The Outbreak… Concern first arose on September 21, 2012, when the Tennessee Department of Health notified the United States Centers for Disease Control and Prevention (CDC) of a patient with the onset of meningitis¹ approximately nineteen days after receiving an epidural steroid injection at a Tennessee ambulatory surgical center.² By October 10, 2012, the outbreak of a rare and potentially deadly form of fungal meningitis had sickened 137 people and killed twelve in ten states.³ By October 15, 2012, the total number of reported cases reached 205 in fourteen states and included fifteen deaths.⁴

Options for treatment of this rare fungal infection are limited to two antifungal medicines with serious side effects.⁵ While these drugs fight the fungus, they can also cause serious damage to the kidneys and liver, so much so that the CDC has warned that they should not be given unless a patient’s spinal fluid is clouded by infection.⁶ To further complicate matters, there is nothing that can be done preventatively for those who may have been exposed to this rare infection, and medical research provides very little guidance to doctors as they attempt to predict the ultimate outcome of this treatment regimen.⁷

The source of this severe outbreak of fungal meningitis was eventually traced to three lots of preservative-free methylprednisolone acetate (80mg/ml) produced by the New England Compounding Center (NECC) located in Framingham, Massachusetts.⁸ The CDC later determined that NECC produced and distributed a total of 17,676 vials of the potentially contaminated injections to healthcare providers and facilities in twenty-three states.⁹ In all, the CDC estimates that some 14,000 individuals received potentially tainted steroid injections compounded by NECC.¹⁰

In response to concerns over these contaminated injections, on October 6, 2012, NECC voluntarily recalled the three lots in question, and the CDC and FDA recommended that all healthcare personnel cease use of all inventories of any product produced by NECC.¹¹ Thereafter, NECC voluntarily suspended all operations and expanded its recall to include all methylprednisolone acetate it had prepared, as well as all other drug products it had produced for intrathecal administration.¹² On October 10, 2012, a second pharmacy operation owned by the same company voluntarily ceased operations.¹³ On October 16, 2012, the FDA and local police officers raided the NECC headquarters, seizing drug samples and company records as part of the FDA’s ongoing investigation into the company and its compounding practices.¹⁴

What is Compounding? Drug compounding is a process by which a pharmacist or doctor combines, mixes, or alters ingredients to create a medication tailored to the needs of an individual patient.¹⁵ This process has historically been used to prepare medications that are not commercially available or when a particular patient is unable to take a mass-produced pharmaceutical product.¹⁶

Until the 1950s, when the mass production of prescription medications truly began in earnest, it is estimated that approximately 80% of all prescription medications were compounded.¹⁷ This form of “traditional compounding” involved pharmacists only preparing compounded drugs upon the receipt of a valid prescription from a healthcare provider licensed to prescribe medication.¹⁸ However, drug compounding has become a big business over the last couple of decades. Now, it is estimated that compounded drugs represent thirty-seven million prescriptions in the United States each year, representing 3% of the $300 billion prescription drug industry in the United States.¹⁹ Large-scale compounding pharmacies, like NECC, are often licensed to distribute their products to medical providers and clinics in all fifty states and, in many cases, are producing large quantities of these drugs.²⁰

While in the past, traditional compounding was focused on providing drugs that met the specific needs of individual patients, today it appears that large-scale drug compounding largely serves a different purpose. Physicians often cite the lower cost and widespread availability of compounded drugs as compared to brand-name drugs as the biggest advantages to utilizing compounding pharmacies.²¹ For instance, in the case of the steroid methylprednisolone acetate being produced and distributed by NECC, the FDA approved a brand-name version of this drug developed, patented, and manufactured by Pfizer — Depo-Medrol — in 1959.²² After Pfizer’s patent on Depo-Medrol expired, generic versions of the drug were widely available on the market for some time.²³ The steroid, however, became scarce in recent years after a number of generic manufacturers discontinued supplying the drug, causing the price to skyrocket from $3.00 for a multi-dose vial to $40.00 per vial.²⁴ Compounding pharmacies largely filled this vacuum by producing a compounded version of the drug, which costs between $15.00 and $20.00 for a multi-dose vial.²⁵

