Differing Views on Essential Health Benefits Extend to Drug Coverage

P&T Journal...March 2013

Composition of Formularies a Major Point of Contention

     With state health exchanges set to open their doors on January 1, 2014, the qualified health plans (QHPs) who will offer health insurance to individuals and small businesses under Obamacare still don't know what standards their pharmacy formularies will have to meet. In a reprise of some of the battles over formularies within the Part D Medicare drug program, insurance companies, drug manufacturers, and PBMs are now in hand to hand combat with drug manufacturers and patient advocacy organizations over how the Department of Health and Human Services (HHS) should define the "pharmacy" benefit, one of 10 categories of "essential health benefits" (EHBs) each QHP will have to offer.

        Drug companies are concerned insurance companies and their pharmacy benefit managers (PBMs) will limit access to drugs (read brand name drugs), especially to vulnerable populations with drug higher costs, such as cancer and psychiatric patients. Insurance companies are worried that any requirements that pry open formularies will prevent them from offering premiums within Affordable Care Act (ACA) parameters. 

     The Obama Administration is trying to broker compromises on numerous issues percolating beneath that cost v. access divide. The proposed rule issued by the HHS last November describes the formulary structure QHBs are expected to use, and ranges over issues such as P&T committee oversight, use of USP classifications to determine breath and depth of coverage (i.e. number of drugs in each class) and use of tiers, when to add newly approved drugs to formularies, how each state should establish a "benchmark" formulary for QHPs in their state, where specialty pharmacy tiers can be used and the appeals process for patients who initial prescriptions are off-formulary, which gets into questions of prior authorization.

     While the pharmaceutical access requirements clearly apply to out-patient pharmacies, there is considerably confusion over how they apply to in-patient hospital formularies and Part B drugs administered in physician offices. "In the proposed rule, HHS is silent on what the EHB minimum standards are for hospital inpatient formularies or for physician-administered drugs," states an industry source. "Lack of standards on coverage of these treatments could lead to benefit designs that do not provide patients sufficient access to medically necessary care."

      The HHS will issue a final rule before the end of the year, hopefully, from the QHPs' standpoint, well before then. Companies such as UnitedHealth Group, Aetna and Humana are currently deciding how many states they want to offer health plans in. There will be separate markets for individual and small business plans. Insurance companies will decide which states to participate in based on the parameters the HHS sets in all 10 EHB categories, including pharmaceuticals. In January, UnitedHealth Group Inc. CEO Stephen Hemsley told analysts, "We will only participate in exchanges that we assess to be fair, commercially sustainable and provide a reasonable return on the capital they will require.”

      Interested parties have criticized the proposed rule as much for what it includes as for what it excludes. Aside from omissions having to do with tiering, there is no requirement that QHPs with formularies (and most will have formularies) have a P&T Committee, as is required under Part D. Drug manufacturers want every health plan with a formulary to have a P&T Committee, one that is independent. The Pharmaceutical Care Management Association (PCMA) answers, in effect, "fine;" but let the P&T Committee make the decisions on which drugs should be available in which classes, and on what tiers. 

     That is not the approach taken by the HHS in the proposed rule it published last November. Its core requirement is that plans subject to the EHB standard provide prescription drug coverage that is at least the greater of the following: (1) one drug in every United States Pharmacopeia (USP) category and class; or (2) the same number of prescription drugs in each category and class as the EHB-benchmark plan. That is an expansion of the standard the HHS preliminarily endorsed in December 2011 in its EHB Bulletin. That would have required health plans to cover at least one drug in each category and class in which the EHB-benchmark plan covered at least one drug. The Bulletin did not include a reference to the USP Classification System. The specific drugs on each plan's drug list could vary under this approach, as long as a drug in each category and class was covered. 

    That "one drug per class" requirement provoked considerable consternation among many interested parties. Somewhere around 11,000 comments flooded the HHS. The "benchmark plan" alternative was then added when the November 26 proposed rule was published. By comparison, the Medicare Part D program requires plans to provide a minimum of two drugs per class.

     Under Obamacare, each state chooses a benchmark health plan from among four possibilities operating in that state. These are (1) The largest plan by enrollment in any of the three largest small group insurance products in the state's small group market; (2) any of the largest three state employee health benefit plans by enrollment; (3) any of the largest three national Federal Employees Health Benefits Program (FEHBP) plan options by enrollment that are open to Federal employees; or (4) the largest insured commercial non-Medicaid Health Maintenance Organization (HMO) operating in the state. 

