. On one hand, the 42 deserve considerable credit. They have raised their hands and said they want to be held to a higher standard. However, the DQSA told the FDA to develop a set of cGMPs specifically for 503B pharmacies. Those practices have not been proposed, so the FDA is starting to inspect the 42 against standards that are not yet in place. “I have spoken to some of the pharmacies on the list [of 42] and know some are spending hundreds of thousands of dollars to upgrade their facilities,” says Joe Cabaleiro, RPh, Associate Director of Pharmacy at the Accreditation Commission for Health Care, which accredits pharmacies.
Still, the list of 42 503B outsourcing facilities would give anyone reason for pause. For example, the first compounder on the list of 42 is Advanced Pharma, Inc., of Houston, Texas. It registered on January 22, 2014. The FDA completed an inspection on March 17, 2014, and issued a Form 483. It discusses a number of shortcomings at the Houston facility, including some in the category of procedures to prevent microbiological contamination of sterile products.
Bourjois Abboud, RPh, MBA, President of Advanced Pharma, says those kinds of observations—and they are common on Form 483s issued to many of the 42—should give potential hospital pharmacist customers pause for concern. But he explains that Advanced Pharma, like many of the others, is in the process of transitioning from an environment where it complies with USP 797 to one where it complies with FDA GMPs written especially for 503B pharmacies. Those have not even been published yet, which means 503B registrants such as Advanced Pharma are not sure what FDA inspectors will be looking for. “So the important thing to ask is, what is a 503B pharmacy’s response to a 483, and what corrective action is it taking,” Abboud states. Soon he expects to complete a significant expansion to the present facility that began in 2013 with the speculation of FDA governance and GMP standards. This expansion represents a seven-figure investment that he feels puts his company ahead of the yet-to-be-issued standards, Abboud says.
Johnsrud points out that under USP 797 the sterility of the finished product is emphasized as opposed to the facility and the process, which is what a cGMP additionally attempts to ensure.
Abboud emphasizes that he and other leaders in the bulk sterile compounding business have long wanted the FDA to regulate and inspect their facilities. That is because Advanced Pharma and other companies have been unable to sell products to hospital pharmacies in states that require in-office use, meaning that the hospital must be able to produce a specific prescription for each dose it purchases from an outside vendor. Now Advanced Pharma plans to market to hospital pharmacies in 48 states.