Not the First Time Compounding has Come Under Fire… In the wake of the fungal meningitis outbreak, compounding pharmacies have come under intensifying public scrutiny and media attention. Reports show that since 2001, the FDA has issued more than forty warning letters to compounding pharmacies nationwide for issues such as producing banned compounds, distributing drugs that were adulterated or contaminated, and selling medication in improper dosages or without accurate labels.²⁶ In this same time frame, it is reported that more than two dozen deaths and scores of injuries and illnesses have been linked to medications produced and distributed by compounding pharmacies.²⁷ For instance:

• In 2001, three people died from bacterial meningitis when a San Francisco Bay area physician injected twelve patients with a contaminated compounded drug.
• In September 2005, three people died and several others were sickened at a Virginia hospital after receiving drugs from a compounding pharmacy in Maryland.
• In March 2007, two patients in Washington and Oregon died after receiving excessive doses of an intravenous pain medication that was incorrectly measured by a compounding pharmacy in Texas.
• In March 2011, nine patients in Alabama died after receiving contaminated nutritional supplements prepared by a local compounding pharmacy.
• In March 2012, thirty-three patients in seven states developed fungal eye infections following surgery during which they were injected with contaminated drugs prepared by a Florida compounding pharmacy.²⁸

Regulation of Compounding Pharmacies and Legal Battles… Neither compounded drugs nor compounding pharmacies are discussed in any great detail anywhere in the 1938 law that authorized the FDA to regulate virtually all aspects of the manufacture, marketing, and distribution of drugs in the United States. Given the unclear application of the FDCA to the activities of compounding pharmacies, for some fifty years the FDA generally left regulation of compounding and compounding pharmacies to the states.²⁹ However, in the 1990s, the FDA became concerned that some pharmacists were manufacturing and selling drugs beyond what was traditionally understood to be the business of compounding, while continuing to avoid the requirements of the FDCA.³⁰

Therefore, in 1992, the FDA issued a Compliance Policy Guide (CPG) titled Manufacture, Distribution, and Promotion of Adulterated, Misbranded, or Unapproved New Drugs for Human Use by State-Licensed Pharmacies.³¹ While this CPG explicitly recognized that “a licensed pharmacist may compound drugs extemporaneously after receipt of a valid prescription for an individual patient,” and that such activity would not be subject to the Agency’s enforcement discretion, the CPG suggested that the FDA would become more active in enforcing the requirements of the FDCA against compounding pharmacies whose activities raised concerns that they were actually acting as drug manufacturers as opposed to traditional compounders.³² Specifically the CPG contained a list of nine factors meant to guide the Agency in determining whether future enforcement actions were appropriate. These factors, which the Agency determined were suggestive of the manufacture of drugs that would subject a compounding pharmacy to the requirements of the FDCA, were as follows:

1. Soliciting business […] to compound specific drug products […];
2. Compounding, regularly, or in inordinate amounts, drug products that are commercially available in the marketplace and that are essentially generic copies of commercially available, FDA-approved drug products;
3. Receiving, storing, or using drug substances without first obtaining written assurance from the supplier that each lot of the drug substance has been made in an FDA-approved facility;
4. Receiving, storing, or using drug components not guaranteed or otherwise determined to meet official compendia requirements;
5. Using commercial scale manufacturing or testing equipment for compounding drug products;
6. Compounding inordinate amounts of drugs in anticipation of receiving prescriptions in relation to the amounts of drugs compounded after receiving valid prescriptions;
7. Offering compounded drug products at wholesale to other state licensed persons or commercial entities for resale;
8. Distributing inordinate amounts of compounded products out of state; and
9. Failing to operate in conformance with applicable state law regulating the practice of pharmacy.³³

Despite a legal victory upholding the validity and effect of this CPG,³⁴ there is very little evidence that the FDA significantly increased or otherwise altered its enforcement activities vis-à-vis compounding pharmacies in the years that followed the issuance of the CPG.

