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Drug Regulation

Compounding pharmacies pose unrecognized dangers, expand beyond FDA restrictions

April 12, 2004 | A version of this story appeared in Volume 82, Issue 15

Compounding pharmacies fill a need by making individual prescriptions, but some may be endangering public health.
Compounding pharmacies fill a need by making individual prescriptions, but some may be endangering public health.

The Food & Drug Administration could make many improvements in the way it protects consumers from risks of prescription medicines. Postmarket surveillance of adverse reactions to pharmaceuticals could be enhanced, for example: Under current practices, it can take years before FDA can gather enough data to pull a dangerous drug from commerce. In another area, the agency has not been able to put a stop to Internet purchases of pharmaceuticals without a valid prescription. Some drugs sold via the Web are counterfeit.

But one almost totally unrecognized practice--drug compounding by pharmacists--may pose even greater dangers. Drug compounding traditionally has involved the mixing, combining, or altering of ingredients to create a customized medication for an individual patient. When conducted lawfully, drug compounding is safe and serves a necessary purpose. For example, a physician may write a prescription for a drug specifying that it be made without dye for a patient who is allergic to the colorant used in the available drug. A compounding pharmacist then mixes up the custom medicine under safe conditions.

FDA regulations require that compounded drugs be produced only pursuant to valid prescriptions to meet exceptional medical needs. They prohibit the compounding of commercially available drugs.

UNFORTUNATELY, a number of compounding pharmacies do not operate within the law. Many are actually small manufacturing plants, producing thousands of units of compounded drugs before the pharmacies receive prescriptions. Some of these pharmacies produce drugs that FDA has already pulled from the market for safety reasons. Some manufacture experimental drugs that are under development and not yet approved by FDA. And others use active ingredients that have not been manufactured at FDA-registered facilities, often purchasing imported ingredients from overseas.

Some of these facilities compound high volumes of drugs that are available on the commercial market. Often they supply hospices, clinics, and nursing homes with copies of commercially available drugs that the patients--and often even the doctors or health facilities--don't know are compounded.

If all of this compounding were done with correct dosages, under sterile conditions, and with ingredients manufactured under strict controls and inspected by FDA, much of it still would be illegal. But the drugs would not pose such a severe threat to public health. Sometimes injectable drugs are made under nonsterile conditions and are contaminated with mold or bacteria. In recent years, such drugs have killed a number of patients and made others severely ill.

Other drugs have been compounded with industrial- rather than pharmaceutical-grade ingredients and consequently are contaminated with higher levels of heavy metals or other substances than FDA allows.

In 2002, FDA sampled 29 drugs from compounding pharmacies and found that nine were seriously subpotent and one was superpotent, says Fred Richman, acting chief for FDA's Prescription Drugs Branch. In contrast, the failure rate for commercially available drugs is less than 2%. "This survey is not in any way necessarily reflective of the whole compounding industry," he says, "but it suggests to us that states should take a look at potency as well as sterility as possible problems with some compounded drugs."

FDA officials and other experts who have studied the problem realize that some of these compounding pharmacies present a danger to public health. There is "big exposure to large volumes of compounded drugs" often produced with incorrect dosages under unsafe conditions, Richman says. "The compounding pharmacies are often as large or larger than generic drug manufacturers," he says. However, the products made by compounding pharmacies are not subjected to FDA's new drug approval process, and the firms are not inspected for adherence to Good Manufacturing Practices regulations. The consequence is that no one knows the extent of the problem, he explains.

"Accurate, complete, and unbiased information about the size and scope of the compounding industry is not available," says Sarah L. Sellers, a pharmacist with a specialization in compounding who has studied this problem for eight years at Johns Hopkins Bloomberg School of Public Health. This dearth of data was described in a General Accounting Office report on compounding pharmacies published in October 2003 that said GAO was able to find no data supporting most estimates of how much drug compounding was done and no data on the amount of bulk active ingredients used in compounded medicines.

In the past few years, deaths and illnesses from some compounded drugs have come to light. For example, in 2002, after Donald Boles of Spartanburg, S.C., was given spinal steroid injections to ease pain from back surgery, a rare fungus, normally found in soil, started growing in soft tissues of his back and eroding his bones. The injected steroid solution had been mixed from raw ingredients at a neighborhood drugstore, Urgent Care Pharmacy. The Centers for Disease Control & Prevention investigated and found four other people had been infected with the same batch of steroid preparations. In 2001, three patients died of meningitis contracted from contaminated cortisone shots also made in a compounding pharmacy, Doc's Pharmacy in Walnut Creek, Calif.