     The addition of the "benchmark" formulary option did not satisfy too many people. Opposing sides want numerous, additional modifications. For example, drug manufacturers are unhappy the HHS has said that formularies operating in 2014 and 2015 would only have to carry drugs that were on the formulary of the state benchmark plan when that plan was originally selected by the state. Some states chose benchmark plans in 2011 and 2012. "That would allow plans to exclude coverage for life-saving medical innovations and result in coverage that lags far behind standards of care and typical coverage in the commercial marketplace," says Richard Smith, Executive Vice President, Policy & Research, PhRMA. He also argues that the USP drug classification system was developed for the senior population serviced by Part D. It should not be used to guide EHB formularies. The American Hospital Formulary System would be a better classification yardstick. "The combined effects of multiple policy choices in the proposed rule risks creating powerful incentives to narrow coverage of prescription drugs and limit patients' access to innovative therapies as compared to today's typical coverage," Smith argues.

      Daniel Durham, Executive Vice President, Policy and Regulatory Affairs, America's Health Insurance Plans (AHIP), the insurance industry lobby, wants the HHS to ditch the USP option entirely, and the larger option for formularies to provide one drug per class. "Instead, HHS should require plans to cover the same categories and classes covered under the EHB benchmark plan in a state," he states.

    Greg Low, RPh, PhD,  thinks that is a bad idea. Program Director, MGPO Pharmacy Quality & Utilization Program, Performance Analysis & Improvement, Massachusetts General Hospital, he is largely a disinterested observer, but a highly informed one. He serves on two P&T Committees, one that directs ambulatory coverage for the employees of all Partners Healthcare hospitals in Massachusetts who are covered by its self-insured insurance program, the other that determines the inpatient drug formulary at Massachusetts General Hospital. "The proposed approach would incent manufacturers to discount to the benchmark plan via generous rebates, but to inflate costs for other plans," he states. "Unless the benchmark plan captured a majority of the population, the net effect would be an increase in overall healthcare costs without a corresponding benefit in quality of care or outcomes."

     While he can only speak for the formularies he works on, Low explains that most drug plans cover more than one drug per class, whether that is USP class or some other class. There can be rare exceptions. Take weight loss drugs. PhRMA in its comments to the HHS pointed out that some states, which chose benchmark plans prior to the HHS publishing its proposed rule, some plans did not offer drugs for obesity. There are very few of those drugs on the market. Two that are available, Qsymia and Belviq, have been placed on Low's formularies, but at Tier 3, the highest co-pay level. "That is because they have substantial risk profiles," Low states.

     That said, Low explains that there is no reason why in many classes insurers can't offer several drugs, including entrants in Tier 1, the lowest co-pay category. His formularies offer 13 Tier 1 ace inhibitors, for example. Tier 2 includes Ramipril, a more expensive generic with no clinical advantage. Tier 3 includes brand-name Zestril. "But there is no reason a formulary couldn't offer only six drugs in Tier 1 for ace inhibitors," he offers. "But four is as low as you would want to go since we have two options that are combination products, including hydrochlorothorizide (HCTZ).

     However, drug companies and some patient advocacy groups want the HHS to import into the EHB pharmaceutical standard the requirement in the Part D program: that formularies offer "all or substantially all" of the drugs in six "protected classes:" Antidepressants, Antipsychotics, Anticonvulsants, Immunosuppressants, Antiretrovirals, and Antineoplastics.  Drug companies, physicians and patient groups say failure to do so particularly disadvantages cancer and psychiatric patients. Derek L. Asay, Senior Director, Government Strategy, Federal Accounts and Quality, Eli Lilly and Company, says, "Incorporating the same policy within the EHB benefits standards can help ensure that these benefits are implemented in a way that does not discriminate against certain patient populations, as is also required by the Affordable Care Act." 

      The PBMs and insurance companies say including that language will launch premiums into the stratosphere. Kristin A. Bass, Senior Vice President, Policy and Federal Government Affairs, argues, "The Medicare protected classes effectively eliminate the ability of health plans and their PBMs to negotiate rebates for drugs in those classes, thereby causing drugs in those six classes to be considerably more expensive than they would be if competitive forces were allowed to come into play."

     Low does not support the "all or substantially all" formulary requirement though he acknowledges the need for health plans to offer at least a couple of choices in the lowest co-pay tiers for atypical antipsychotics and anticonvulsants. His formularies offer six antipsychotics on Tier 1; they are all generics and a mix of typical and atypical antipsychotics. Tier 2 offers Abilify. That brand name is on Tier 2 because it is labeled for patients with apathy, giving it a unique clinical profile. Tier 3 includes only brand names, some of which have generic competitors on Tier 1.

      But even in antipsychotics or anticonvulsives, Low does not support some hard and fast requirement that formularies cover X number of drugs. "I think P&T committees will get there on their own," he states. 