Then, in 1997, the federal Food and Drug Administration Modernization Act (FDAMA) was signed into law, adding section 503A to the FDCA in an attempt to clarify the status of pharmacy compounding under the Act. The Act adopted many of the policies contained in the FDA’s 1992 CPG and created legislation empowering the FDA to regulate the activities of compounding pharmacies.³⁵ The FDAMA also explicitly distinguished compounding from manufacturing of drugs and provided for certain exemptions under which compounded products would not be viewed as “new drugs” under the FDCA.³⁶

First, in order to have qualified for exemption under the FDAMA, a drug would have to be compounded by a licensed pharmacist or physician in response to a valid prescription for an identified individual patient. Or, if prepared before the receipt of such a prescription, the drug would have to be made only in “limited quantities” and in response to a history of the licensed pharmacist’s or physician’s receipt of valid prescription orders for that drug product within an established relationship between the pharmacist, the patient, and the prescriber.³⁷ Second, the compounded drug would have to be made from approved ingredients that met certain manufacturing and safety standards,³⁸ and the compounded drug could not have appeared on an FDA list of drug products that had been withdrawn or removed from the market because they were found to be unsafe or ineffective.³⁹ Third, the pharmacist or physician compounding the drug could not “compound regularly or in inordinate amounts (as defined by the Secretary) any drug products that were essentially copies of a commercially available drug product.”⁴⁰ Fourth, the drug product could not have been identified by the FDA as a drug product that presented demonstrable difficulties for compounding in terms of safety or effectiveness.⁴¹ Fifth, in states that had not entered into a “memorandum of understanding” with the FDA addressing the distribution of “inordinate amounts” of compounded drugs in interstate commerce, the pharmacy, pharmacist, or physician compounding the drug could not distribute compounded drugs out of state in quantities exceeding 5% of that entity’s total prescription orders.⁴² Finally, the prescription must have been “unsolicited” and the pharmacy, licensed pharmacist, or licensed physician compounding the drug could “not advertise or promote the compounding of any particular drug, class of drug, or type of drug.”⁴³ The pharmacy, licensed pharmacist, or licensed physician could, however, “advertise and promote the compounding service.”⁴⁴

Shortly after the enactment of the FDAMA, a group of licensed pharmacists, in Western States Med. Ctr. v. Shalala, brought an action specifically challenging the advertising and promotion restrictions contained in the Act’s exemption provisions, claiming that these provisions constituted unconstitutional restrictions of commercial speech under the First Amendment.⁴⁵ In response, the government urged that three substantial interests underlied the FDAMA: 1) the interest in “preserv[ing] the effectiveness and integrity of the FDCA’s new drug approval process and the protection of the public health that it provides; 2) the interest in “preserv[ing] the availability of compounded drugs for those individual patients who, for particularized medical reasons, cannot use commercially available products that have been approved by the FDA”; and 3) “[a]chieving the proper balance between those two independently compelling but competing interests is a substantial government interest.”⁴⁶ Ultimately, the United States Supreme Court in Western States held that the advertising and promotional restrictions contained in the FDAMA were unconstitutional.⁴⁷ In doing so, however, the Court, in dicta, suggested that several means of drawing a line between compounding and large-scale manufacturing were possible, including many of the very same factors upon which the FDA relied to distinguish compounding from manufacturing in its 1992 CPG.⁴⁸ But, maybe most importantly, the Court decided that it could not review the holding of the Ninth Circuit Court of Appeals, which held that the advertising and promotional provisions of the law were not severable from the remainder of the statutory provisions because neither party petitioned for certiorari on that issue — rendering the entire statutory section relating to compounding pharmacies invalid.⁴⁹

