Drug Compounding Regulation Three Years After the Drug Quality and Security Act

On April 20, 2017, the FDA published a review of its work to mitigate the public health risks associated with compounded drugs pursuant to the Drug Quality and Security Act. Just over three years ago, Congress amended the Federal Food, Drug, and Cosmetic Act (FD&C Act) by enacting the Drug Quality and Security Act (DQSA). The first title of the DQSA, known as the Compounding Quality Act, was passed in response to numerous serious adverse events, including deaths, linked to poor quality compounded drugs.


Since enactment of the DQSA, the FDA has worked diligently to mitigate the public health risks associated with compounded drugs by conducting inspections and taking appropriate regulatory and enforcement actions, developing policies, convening advisory committee meetings, collaborating and coordinating with the states, and conducting stakeholder outreach. These efforts are detailed in FDA’s Human Drug Compounding Progress Report, released in January 2017.


Compounding is often regarded as the process of combining, mixing, or altering ingredients to create a sterile or non-sterile medication customized to suit the needs of a patient. Compounded drugs can serve an important role when an FDA-approved drug is not medically appropriate to treat a patient, such as when a patient needs a medication to be made without a certain dye because of an allergy. However, compounded drugs are not FDA-approved, which means they have not been reviewed by FDA for safety, effectiveness, or quality before they are marketed. If a compounded drug does not meet appropriate quality standards (e.g., if an injectable drug is contaminated, or if a tablet contains too much active ingredient), it can cause serious injury or death.


The FDA has investigated numerous serious adverse event reports associated with contaminated, super-potent, mislabeled, or otherwise poor quality compounded drugs. A fungal meningitis outbreak in 2012 was linked to contaminated compounded drugs that a pharmacy shipped to patients and healthcare providers in 20 states. More than 750 people were seriously harmed and more than 60 people died.


Section 503A of the FD&C Act, signed into law November 21, 1997, describes the conditions that must be met for human drug products compounded by a licensed pharmacist in a state-licensed pharmacy or federal facility, or by a licensed physician, to qualify for exemptions from three sections of the FD&C Act:


  • Section 505 – concerning FDA approval prior to marketing,
  • Section 501(a)(2)(B) – concerning Current Good Manufacturing Practice (CGMP) requirements, and
  • Section 502(f)(1) – concerning labeling with adequate directions for use.


Pharmacies whose drugs qualify for the exemptions are primarily overseen by the states, although certain federal requirements also apply. For example, the drugs remain subject to the federal prohibition on preparing, packing, or holding drugs under insanitary conditions whereby they may become contaminated with filth or rendered injurious to health (section 501(a)(2)(A) of the FD&C Act).


Under Section 503B of the FD&C Act, a compounder can elect to register with FDA as an “outsourcing facility.” Outsourcing facilities can compound drugs either pursuant to a patient-specific prescription or in response to an order from a health care provider, such as a hospital, without first obtaining patient-specific prescriptions. Drugs compounded by or under the direct supervision of a licensed pharmacist in an outsourcing facility that meet the conditions in section 503B are exempt from three requirements of the FD&C Act:


  • Section 505 – concerning FDA approval prior to marketing,
  • Section 502(f)(1) – concerning labeling with adequate directions for use, and
  • Section 582 – concerning drug supply chain security requirements.


If a compounder elects to register with FDA as an outsourcing facility, it is subject to CGMP requirements, inspection by FDA according to a risk-based schedule, and adverse event reporting requirements. Drug products compounded in an outsourcing facility must meet certain conditions in section 503B to qualify for the exemptions listed above. Drug products compounded by outsourcing facilities provide greater quality assurance than drugs compounded by entities that are not required to comply with CGMP requirements and are not routinely overseen by FDA. For this reason, the FDA encourages entities and individuals to obtain compounded drugs from outsourcing facilities.


Between 2013 and 2016, the FDA significantly increased its regulatory oversight of compounders. The FDA conducted more than 350 inspections. The FDA issued more than 130 warning letters advising compounders of significant violations of federal law. The FDA issued more than 30 letters referring inspectional findings to state regulatory agencies. The FDA has overseen approximately 100 recalls involving compounded drugs. The FDA worked with the Department of Justice on a number of civil and criminal enforcement actions. Also between 2013 and 2016, the FDA developed numerous policies, convened multiple advisory committee meetings, collaborated and coordinated with state regulators, and conducted stakeholder outreach.


See the FDA Announcement


See also Medical Law Perspectives, January 2014 Report: Prescription Painkillers: Risks for Patients, Pharmacists, and Physicians


See also Medical Law Perspectives, May 2013 Report: Drugs, Dosage, and Damage: Physician Liability for Prescribing or Administering Medication


See also Medical Law Perspectives, March 2012 Report: Off-Label Use of Prescriptions: When is this Medical Malpractice? Is the Pharmaceutical Company Liable for Overpromotion?


See the Medical Law Perspectives March 5, 2015, Blog: Patients Injected with Unsterile Training IV Solution Injured


See the Medical Law Perspectives February 16, 2015, Blog: Pharmacy Owes Duty To Patient Not To Fill Excessive Prescriptions for Opioids