ACCORDING TO the GAO report, FDA is aware of more than 200 adverse events involving 71 compounded products since 1990. However, the agency does not require compounding pharmacies to report deaths or illnesses that may be associated with their products. This is in contrast to drug manufacturers, which must report any adverse events. In fact, compounding pharmacies do not even have to register with FDA, only with the states where they sell their products.

Because adverse event reporting from compounded drugs is not required, the known cases of deaths and injuries are considered the "tip of the iceberg" by public health officials, Sellers says.

FDA maintains that drug compounding activities are generally subject to its oversight, but the agency relies on states to regulate the limited compounding of drugs that is part of the traditional pharmacy practice. FDA does, however, maintain authority to crack down on major violations of drug laws, such as compounding pharmacies that manufacture medicines in bulk quantities and those that produce experimental drugs or drugs that were withdrawn from the market for safety reasons.

Congress passed a law in 1997 exempting compounders from some requirements of the Food, Drug & Cosmetic Act if they met a strict set of guidelines. One guideline was that compounders should not become manufacturers; that is, compounding must be done pursuant to an individual prescription from an authorized prescriber.

However, the whole provision dealing with compounders was declared invalid by a Supreme Court decision in 2002 because a section of the law dealing with advertising was ruled to be an unconstitutional restriction of commercial speech. FDA then issued a guidance, which has not yet been finalized, to lay out when the agency would take enforcement action against compounders. The invalidation of the 1997 law means that compounders continue to operate in somewhat of a regulatory vacuum.

One enabling factor facilitating the rapid growth of the compounded drug business in recent years is the emergence of very large so-called repackagers. These firms buy bulk quantities of pharmaceutical ingredients, often from overseas suppliers, and repackage them into smaller units suitable for sale to compounding pharmacies. They also sell equipment for mass production of pharmaceuticals, such as industrial-size mixers, and they sell plastic vials, often made of materials unapproved by FDA, for packaging the drugs. In addition, they market recipe books for drug preparation and provide training sessions, all under one roof.


THREE OF these firms are Professional Compounding Centers of America, Houston; Meridian Specialty Pharmaceuticals, Decatur, Ala.; and Medisca, Plattsburgh, N.Y. Meridian President Mickey Letson has placed advertisements in the New York Times, saying, "Anyone can set up a respiratory compounding pharmacy."

"It is a very well-organized industry, and it is largely supported by chemical suppliers," asserts Sellers, who testified on this topic at a hearing before the Senate Committee on Health, Labor, Education & Pensions last fall. Sellers describes various ruses some compounding pharmacies use to justify making and selling their drugs in large quantities without prior prescriptions. One is to simply write their own prescriptions. Or the salesperson for a compounding pharmacy gets a distributors license from the state. He or she then calls a physician at a clinic, for example, and says, "We can't find a particular commercially available drug because it is in short supply. But we have access to a substitute product."

The physician, Sellers says, may not be aware that the distributor is employed by a compounding pharmacy and that the substitute drug will be produced at the pharmacy. The physician then changes the prescription from one for the commercially available product to the one manufactured by the compounding pharmacy. Technically, this allows the pharmacy to claim it is producing drugs on a per-prescription basis.

This practice can yield huge profits. In her testimony at the Senate hearing, Sellers cited the following example. Ten years ago, she was employed by a compounding pharmacy. At that time, the wholesale cost of an FDA-approved sterile drug for intraspinal infusion was $400, and the Medicare reimbursement for the drug was close to $1,000. But a compounding pharmacy could make the medicine from scratch using nonsterile ingredients under nonsterile conditions with no validation of proper dosage for less than $10.

"The risks of using such a product were not identified, analyzed, or communicated to physicians or their patients," Sellers said. "This practice was becoming 'standard of care' in certain medical settings," she explained.

Today, compounded drugs are probably even more common than they were a decade ago. Patricia Paget, communications coordinator for the International Academy of Compounding Pharmacists (IACP), claims that the compounding industry produces about 1% of the total units of prescription drugs sold in the U.S., or 30 million units worth $2.1 billion in a prescription drug market with $216 billion in sales.

"But if you look at individual dosage forms, like injectables and inhalation solutions"--which are used extensively to treat elderly patients--"the percent of compounded products is much greater," Sellers says. Some pharmaceutical companies have told her that compounding pharmacies are making 20 to 30% of the respirable drugs, she explains.

According to HME News, a newsletter for home medical equipment providers, Meridian Pharmaceuticals teaches distributors of medical equipment "how to open pharmacies and existing pharmacies how to crack the Medicare market as it pertains to respiratory services."

