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Confounding Issues about Compounding Pharmacy Regulation*


Written by Tara E. Swenson and Stephanie D. Willis

New England Compounding Center (NECC) distributed contaminated syringes that caused a meningitis outbreak – killing fifteen people in fifteen states. Officials estimate that as many as 14,000 patients may have received injections of steroids compounded by NECC from contaminated syringes.

The tragedy raises key questions with imprecise answers.

  • Is NECC a drug manufacturer? No, it’s a compounding pharmacy, but its activities may qualify as manufacturing in this case.
  • Were NECC’s activities subject to federal and/or state regulation?  NECC is subject to both federal and state regulation, but the reach of such oversight on compounding pharmacies is unclear.

What is a compounding pharmacy?

Linda Bentley, our colleague who advises clients on FDA regulatory issues, explained to WebMD Health News that the traditional role of compounding pharmacies is to make drugs prescribed by doctors for patients with specific needs that a commercially available drug cannot meet.  Bentley offered two examples:

  • A young child may need a small, liquid dose of a drug made only in adult-dosage tablets.
  • A person may be allergic to one of the ingredients in the commercial version of a drug.

Compounding pharmacies generally cannot produce compounded drugs prior to receiving a prescription from a provider, provide compounded drugs for general distribution, or conduct other activities that may qualify them as drug manufacturers. But, as Bentley noted to USA Today, Food and Drug Administration (FDA) guidance can be confusing, and “there’s no bright line standard” for distinguishing between traditional compounding and manufacturing activities.

What agencies regulate compounding pharmacies?

The FDA and individual state Boards of Pharmacy regulate compounding pharmacies, but the extent of each agency’s enforcement authority is unclear.  The U.S. Drug Enforcement Agency also regulates compounding pharmacies when they handle controlled substances.

Compounded drugs are exempt from the FDA’s standard drug approval requirements under the Food, Drug, and Cosmetic Act, so the FDA has less authority over compounding pharmacies than over traditional drug manufacturers.  A compounding pharmacy’s activities can cross the line that triggers FDA oversight, but when is not always clear.  As Bentley describes in another article, “[i]t's a gray area because there's no clear standard as to when the pharmacy crosses the line and looks more like a manufacturer than a compounding pharmacy . . . I mean, that's a big hole.  The problem is that it's hard to know where the edges are."

Although state Boards of Pharmacy generally license and survey all pharmacies, including compounding pharmacies, the state may or may not have separate, more rigorous, regulations or license requirements in place for compounding pharmacies.

What will happen now? 

State and federal lawmakers will likely propose a variety of legislation aimed to increase oversight of compounding pharmacies and their practices.  One possibility is that Congress and the FDA could define the activities compounding pharmacies must avoid to prevent being subject to regulation as a drug manufacturer more clearly.  Alternatively, the NECC incident may bring about a new oversight regime for compounding pharmacies completely distinct from that applicable to drug manufacturers.  States could also amend their pharmacy laws to create separate, more rigorous licensing and inspection standards for compounding pharmacies.

Additionally, state and/or federal law may require a compounding pharmacy to be accredited as other provider types are in the health care industry.  Compounding pharmacies can currently seek accreditation by the Pharmacy Compounding Accreditation Board (PCAB), but few have.  Of the thousands of compounding pharmacies that operate in the United States, less than 200 hold PCAB accreditation.  PCAB-accredited pharmacies are located in only 38 states, and only 5 are located in Massachusetts, NECC’s home state.


*Copyright 2012 American Health Lawyers Association, Washington, D.C.  Reprint permission granted.


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Karen S. Lovitch

Chair, Health Law Practice & Co-Chair, Health Care Enforcement Defense Practice

Karen advises industry clients on regulatory, transactional, operational, and enforcement matters. She has deep experience handling FCA investigations and qui tam litigation for laboratories and diagnostics companies.