      Though the HHS proposed rule does get into the number of classes on a formulary, and the number of drugs in each class, it does not discuss tiering, which enables P&T committees to manage pharmaceutical costs. The Obama Administration hopes to keep premiums within the reach of buyers. So, for example, all plans sold or renewed in 2014, must limit the out-of-pocket exposure of consumers to approximately $6,000 for individual and $12,000 for families. The deductible for plans in the small group market will be limited to $2,000 for individuals and $4,000 for families in 2014, also indexed to average premium growth in future years. 

     Also, all plans must design their cost-sharing (deductibles, co-pays, coinsurance) to fit into specific levels of coverage.  The levels of coverage are defined as follows:

• Bronze Level – The plan must cover 60% of expected costs for the average individual
• Silver Level – The plan must cover 70% of expected costs for the average individual
• Gold Level – The plan must cover 80% of expected costs for the average individual
• Platinum Level – The plan must cover 90% of expected costs for the average individual

       The four levels are suppose to guarantee that any individual without health insurance come 2014 will be able to afford it, since he or she, or their family, will have to pay a penalty, which will be small compared to the cost of the insurance if they do not obtain coverage. The point of this requirement, beyond keeping people out of the emergency room and preventing "cross subsidization," is to make sure that these newly covered have access to equivalent policies, in terms of breadth and depth, as those offered by employers to employees. 

      In addition to requirements in each of the 10 EHB categories, there are two broad "anti-discrimination" standards imposed by Obamacare which will also determine access in each category, including pharmaceuticals. One standard prohibits discrimination based on an individual's age, expected length of life, present or predicted disability, degree of medical dependency, quality of life, or other health conditions. The other dictates that benefits not be "unduly weighted." But the HHS proposed rule does not apply either to the prescription drug category except for a glancing reference that "We will use information on complaints and appeals and data on drug lists to refine our prescription drug benefit review policy for future years."

     That is not good enough for Derek Asay, Senior Director, Government Strategy, Federal Accounts and Quality, Eli Lilly. He states, "Stronger standards are needed in the proposed regulation‘s sections on anti-discrimination and prohibitions on discrimination, together with more guidance for state and/or federal level enforcement of such standards."

     The anti-discrimination standards also come into plan with regard to specialty drugs, again traditionally associated with cancer, AIDs and psychiatric patients. They generally require higher cost sharing, and raise, according to the PhRMA, particular discrimination issues. Although the proposed rule does not directly discuss specialty tiers, the actuarial value (AV) calculator that plans will use to determine coverage limits in each of the four color-coded option appears to allow plans to include a specialty tier. Specialty tiers are discriminatory because they lead to benefit designs that aggressively differentiate out-of-pocket costs based on the need for more costly services. That would  violate the EHB's anti-discrimination dictate  that benefits not be "unduly weighted." PhRMA's Smith explains, "Patients with higher cost hospitalizations are not charged a dramatically higher specialty tier coinsurance percentage than patients needing less expensive hospital care."

     Another hot button with regard to application of anti-discrimination standards is utilization reviews. The PhRMA wants the HHS to adopt the full panoply of utilization review prohibitions that are part of the Medicare Part D plan. There Medicare checks plan formularies for tier placement, to assure high-cost beneficiaries are not being discriminated against, whether there is appropriate access in major treatment classes, and broad range of drugs disproportionately used by vulnerable beneficiaries. The PhRMA's Smith wants the HHS to explore the possibility of designing an automated formulary review which would guarantee unbiased utilization reviews. 

     But the PCMA's Bass believes there are some drug management and utilization controls that could be adversely affected by an overly restrictive reading of a EHB anti-discrimination requirement. For example, certain skin medications are typically subject to age-related utilization controls to assure that their use is for medicinal (e.g., acne treatment) rather than cosmetic purposes (e.g., wrinkle reduction or firming up of sagging skin). Vaccines are another type of medication where age is an important determinant for when a patient should receive an initial dose or so-called booster doses. These age-related controls assure appropriate clinical use of certain medications and utilization edits of this nature should not be prohibited under the antidiscrimination ban stated in this provision of the rule. Another category of drugs where utilization management could be impeded, or even prohibited, is the so-called “lifestyle” drugs (e.g., drugs for treatment of erectile dysfunction). Most health plans, both governmental and commercial, impose limitations on access to these drugs, typically in the form of quantity limits. To the extent that use of such drugs is higher among older enrollees, claims of age discrimination could be made in this regard. 