In the wake of Western States, the FDA issued a revised CPG in 2002 indicating its position that the entirety of the FDAMA had been struck down and once again addressing its continuing but relatively limited role in the regulation of compounding.⁵⁰ Just as before Western States, going forward, the FDA would only involve itself in limited compounding drug cases involving only the most egregious activities.⁵¹

However, as issues with compounding pharmacies continued to mount, calls for stricter regulation by the federal government grew, but so did lobbying efforts by compounding pharmacists. In 2003, when an FDA oversight committee on pharmacy compounding was proposed as part of a bill on the government’s Medicare health plan for the elderly, health officials voiced concerns regarding the safety and efficacy of compounded drugs.⁵² For instance, Sarah Sellers, a pharmacist who worked in compounding before joining the FDA, testified: “Professional standards for sterile compounding have not been consistently applied,” and “[t]he absence of federal compounding regulations has created vulnerability in our gold standard system for pharmaceutical regulation.”⁵³ Similarly, Dr. Steven Galson, also with the FDA, related how limited testing of compounded drugs found that ten out of twenty-nine compounded drug samples tested failed one or more quality tests compared to only four of 3,000 samples of drugs manufactured by drug manufacturers subject to FDA regulation.⁵⁴ Despite this testimony, intensive lobbying efforts by the compounding industry ultimately led to the downfall of the proposed legislation.⁵⁵

Then, a group of compounding pharmacists brought yet another action against the FDA which challenged the Agency’s new assertions of authority in the 2002 CPG.⁵⁶ In this action, Med. Ctr. Pharmacy v. Gonzales, the plaintiffs sought, in part, a declaration that drugs compounded by licensed pharmacists were not “new drugs” per se under the FDCA.⁵⁷ Ultimately, the Fifth Circuit Court of Appeals found that compounded drugs are not uniformly exempt from the new drug approval requirements of the FDCA, but instead that the statutory scheme provides for a limited exemption from the new drug approval requirements for compounded drugs that comply with the legally valid conditions set forth in the FDAMA (which had been previously struck down in Western States).⁵⁸ In coming to its conclusion, the Fifth Circuit explicitly held, contrary to the Ninth Circuit in Western States, that the invalidated portion of FDAMA was severable, and therefore, the remaining provisions in the statute relating to compounding pharmacies remain in full force and effect.⁵⁹ Therefore, according to the Fifth Circuit, compounding pharmacies are not exempt from the requirements of the FDCA as a matter of law, but instead, as long as they meet the “traditional compounding” exemptions set forth in the FDAMA, they would remain exempt from the significant “new drug” requirements of the FDCA.⁶⁰ Despite this finding, the FDA’s approach to regulating compounding pharmacies did not significantly change in the years following Med. Ctr. Pharmacy.

Finally, in 2007, senators from Massachusetts, Kansas, and North Carolina introduced sweeping legislation, titled The Safe Drug Compound Act of 2007, which again sought to give the FDA more power to regulate compounding pharmacies.⁶¹ This legislation would have given the FDA authority to inspect all retail compounding pharmacies and their records. Additionally, it would have restricted interstate distribution of compounded products by requiring pharmacists to provide detailed documentation on such orders and advising state boards to discourage distribution of inordinate amounts of interstate compounded products, while also requiring physicians to document when compounded medications were needed.⁶² Finally, it also called on the FDA to establish federal requirements for sterile compounding.⁶³

Opponents of this proposed legislation argued that it would not be practical to regulate compounded products as new drugs and that the costs and time involved in complying with the documentation requirements would complicate the prescribing and dispensing of these drugs, thus restricting access to patients who need them.⁶⁴ They further stressed that the proposed legislation would interfere with the physician-pharmacist-patient relationship by granting the FDA authority to determine when the medications are needed.⁶⁵ Again, in the face of significant opposition by the compounding pharmacists’ lobby, this bill failed.⁶⁶ Thereafter, regulation of compounding pharmacies has remained largely with the states through the present day.