FDA is aware of the abuses perpetrated by suppliers to compounding pharmacies. A search of its website reveals many violation letters sent to the large repackagers. For example, in July 2001, Professional Compounding Centers of America (PCCA) was cited for "repacking and distributing bulk drug substances that were withdrawn or removed from the market for reasons of safety or effectiveness." In the same letter, FDA cited PCCA for repacking nonpenicillin b-lactam drugs (cephalosporins) with the same equipment used for penicillins. This could lead to dangerous cross-contamination. Patients who are allergic to penicillin--many of whom react to extremely low levels--could take a cephalosporin drug and suffer a life-threatening reaction from the penicillin contaminant. Other violation letters were sent to PCCA in 1985, 1989, and 2000.

In May 2003, about 6 tons of phenylbutanone repackaged into units of various sizes by Medisca was recalled because the expiration dates had been changed and the lot numbers altered.

In July 2001, FDA sent a warning letter to Meridian Pharmaceuticals because it failed to assign an expiration date or retest date to many of the active pharmaceutical ingredients it repackaged. Meridian was also cited for relabeling industrial-grade ingredients as pharmaceutical-grade, and for misspelling drug names on the repackaged units. It also failed to maintain temperature and humidity controls in the repackaging rooms, FDA alleged.

Physicians and clinics may be purchasing drugs from compounding pharmacies without even knowing it.
Physicians and clinics may be purchasing drugs from compounding pharmacies without even knowing it.

INTERNET SEARCHES reveal that compounding pharmacies are selling investigational new drugs that cannot be legally marketed until they are approved by FDA. These include polydocanal, a detergent used to treat varicose veins in Europe, and 4-aminopyridine, originally used in pesticides but now being marketed by compounders for multiple sclerosis. These drugs can be purchased online. GAO report says some pharmacies may be manufacturing new drugs under the guise of compounding in order to avoid the strict requirements of the Food, Drug & Cosmetic Act.


At the Senate hearing, William P. Kennedy, owner of Nephron Pharmaceuticals in Orlando, Fla., testified. He said he was uniquely qualified to speak because he formerly owned a compounding pharmacy that produced large volumes of compounded drugs and now owns an FDA-approved drug manufacturing plant.

In the mid-1980s, Kennedy's pharmacy began compounding various respiratory medications on a massive scale. FDA inspected the premises in 1990 and decided the pharmacy needed to be formally listed as a manufacturer. After this, Kennedy spent a great deal of money to establish an FDA-approved manufacturing plant.

However, in his trips around the U.S. to market his products, Kennedy encounters "time after time, non-FDA approved companies in the inhalation drug market willfully mass compounding their products," he said. "Their product is rampant. The consumer is at risk and doesn't even know it," he explained. "Companies and individuals are willfully breaking the rules and regulations long established by FDA."

Some states are taking steps to improve the safety of compounded drugs. The Missouri Board of Pharmacy has begun random batch testing of compounded drugs. Random samples of drugs prepared in anticipation of prescriptions are being tested, and undercover agents posing as patients are purchasing compounded drugs, which will then be tested. Missouri is the only state that has initiated random testing.

North Carolina has decided to require pharmacies to report deaths associated with prescription drugs, including compounded drugs. However, illnesses do not have to be reported. Wyoming has set up specific guidelines for drug compounding.

The National Association of Boards of Pharmacy, along with IACP and other organizations, is convening a steering committee to develop a quality improvement program for compounding pharmacies that will include accreditation and certification.

DESPITE these efforts aimed at improving compounding pharmacies, states may lack resources to provide proper oversight, GAO says. The rapid increase in the number of drug sales over the Internet creates special problems--many of the compounding pharmacies licensed in a state are not located there. That situation makes it impossible for a state board of pharmacy to inspect all the pharmacies that are selling compounded drugs in the state.

IACP's Paget claims that compounded drugs are safe. More than 30 million prescriptions are dispensed every year to patients, she says. "Adverse incidents are tragic, but incredibly rare," she says.

Still, the industry is developing a program to make sure safety is improved, Paget says, referring to the effort the National Association of Boards of Pharmacy is making to develop an accreditation program. That program is expected to be rolled out later this year, she says.

Paget points out that compounding pharmacies serve needs that are not served by the ordinary commercially available drugs. "Compounded medicines are individually tailored to your needs, age, weight, and preferences," she says. Large manufacturers have discontinued thousands of products that are no longer profitable, she says. "Compounding pharmacists prepare medicines ... based on your need, not the needs of the marketplace," she says. She is not aware that compounding pharmacists dispense experimental medicines or drugs that have been banned by FDA, she claims.

FDA is working closely with the states to try to detect and eliminate abuses in the compounding industry, Richman says. But given that many states have limited resources and pharmacy self-inspection is allowed in four states, it will take much more than close cooperation to stamp out the abuses of the lucrative compounding pharmacies, according to evidence presented at the Senate hearing. New federal legislation and stronger regulations are required, Sellers says.


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