     The question of utilization reviews and lifestyle drugs brings up a second related issue: what flexibility will patients have to request and get off-formulary drugs, and to appeal negative decisions? The proposed rule added the protection that an enrollee can request clinically appropriate drugs. But Lilly's Asay is concerned the EHB standards do not include sufficient safeguards to ensure that this and a number of the ACA‘s important patient protections will be enforced. The ACA and its implementing regulations already provide internal appeals and external review rights when a plan denies a covered benefit, including when a plan denies a formulary exception. But Asay thinks the HHS needs to establish more specific appeal rights for EHB pharmacy benefits, which should include shorter timelines for appeals determinations. Moreover, there seems to be some wiggle room between the proposed rule's application to clinically appropriate drugs and medically necessary drugs." Patients need a meaningful exceptions process that allows access to medically necessary drugs that goes beyond the standard in the proposed rule of merely assuring patients of their right to ―request a drug that is not on the formulary," emphasizes Asay.

     The differences between the drug manufacturers and insurance companies on access v. cost bring to mind, in terms of their seeming conflict, the difference between congressional Republicans and the President on taxes v. spending. But in the case of essential benefits, the Obama administration is the final arbiter, not one of the pleaders. That is probably a relief of sorts for the administration, but maybe not much of one. Instead of being in a foxhole exchanging political fire with Republicans, the White House is caught in the crossfire between insurers on one side and drug manufacturers on the other.

Focus on Failures of Compounding Pharmacies

P&T Journal...January 2013

    On April 11, 2011, Lisa Cornett, an inspector for the Colorado Board of Pharmacy, wrote a "special report" memo to the board detailing her inspection seven days earlier of the Sky Ridge Medical Center pharmacy in Lone Tree, Colorado. Cornett had found 15 vials of methachlorine (y) phenol (kit) solution, 5x5 ML, all of them shipped from the New England Compounding Center (NECC). That "bulk" shipment of compounded drugs caused Cornett to check with the Food and Drug Administration (FDA) to see whether the NECC was registered as a "manufacturer." Compounders who sell drugs in bulk to hospitals are suppose to be licensed by the FDA as manufacturers. Regina Barrell, an FDA official, e-mailed back to say "no," the NECC was not licensed. As a result Colorado issued a cease and desist order to the NECC on April 15, 2011. 

       That notification triggered an enforcement action by the Colorado Pharmacy Board which resulted in Sky Ridge paying a $5500 fine based on its purchase of multiple doses without providing individual prescriptions, as state law requires. One would have thought that other Colorado hospital pharmacies would have gotten the message. But one year later, a second Colorado investigator, Susan Martin, found 46 vials of hyaluronidase 150u/ML, 1 ML injection at Delta County Memorial Hospital in Delta, CO. The vials were shipped by the NECC. That find sparked a communication from the Colorado Board to the Massachusetts Board of Pharmacy alerting it to the fact that NECC, a non-manufacturer, was selling bulk, compounded drugs to hospital pharmacies. The Massachusetts board ignored that alert. Had it conducted an immediate inspection of the NECC's facilities in Framingham, Mass., it might have discovered the non-sterile conditions which led to the bacterial contamination of the methylprednisolone acetate (MPA) doses which have so far led to 32 deaths and over 400 illnesses. Massachusetts and the FDA eventually shut down the NECC and Ameridose, a second compounder which is licensed by the FDA but linked to the NECC via management.

      Meanwhile, the Colorado Pharmacy Board has not taken final action against the Delta hospital pharmacy, nor against a third pharmacy, Exempla Good Samaritan Medical Center in Lafayette, CO, which received repeated bulk shipments from the NECC prior to the Sky Ridge purchases in 2011. Cory Everett-Lozano, spokesman for the Colorado Pharmacy Board and the larger state department in which it is housed, says, "The Board has not yet decided what to do with the hospital in Delta.  It's complicated for a couple reasons which are not public at this time.  The Board will decide what to do in the near future."

     There are two primary issues, each with thorny complexities, concerning hospital pharmacy use of compounded drugs arising from the NECC contamination disaster, none of which have really been answered, nor elevated to headline-level issues. The obvious one has to do with hospital purchases of compounded drugs from outside vendors. New federal and state laws may diminish access to those drugs, and increase their costs, as outside vendors spend capital (or go out of business) to comply with new regulations. But hospitals themselves are significant compounders, and their adherence to United States Pharmacopeial Convention (USP) standards, and enforcement of those standards and other state laws, is likely to emerge into the spotlight, too. 

     So far, press and congressional criticism has focused narrowly on the NECC and on enforcement failures in that regard by Massachusetts and the Food and Drug Administration. But Members of Congress have now sought explanations from state boards of pharmacy about their policies and enforcement actions regarding compounding. These could well lead to boards in states such as Colorado having to explain how they police hospital pharmacies, and enforce (or not) compounding laws, which of course vary from state to state.