What Happens Next? Opinions vary as to what could have and what should have been done to avoid the fungal meningitis outbreak that continues to spread across the country. Some believe that regulation should remain largely with the states, while others believe that the FDA could have acted under the authority it already has. However, it is difficult to deny that evidence to date would suggest that, at least in the case of NECC, varying state regulations combined with a lack of FDA oversight has opened the door for safety problems to arise with compounding pharmacies. This evidence has led to reenergized efforts in Congress to enact wide-ranging legislation to regulate compounding pharmacies. Recently, Rep. Edward Markey, D-Massachusetts, said in a statement announcing new efforts to pass federal legislation to ensure that the FDA has authority to oversee these pharmacies: “Unfortunately, compounding pharmacies are a 19th-century service operating in a 21st-century industry, and we need to update and strengthen the rules that govern these operations so that patients can safely benefit from the unique service they offer.”⁶⁷ Similarly, Rep. Rosa DeLauro, D-Connecticut, wrote in a recent letter to the Health and Human Services Secretary, Kathleen Sebelius: “This outbreak and the corresponding recall of products from the New England Compounding Center expose dramatic gaps in our drug safety standards that create an unnecessary risk to the public health.”⁶⁸ Representative DeLauro went on to write that while “some compounding pharmacies have evolved into large-scale operations that produce sizable quantities of some drugs […] the FDA lacks clear authority for ensuring the safety of these products and last updated its guidance for [the] industry in 2002. Because of the current vague patchwork of federal and state oversight and regulation of these pharmacies, consumers are left at risk and often unaware of the differences between these products and others.”⁶⁹

At the same time, the FDA cites conflicting court rulings as the main obstacle for change. FDA Deputy Commissioner Deborah M. Autor recently stated: “We need to come together and work together […]. It’s really unfortunate that it takes a crisis to bring this kind of change. But that often is the case. It is in crisis that we have the opportunity to make change. I will say that enforcement in this case and in other compounding cases is complicated greatly by litigation and by a lack of clarity in the law.”⁷⁰

In the end, as doctors continue to diagnose patients across the country with fungal meningitis and as many of those patients continue to succumb to this rare condition, it remains unclear how far the federal government will be able to go in enacting sweeping regulations of the drug compounding industry. However, with the continuing onslaught of media attention and public outcry keeping this issue front and center, it seems likely that some form of federal legislation will surely follow. While successful in the past, the lobbying efforts of compounding pharmacies will likely be overmatched this time around. However, as in the past, it seems certain that the courts will have the last word on any enacted legislation. Given past history, what happens next is anyone’s guess.

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[1] Meningitis is an inflammation of the membranes that envelop the brain and spinal cord, which causes people to suffer from fever, new or worsening headache, nausea, and symptoms consistent with stroke. See Dorland’s Illustrated Medical Dictionary, 1,004 (27th ed. 1988).

[2] Centers for Disease Control and Prevention, CDC Newsroom, <http://www.cdc.gov/media/releases/2012/t1004_meningitis_outbreak.html>. Last accessed October 11, 2012.

[3] Centers for Disease Control and Prevention, Multistate Meningitis Outbreak Investigation, <http://www.cdc.gov/HAI/outbreaks/meningitis.html>. Last accessed October 11, 2012.

[4] Bliss, J., The Tennessean, October 15, 2012, “Meningitis Outbreak Keeps Local, CDC Labs Busy.”

[5] Wilemon, T., The Tennessean, October 11, 2012, “Meningitis Outbreak: Harmful Meds Are Sole Weapon.”

[6] Id.

[7] Id.

[8] Centers for Disease Control and Prevention, Multistate Meningitis Outbreak Investigation, supra, note 3.

[9] Centers for Disease Control and Prevention, CDC Newsroom, supra, note 2. Brown, J. & Marsteller, D., The Tennessean, October 12, 2012, “Meningitis Outbreak: Compounding Pharmacies Have Advantages, Pain Doctors Say.”

[10] Roche, Jr., W., and Wilemon, T., The Tennessean, October 12, 2012, “Meningitis Outbreak: Drug Regulators Seek More Oversight on Compounding Pharmacies.”