Inspections Have Turned Up Issues

There is no way to sugarcoat the Form 483s issued before and after January 2014 to almost all of the pharmacies on the 503B list. Almost all are designated “open.” The FDA explains that designation this way: “Open does not mean that FDA has determined that further action will be taken. It means only that a determination has not yet been made. If an action has been taken, it will be listed. Possible FDA actions may include: warning letter; seizure; or injunction.”  The Form 483s paint a picture of endemic sloppiness.
The FDA inspected Allergy Laboratories, Inc., in Oklahoma City, Oklahoma, the third compounder on the list of 42, in April 2013. A Form 483 was issued as a result of that inspection. Then the FDA issued a warning letter on September 4, 2013. One paragraph from that letter states:
The deficiencies described in the Form FDA 483 issued at the close of each inspection referenced above and this letter are an indication of your quality control units not fulfilling their responsibility to assure the identity, strength, quality, and purity of your licensed biological drug products and intermediates. These serious deficiencies from the applicable regulations and standards described above, when viewed collectively, represent the extensive failure of your firm to maintain control over the manufacturing process, including 1) release of product, 2) monitoring of the process, 3) appropriate response to a failure in the process, and 4) process controls. These critical aspects of the operation are objectionable and accordingly, the agency lacks confidence in your firm’s ability to manufacture pure, potent, safe and effective products.
Rebecca Johnson, president of Allergy Laboratories, did not return phone calls.
Cantrell Drug Company in Little Rock, Arkansas, has an open warning letter, while its president, Dell McCarley, PharmD, is president of the newly launched Specialty Sterile Pharmaceutical Society (www.sterilepharma.net). A Form 483 was issued to Cantrell Drug on November 2, 2013, and remains “open.” It includes numerous complaints, including entries in a section titled: “Procedures designed to prevent microbiological contamination of drug products purporting to be sterile are not established.” Dr. McCarley did not respond to phone and e-mail requests to be interviewed.
The FDA has never inspected some of the registrants. A state regulatory agency may have done so, but no information in that regard is posted on the FDA website. The second registrant listed alphabetically that has never been inspected by the FDA is Banner Health in Chandler, Arizona. Repeated requests to the Arizona State Board of Pharmacy asking whether it has inspected Banner went unanswered.
Even if a hospital pharmacist does find a spotless 503B pharmacy, it is not clear what compounds he or she may purchase from that outsourcing facility. Johnsrud says he has heard conflicting reports about what a 503B pharmacy can manufacture. The 503B draft guidance document  says the list of acceptable products will come into play if a potential compounded drug does not comply with the standards of an applicable USP or National Formulary monograph. If such a monograph does not exist, then the substance must be a component of an approved drug product. If the substance used is neither of the above, then the bulk substance must be included on a “positive list.”
The FDA first published a proposed positive list of such substances in 1999. That list contained 20 substances that the FDA initially recommended, and another 10 then still under FDA consideration. The FDA did not issue a final rule adopting the 30 substances or otherwise finalize the list. On December 4, 2013, the FDA withdrew that proposed rule and bulk substances list, stating it would reconsider the substances on the original list and requesting nominations for specific bulk substances to be included on a new list.
Can pharmacists still compound those 30 drugs in the absence of an FDA list? Jim Smith, President of the Professional Compounding Centers of America, says:
To now preclude their use, after this prolonged period of permissible use, until finalization of a new list, would mean disruption for the physicians who prescribe these therapies and the untold number of patients who have come to rely upon them. Bulk substances that illustrate the importance of continued access include: betahistine, cantharidin, diphenylcyclopropenone, piracetam, and quinacrine HCl.

What Are “Limited” and “Inordinate” Under 503A?

While it is mostly hospital pharmacists who will be concerned about bulk purchases from 503B outsourcing facilities, both they and community pharmacists will have to pay attention to the new complexities evolving out of the tightened-up 503A program. Those new provisions have particular relevance for hospital pharmacies because one of them will detail the extent to which hospital pharmacies can distribute compounded drugs beyond a certain number (that metric is among the many things undetermined) to other hospitals or clinics in the health system that happen to be located across state lines from the pharmacy where the compounding takes place.
There will be two distinctions here. First, if the compounding pharmacy is located in a state that has not executed a memorandum of understanding (MOU) with the FDA, it can sell interstate no more than 5% of the total prescription orders dispensed or distributed by the individual or firm. The FDA is supposed to come up with a model MOU in conjunction with the National Association of Boards of Pharmacy. The FDA published a draft MOU back in 1999, but it was never finalized. If the state does sign an MOU, the hospital pharmacy does not face that 5% restriction.
The American Pharmacists Association (APhA) wants the FDA to reconsider the inclusion of the 5% limitation on compounded drug products as the default “non-MOU” metric. Its comments to the FDA say the agency needs to clarify how it will calculate “total prescription orders.” Is this calculated on a monthly, quarterly, or annual average basis? How is the baseline established, and if there is a temporary spike (e.g., for a drug in shortage), how would that affect a pharmacy’s compliance? Further, because the FDA has failed to provide any basis for this number, the 5% limit appears arbitrary at best.
Other elements in the draft guidance affect all state-regulated 503A pharmacies, not just those shipping interstate. One allows a licensed pharmacist or licensed physician to compound “in limited quantities before the receipt of a valid prescription.” There is no definition of “limited quantities.” The FDA has never defined that term, and the draft guidance doesn’t take a shot at doing so, either. The draft guidance also states that a pharmacist or physician should “not compound regularly or in inordinate amounts any drug products that are essentially copies of commercially available drug products.” “Inordinate amounts” is not defined either.
“This language has affected how much high-risk compounding we do internally. There may be some subjectivity surrounding how ‘compound regularly or in inordinate amounts’ can be interpreted,” states CHI’s Hill. “The draft guidance and all the events involving adverse drug events (ADEs) have caused us to examine our compounding practices more closely. We have advised our membership to use high-risk compounding only when other means of acceptable procurement have been exhausted.”