     Hospitals depend heavily on compounding. At hearings on November 15, 2012 in the Senate Health, Education, Labor and Pensions (HELP) Committee, David Miller, R. Ph., IACP Executive Vice-President and CEO, the International Academy of Compounding Pharmacists (IACP), said: "Many, if not most, of the lifesaving intravenous drugs given in hospitals and clinics are compounded. Because hospital patients are often on multiple medications, compounding them into one treatment saves the hospital personnel time and the patient multiple injections or administrations."

     William W. Churchill MS, R.Ph., Chief of Service, Department of Pharmacy, Brigham and Women's Hospital in Boston, says his hospital provides approximately 8 million doses of drugs to its patients annually. Of that total, about 1.5 million are compounded sterile products, about 300,000 of those are provided by outside vendors. Those outside compounded drugs typically fall into a several categories, including total parenteral nutrition PCA syringes, epidural solutions, and intrathecal pain medications. "We have a group of chronic pain patients who can only be treated with compounded medications because we cannot get them in the concentrations the patients need from commercial suppliers," Churchill explains.

     In an interview with the Associated Press, Daniel Ashby, the Director of the Johns Hopkins Hospital pharmacy in Baltimore, said he buys 26 drugs out of a total of 3,000 from three compounding companies, including Ameridose. The other two are AnazaoHealth in Tampa and PharMEDium of Lake Forest, Ill. As is the case with many hospital pharmacies, Hopkins buys compounded drugs when there is a shortage of the commercial alternative manufactured by an FDA-regulated manufacturer. Ameridose, which ceased operations on October 12, 2012 in the wake of an FDA and state inspection, sold six drugs which are on the FDA's shortage list: sodium bicarbonate injection, succinylcholine injection, atropine sulfate injection, bupivaccine hydrochloride injection, lidocain hydrochloride injection and furosemide injection.

   

      But despite that dependence, hospital pharmacists are often unaware of state and federal laws regarding compounding, the U.S. Pharmacopeia "chapters" governing on-site compounding, and the conditions at compounding vendors such as NECC. Churchill says BWH was using the NECC mostly for intrathecal pain medications and compounded “topical use”-only solutions.  Many of these solutions were compounded and sterilized from raw chemicals in order to meet patient medication needs. Brigham and Women's was using Ameridose for "sterile-to-sterile” compounded products, and had been doing so for many years. Brigham and Women's had conducted its own, scheduled on-site audits of both of these facilities, and had been satisfied with their services until the recent issues came to light. However, the audits were not as extensive as the FDA or state regulatory agencies because the hospital lacks legal authority. 

      Theoretically, Churchill could have checked to see whether the NECC and Ameridose were accredited by the Pharmacy Compounding Accreditation Board (PCAB), which has been in existence since 2004. It was founded by a group of pharmacy organizations such as the American Pharmacists Association, National Community Pharmacists Association, and IACPs. Churchill says, "I was previously unaware that the PCAB existed.  Furthermore, the value of their accreditation would have been unclear given our lack of familiarity with the agency, its past performance, or how rigorous their accreditation process is.” 

     Joe Cabaleiro R.Ph., Executive Director, PCAB, says neither the NECC nor Ameridose are accredited. The organization lists accredited pharmacies on its website at: http://www.pcab.org/accredited-pharmacies. The organization has a 50-page manual which describes the conditions and procedures it requires pharmacies to maintain. (see:

http://www.pcab.org/cms/wp-content/themes/pcab/img/PCAB-Accreditation-Manual.pdf)

In the section of "Compliance Indicators," one of the two elements is "The pharmacy demonstrates that it has access to all current and applicable standards of the United States Pharmacopeial Convention (USP)." The section on "Sterile Compounding" takes up about half of one page. It contains the only mention of USP 797 in the manual, requiring that "sterile portions of the compounding process such as weighing must, at a minimum, be performed in equipment meeting the requirements above for nonsterile compounding. The equipment must be situated in an environment meeting USP 797 standards." There are no references in the manual to USP 71 or 795.

    

USP General Chapter 797 describes conditions and practices to prevent harm to patients that could result from microbial contamination, excessive bacterial endotoxins, variability in intended strength, unintended chemical and physical contaminants, and ingredients of inappropriate quality in compounded sterile preparations.

General Chapter 795 provides guidance on applying good compounding practices in the preparation of nonsterile compounded formulations for dispensing and/or administration to humans or animals. The latest revision which became official May 1, 2011 includes categories of compounding (simple, moderate, and complex); definitions for terms (e.g., beyond-use date, hazardous drug, stability); and criteria for compounding each drug preparation (e.g., suitable compounding environment, use of appropriate equipment).

General Chapter 71 specifies how sterility testing of a compounded drug should be done.

