FDA Clarifies Rules for Compounding Pharmacies to Plug a Loophole
(Thursday, June 29, 2023)
Compounding pharmacies registered as “Outsourcing Facilities” are allowed to mass produce compounded drugs in anticipation of prescriptions but are not allowed to sell their products on a wholesale basis. This distinction between what compounding pharmacies are allowed to do and what they are prohibited from doing is described in a new guidance document from the FDA released this week.
Compounding pharmacies play an important role in the drug supply chain by providing patients with customized drug products for their special needs based on a prescription. In recent years, several compounding pharmacies have been acting as wholesale distributors of drug products where the pharmacy supplies large quantities of their drug products to a distributor without a prescription who in turn sells the drug to patients or healthcare providers. Thus, in effect, the compounding pharmacy is acting as a drug manufacturer and not a compounding pharmacy as defined in the law which is prohibited.
Unlike compounding pharmacies, drug manufacturers are required to get approval for their drug products from the FDA under an appropriate market approval application, NDA or ANDA. Compounding is not allowed by products classified as biologics. Drug manufacturers also are required to pay higher user fees, and are subject to higher standards of cGMP. Compounding pharmacies are also not allowed to create compounded versions of FDA-approved drugs; only formulations not available as an FDA-approved drug can be produced. Due to the reduced regulatory burden, compounded version of drug formulations can be created quickly and at a lower cost.
The cost savings from compounded drugs can be passed on to the patients which has been used as a justification for large-scale compounding such as done by Mark Cuban’s company and providers of the compounded version of the various GLP-1 weight loss drugs. However, such pharmacies break two laws: first, they produce compounded versions of FDA approved drugs, and second, they provide drugs on a wholesale basis without prescription to wholesale distributors who in turn sell these products to patients. Therefore, the pharmacy does not directly sell to consumers as required by the law.
Lower cost is not an acceptable justification for illegal activities. Traditional compounding pharmacies rely on prescriptions to produce their compounded drug products. And that’s what they should be doing. The new guidance document from FDA clarifies the prohibitions on compounded pharmacies from wholesale distribution activities with examples. FDA has already been enforcing these laws. So, the guidance document primarily serves as reference for compounding pharmacies that have been trying to fly under the radar.
Dr. Mukesh Kumar
Founder & CEO, FDAMap
Linkedin: Mukesh Kumar, PhD, RAC