How Far Does FDA Authority Go Under 503A?

An equally fundamental question is what standards a pharmacy will be held to when compounding drugs on its own premises. Congress made it clear when writing the new 503B section that the FDA must make sure that outsourcing facilities are complying with USP chapters 795 and 797. It did not amend 503A to require the same for in-house, 503A pharmacies. “It would appear, absent Congressional action, FDA does not have the legal authority to enforce compliance with 795 and 797 for pharmacies exempt under 503A,”’ states the PCCA’s Smith. “PCCA fully supports compounding in compliance with USP 795 and 797, encourages states to adopt these standards (as many have), and provides significant training and education on the same; regulation and enforcement of these provisions should remain a matter of state, not federal law.”
The USP 797 issue is academic in many states, where compliance is required by the state board of pharmacy. That is the case in Iowa, Illinois, and Texas, according to Johnsrud, whose four sterile pharmacies operate in those states.
But the answers to many of the open questions about the new compounding landscape are clearly not academic. The longer confusion reigns, the more likely it is that another NECC type of problem will develop.

Author bio: 
Mr. Barlas, a freelance writer based in Washington, D.C., covers topics inside the Beltway.

REFERENCES

1. FDA. Form letter from Margaret A. Hamburg, MD, Commissioner of Food and Drugs, to hospital pharmacists. Available at:  http://www.fda.gov/downloads/Drugs/GuidanceCompliance-RegulatoryInformation/PharmacyCompounding/UCM380599.pdf. Accessed April 30, 2014.
2. Government Printing Office. Drug Quality and Security Act. 2013 Available at: http://www.gpo.gov/fdsys/pkg/BILLS-113hr3204enr/pdf/BILLS-113hr3204enr.pdf. Accessed April 25, 2014.
3. FDA. Registered outsourcing facilities. Available at: http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCompounding/ucm378645.htm. Accessed May 12, 2014.
4. FDA. Information concerning outsourcing facility registration. Available at: http://www.fda.gov/Drugs/GuidanceCompliance-RegulatoryInformation/PharmacyCompounding/ucm389118.htm. Accessed April 30, 2014.
5. FDA. Form 483 issued to Advanced Pharma, Inc., Houston, Texas. Available at: http://www.fda.gov/downloads/AboutFDA/CentersOffices/OfficeofGlobalRegulatoryOperationsandPolicy/ORA/ORAElectronicReadingRoom/UCM392180.pdf. Accessed April 30, 2014.
6. FDA. Warning letter to Allergy Laboratories, Inc.; Oklahoma City, Oklahoma: Available at: http://www.fda.gov/ICECI/Enforce-mentActions/WarningLetters/2013/ucm376390.htm. Accessed April 30, 2014.
7. FDA. Form 483 issued to Cantrell Drug Company, Little Rock, Arkansas. Available at: http://www.fda.gov/downloads/AboutFDA/CentersOffices/OfficeofGlobalRegulatoryOperationsandPolicy/ORA/ORAElectronicReadingRoom/UCM375548.pdf. Accessed April 30, 2014.
8. FDA. Guidance for Industry: Interim Product Reporting for Human Drug Compounding Outsourcing Facilities Under Section 503B of the Federal Food, Drug, and Cosmetic Act. Available at: http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatory-Information/Guidances/UCM377050.pdf. Accessed April 30, 2014.
9. Professional Compounding Centers of America. Re: Draft Guidance “Pharmacy Compounding of Human Drug Products Under Section 503A of the Federal Food, Drug, and Cosmetic Act.” Available at: http://www.protectmycompounds.com/wp-content/uploads/2013/06/PCCA-503A-Guidance-Comments-to-FDA-020314.pdf. Accessed April 30, 2014.
10. FDA. Guidance: Pharmacy Compounding of Human Drug Products Under Section 503A of the Federal Food, Drug, and Cosmetic Act. Available at: http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM377052.pdf. Accessed April 30, 2014.