    

     While the three USP chapters are good as far as they go, many hospital pharmacists are still unfamiliar with them. Moreover, neither state nor federal regulatory bodies inspect either hospital or retail compounding pharmacies for compliance with those standards. The IACP's Miller told the Senate Health, Education, Labor and Pensions Committee, " The IACP believes that all states must adopt mandatory compliance with USP 795 and 797 standards." Only 17 states have done so. While some accreditation bodies appear to use the USP standards, there is no assurance that those bodies go back to pharmacies once they are accredited to make sure facilities still have floors which can be eaten off of.

   

     With regard to in-house compounding, which averages about 1 million doses a year, Churchill says his pharmacy adheres to USP 797, 795 and 71. He is fortunate because hospital leadership has supported his use of an outside expert consultant to assist his leadership team in assuring that Brigham and Women's is complying with those USP regulations. "The USP chapters 797, 795 and 71 have many intricate details and nuances and that is why our consultant is so valuable to us," he explains. "But there is a lack of process and lack of resources to ensure compliance," Churchill explains.

       One might expect The Joint Commission or the federal government--because of Medicare conditions of participation, for example--to survey hospital pharmacies for adherence to USP standards. "The federal government doesn't walk into a lot of hospital pharmacies," notes Churchill.

     The Joint Commission doesn't look at that issue when it visits hospital pharmacies, according to one hospital pharmacist. "They don't have the resources," he explains.

    

     One former USP official, who declines to be identified, says, The Joint Commission's last official statement on USP 797 was in 2004. " I am not sure they will even know what USP 795 or 17 are," he adds. Amy Panagopoulos RN, MBA, Senior Director, Quality, Evaluation and Strategy, Division of Healthcare Quality Evaluation, The Joint Commission, failed to provide any information on The Joint Commission inspections of hospital pharmacies with regard to USP standards.

      Complicating the issue of USP compliance further is confusion over whether the Food and Drug Administration has the authority to enforce the three USP standards, even if it did have the inspection staff to do so, either at places like the NECC or in hospitals. What is clear is that the FDA has the authority to regulate "manufacturers" of compounded drugs, whether non-sterile-to-sterile, or sterile-to-sterile. Ameridose was licensed as a manufacturer. Compounders such as the NECC who consider themselves "non-manufacturers" are not licensed by the FDA and are not allowed, theoretically, to supply compounded drugs to a physician or hospital pharmacy without getting an individual prescription for that dose in advance. It is the responsibility of the state board of pharmacy to blow the whistle when violations of the individual prescription law occur. FDA-licensed manufacturers can supply compounded drugs in bulk. In the middle of those two scenarios is "anticipatory compounding," where a hospital or an outside vendor can make or supply multiple doses in "reasonable quantities" without a prescription based on "historical need" of a hospital or other health care facility, such as a pain clinic, according to Miller of the IACP.

     But testimony at House and Senate hearings in November produced numerous allusions to the grey areas in federal law. Margaret Hamburg, Commissioner of the FDA, explained that the FDA first published a compliance guide on compounding in 1992. The compounding industry had objections to it, and went to Congress looking for changes. The Food and Drug Administration Modernization Act of 1997 added a new section to the Food, Drug and Cosmetic Act exempting compounded drugs from three critical provisions of the existing law. The new sections also limited advertising of compounded drugs, and solicitation by compounders of prescriptions. "These provisions were the subject of subsequent court challenges, which have produced conflicting case law and amplified the perceived gaps and ambiguity associated with the FDA's authority over compounding pharmacies," Hamburg explained.

     Lauren Smith, MD, MP, Interim Commissioner, Massachusetts Department of Public Health (MDPH), says there is a "black hole" between state and federal regulation of compounding pharmacies.

     Nonetheless, the FDA did inspect the NECC in conjunction with Massachusetts in 2002 and 2006.  The FDA did the 2002 inspection based on MedWatch reports of meningitis symptoms in people taking MPA, and also because of complaints related to betamethasone. In the aftermath of the 2006 inspection, which looked at different issues, the FDA wrote a "warning letter" threatening to shut the facility down. That never happened. The Massachusetts Board of Pharmacy inspected the NECC facility in Framingham, MA in 2011, looking at sterile conditions, among other things, and rated the facility "satisfactory" based on that inspection. The FDA never inspected NECC after 2006. At the hearings in the House Energy and Commerce Subcommittee on Oversight and Investigations on November 14, Rep. Cliff Stearns (R-Fla.), Chairman of the subcommittee, complained that the FDA repeatedly documented problems at NECC, some identical to the same problem that caused the recent outbreak. Stearns asked Hamburg, the FDA Commissioner, whether the agency had the authority to shut down the NECC. "That is a very, very complex question," she answered. 