[11] Centers for Disease Control and Prevention, CDC Newsroom, supra, note 2.

[12] Id.

[13] White, J., The Wall Street Journal, October 11, 2012, “Meningitis Case Count Rises to 170, Putting a Fast-Growing Industry on the Spot.”

[14] Smith, E., The Boston Herald, October 17, 2012, “Feds Raid Pharmacy in Outbreak.”

[15] Thompson v. W. States Med. Ctr., 535 U.S. 357, 360–61 (2002).

[16] Id. at 361.

[17] Lam, Carol, Pharmacy Compounding – Regulatory Issues, <http://regulatory.usc.edu/Journal.htm> (last visited October 16, 2012).

[18] Id.

[19] White, J., supra, note 13; Cohen, E.; Dellorto, D.; and Hudson, W., CNN, October 10, 2012, “Meningitis Outbreak Highlights Failed Oversight Efforts.”

[20] Cohen, et al., supra, note 19.

[21] Brown, et al., supra, note 9.

[22] Id.

[23] Id.

[24] Id.

[25] Id.

[26] Eisler, P., USA Today, October 12, 2012, “Deaths, Infections Tied to ‘Compounding’ Drugs.”

[27] Id.

[28] Id.

[29] Western States Med. Ctr., supra, note 15, at 362.

[30] Id.

[31] Professionals and Patients for Customized Care v. Shalala, 847 F.Supp. 1359, 1362 (S.D. Tex. 1994).

[32] Professionals and Patients for Customized Care v. Shalala, 56 F.3d 592, 593–4 (5th Cir. 1995).

[33] Id. at 597.

[34] See generally Professionals and Patients for Customized Care, supra, note 32.

[35] W. States Med. Ctr., supra, note 15, at 364.

[36] Id. at 363.

[37] Id. at 364 (citing 21 U.S.C. § 353a(a)).

[38] Id. (citing 21 U.S.C. § 353a(b)(1)(A)-(B)).

[39] Id. (citing 21 U.S.C. § 353a(b)(1)(C)).

[40] Id. (citing 21 U.S.C. § 353a(b)(1)(D)).

[41] Id. (citing 21 U.S.C. § 353a(b)(3)(A)).

[42] Id. (citing 21 U.S.C. § 353a(b)(3)(B)).

[43] Id. (citing 21 U.S.C. § 353a(a)).

[44] Id. at 364–65 (citing 21 U.S.C. § 353a(c)).

[45] Western States Med. Ctr. v. Shalala, 69 F.Supp.2d 1288 (D. Nev. 1999).

[46] Western States Med. Ctr., supra, note 15, at 368.

[47] Id. at 377.

[48] Id. at 372.

[49] Id. at 366.

[50] Med. Ctr. Pharmacy v. Mukasey, 536 F.3d 383, 391 (5th Cir. 2008).

[51] See, e.g., In re Establishment Inspection of: Wedgewood Village Pharmacy, Inc., 270 F.Supp2d 525 (D.N.J. 2003).

[52] Begley, S., Reuters, October 16, 2012, “Insight: How Compounding Pharmacies Rallied Patients to Fight Regulation.”

[53] Cohen, et al., supra, note 18; Begley, S., supra, note 52.

[54] Begley, supra, note 52.

[55] Id.

[56] See Med. Ctr. Pharmacy v. Gonzales, 451 F.Supp.2d 854 (W.D. Tex. 2006).

[57] Id. at 856.

[58] Med. Ctr. Pharmacy v. Mukasey, supra, note 50, at 394.

[59] Id. at 401.

[60] Id. at 405.

[61] Lam, supra, note 17.

[62] Id.

[63] Id.

[64] Id.

[65] Id.

[66] Id.; Begley, supra, note 52.

[67] Cohen, et al., supra, note 18.

[68] Id.

[69] Id.

[70] Roche, et al., supra, note 10.

Finis