     Hamburg asked both the House and Senate to clarify that ambiguity by adopting legislation which would modify the Food, Drug and Cosmetic Act to recognize two categories of compounding pharmacies: traditional and non-traditional. Pharmacies in the latter category would have to comply with federal current good manufacturing practices (cGMPs), for example, from which they were exempted by the 1997 law. That would give the FDA more authority to deal with the kind of potential contamination that brought low the NECC and Ameridose. Besides mandating cGMP compliance for non-traditional pharmacies, the FDA-suggested reforms would bar compounding of certain products under any circumstance, with certain exceptions. These would include compounding of drugs which are copies of FDA-approved drugs absent a shortage designation and complex dosage forms such as extended release products.

   

  One congressional reform bill has already been introduced by Rep. Ed Markey (D-MA). It is called the Verifying Authority and Legality in Drug (VALID) Compounding Act (H.R. 6584). It will:

Ensure that compounding pharmacies that are operating as drug manufacturers are regulated by the FDA as drug manufacturers;

Allow compounding pharmacies with a legitimate reason to compound drugs before the receipt of a valid prescription to request a waiver to enable them to do so;

Allow the FDA to waive the requirement to compound drugs solely for individual patients with valid prescriptions in the event of a drug shortage or to protect public health;

Increases transparency to the public by mandating that compounded drugs be labeled to ensure that recipients know that the drugs have not been tested for safety or effectiveness, publishing a “Do Not Compound” list of unsafe or ineffective drugs, and reporting of bad reactions to compounded drugs or any drug that poses a safety risk.

      The American Society of Health System Pharmacists (ASHP) thinks the gray areas between state and federal regulation need to be eliminated. "Previous attempts to define compounding in federal law contained certain elements that should be examined in light of practice changes since 1997," says Kasey Thompson, Vice President of Policy, Planning and Communications for the ASHP. "Recent legislative proposals merit further discussion and exploration, since they may reflect those practice changes and allow for the regulatory flexibility among state boards of pharmacy and the FDA that would ensure that hospitals continue to be allowed to obtain compounded medications in anticipation of patient need."

     

     Congress has tried in the past to clear up some of this Federal-State enforcement confusion. At the Senate hearings, Sen. Pat Roberts (R-KS) noted the IACP itself had blocked remedial efforts. He asked the IACP's Miller and the ASHP's Thompson if they were willing to work with Congress this time to fill in the gaps between federal and state regulation of compounding pharmacies. Both answered affirmatively.

   
      However, Miller's testimony seemed to suggest his group had certain red lines it didn't want Congress to cross. He indicated that states had the authority to quickly address issues such as the NECC contamination issue, and that Massachusetts should have done so. He also noted that the FDA had plenty of reason--and authority--to force the NECC to become licensed as a manufacturer, thus making it easier for the FDA to inspect its premises. At the same time, though, he noted that state boards of pharmacy are underfunded.

     The spokeswoman for Sky Ridge Medical Center did not return a phone call. So it is hard to know whether that hospital knew it was breaking Colorado law by dealing with the NECC. But hospitals across the country, and their pharmacy directors, now have little excuse for claiming ignorance about state and federal compounding laws, which are likely to be tightened. If that is not done carefully, reform could complicate the already problematic drug shortage problem.

EPA Publishes Final Industrial Boiler Rule

The Fabricator...February 2013

     Most metal fabricators won't be hit very hard by the EPA's final rule on air emissions from industrial boilers. The final rule, issued in December, gives affected sources three years to come into compliance with emissions limits on air pollutants such as mercury and lead. But while there are somewhere around 14,000 industrial boilers nationally, probably fewer than 1700 will face new emissions restrictions, and some of them will be able to meet those restrictions by adding scrubbers to old boilers. Boilers which run on fuel oil, coal or biomass are in the "affected" category; those which use natural gas face no new restrictions. All boilers will have to do  periodic "tune ups." But that is not a requirement anyone is terribly worried about.

   

    The final rule released on December 20, 2012 included a number of what the EPA described as concessions on provisions included in the proposed rule issued in March 2011. For example, the final rule allows facilities to use "alternative total selective metals emission limits" to regulate metallic air toxics instead of using a particulate matter (PM) as a surrogate, allowing more flexibility and decreasing compliance costs for units that emit low levels of HAP (hazardous air pollutant) metals. However, after the EPA took into account the changes it made in the final rule, it said the estimated annualized cost of the amended rule for the affected boilers would still be $1.19 billion. That was a decrease of $130 million, but to the extent metal fabricators have decades old boilers using one of the "bad" fuels, the capital costs could be heavy.

    

    Bob Bessette, the President of the Council of Industrial Boiler Owners (CIBO), which had been the lead group pressing the EPA for moderation in the final rule, says,  "EPA made some significant modifications to its previous rules.  These changes will greatly improve the ability of facilities to comply." But there appeared to be no easing of carbon monoxide and hydrochloric acid standards, which is what the Industrial Energy Consumers of America had asked for, in order to make it easier for coal-fired boilers to stay in operation. In fact, in the final rule, the EPA appeared to tighten HCL standards. The IECA had asked the EPA to replace numerical limits for CO and HCL with work standards. The agency did not do that. Paul Cicio, President of the IECA, did not respond to an e-mail requesting comment.

Green on the Hill: Familiar landscape; some new faces

Green Manufacturer magazine...January 21, 2013

Vapor, leaks, energy efficiency draw little attention

The political and legislative landscape in Washington in 2013 will look much like it did in 2012, with a couple of exceptions.

Party balance in Congress is essentially unchanged: Republicans control the House, Democrats the Senate. Most committee chairs in both houses remain in place. In a potentially significant switch in the Senate Energy and Natural Resources Committee, Sen. Ron Wyden, D-Ore., takes over as chair from retiring Sen. Jeff Bingaman, D-N.M. Wyden is much more of an environmentalist than Bingaman, whose most notable environmentally friendly efforts were to try to push through his committee—with sketchy results, sadly—measures that would help manufacturers adopt energy efficiency measures. Wyden is more of a "protect the rivers and forests" kind of guy.

In the regulatory realm, President Obama's re-election means that he will continue down the relatively modest path he charted in his first term. Lisa Jackson, the administrator of the Environmental Protection Agency (EPA), has left. Her replacement has not been announced as of this writing.

Business groups reviled Jackson; environmentalists lauded her. That is a good indication that she steered a middle path, which she veered from very rarely. That was evident based on the publication of two rules at the end of December—one lowering the small particle particulate matter (PM) air emission threshold, the other tightening air emission standards for industrial boilers.

The maximum achievable control technology (MACT) rule for industrial boilers affects only about 1,700 industrial boilers, a tiny subset of the 14,000 existing major source boilers, according to the Council of Industrial Boiler Owners. Many in the affected category will be able to come into compliance with air emission restrictions by adding scrubbers within the three-year compliance timeframe. And the PM rule establishes a standard which most cities and counties already meet, meaning very few municipalities will start playing hardball on permit applications for manufacturers looking to expand plants or build new ones. Moreover, again in both cases, compliance deadlines are pretty far out into the future.
With the publication of those two final rules, the Obama administration seemed to be saying it will push forward with environmental regulation, but not like a bull in a china shop.

Vapor Intrusion

One issue coming down the pike in 2013 that has drawn very little attention is the EPA's revision of its 2002 "vapor intrusion" guidance. Federal and state regulators use this to determine whether leaks from underground and above-ground storage tanks and from underground pipelines result in dangerous chemicals coming into buildings. The 2002 guidelines dealt only with leaks into residential properties, but were nonetheless used by EPA investigators to determine whether there were indoor air problems in industrial and commercial buildings.

William McFarland, director, remediation services, General Motors, said the revised 2002 vapor intrusion guidance should include specific provisions regarding leaks of chemicals from underground sources into commercial and industrial buildings. He stated that the need to update the 2002 guidance to take into account differences between residential and commercial buildings is based on the fact that commercial/industrial buildings typically have mechanical ventilation systems designed and operated to provide higher ventilation rates and smaller differences between indoor and outdoor air pressures.

Regarding industrial and commercial ventilation systems, don't expect the Obama administration or Congress to pay much attention to corporate facility energy efficiency issues. The last Congress finally passed in December an extremely watered-down bill called the American Energy Manufacturing Technical Corrections Act (H.R. 6582) that addresses energy efficiency. The core of the bill deals with appliance standards. The legislation has a slim industrial component which requires the U.S. Department of Energy (DOE) to do some studies.

When H.R. 6582 came up for a vote, Rep. Henry Waxman, D-Calif., top Democrat on the House Energy and Commerce Committee, said on the House floor that the act would not produce large energy savings. "The beginning of a new Congress provides us an opportunity to work together on a bipartisan basis to enact commonsense energy efficiency legislation," he said.

Waxman did not utter the words climate change, but Sen. Barbara Boxer, D-Calif., chair of the Senate Environment and Public Works Committee, has. But here, too, the watchword is moderation with regard to legislation. Boxer is convening a clearinghouse that apparently will be a discussion group composed of senators who will study new scientific information on carbon emissions. There is almost no chance that this chitchat will morph into legislation liable to pass Congress.