Are You Interested in the FDA's Guidance on Outsourcing Facilities? Your Time to Comment Is Ending Soon!

The Food and Drug Administration (FDA) has issued five draft documents addressing outsource facility registration; repackaging of human drug products; mixing, diluting, or repackaging biologic products; adverse event reporting for outsourcing facilities; and draft memorandum of understanding (MOU) between a state and the FDA for compounded drug distribution. Comments to four of the five are due May 20, so there is just a short time left to be heard.

If implemented as currently drafted, the guidance will have significant implications on client operations. This update is intended to provide you with a high-level summary of the five draft documents and remind you to put "submit comments" on the top of your to-do list if you have any stake in the outcome.

Registration as an Outsource Facility

In response to questions it has received about the types of activities that allow for outsourcing facility registration, and to provide potential registrants with information about the regulatory impact of doing so, the FDA issued draft guidance entitled For Entities Considering Whether to Register as Outsourcing Facilities Under Section 503B of the Federal Food, Drug, and Cosmetic Act. By way of background, the guidance restates the definition of an outsourcing facility as “a facility at one geographical location or address that—(i) is engaged in compounding of sterile drugs; (ii) has elected to register as an outsourcing facility; and (iii) complies with all of the requirements of [Section 503B].” The guidance goes on to list the various conditions that must be met in order for a human drug product compounded in an outsourcing facility to qualify for Section 503B’s exemptions from drug approval, labeling, and track and trace requirements in the Food, Drug, and Cosmetic Act (“FD&C Act” or “Act”).

Based on the outsourcing facility definition, and the exemptions available through Section 503B, the guidance makes clear that a facility that does not compound the types of products included in the definition or products that qualify for the exemptions should not register. This includes the following:

• a facility that is not engaged in the compounding of sterile, human drugs;
• a facility that does not:
  • compound all of its drugs in accordance with Section 503B; and,
  • comply with current good manufacturing practice (CGMP) requirements; and
• a facility that only conducts:
  • repackaging;
  • non-sterile or animal compounding; or,
  • mixing, diluting, or repackaging of biological products subject to licensure under Section 351 of the Public Health Service Act.

A facility producing drug products that qualify for the exemptions available through Section 503B and that elects to register as an outsourcing facility should understand that the FDA will regulate all of that facility's compounded drugs under Section 503B—not Section 503A. Therefore, even if the facility satisfies the conditions in Section 503A, it is not eligible for the exemptions provided under that section. A registered facility should also note that— in addition to the sterile human drugs it compounds—any non-sterile human drugs it compounds are eligible for the approval, labeling, and track and trace exemptions available through Section 503B. The comment period for this draft guidance will end on May 20, 2015.

Repackaging of Drug Products by Pharmacies, Federal Facilities, and Outsourcing Facilities

The FDA repackaging guidance describes conditions under which the FDA will not take action against hospitals, state-licensed pharmacies, federal facilities, and outsourcing facilities engaged in repackaging of human drugs. In its guidance entitled Repackaging of Certain Human Drug Products by Pharmacies and Outsourcing Facilities; Draft Guidance for Industry; Availability, the FDA explains that it will not take action for violations of Section 505 (new drug applications), Section 502(f)(1) (labeling and directions for use), and where specified, Section 501(a)(2)(B) (CGMPs) of the FD&C Act if certain conditions are met.

Under the FDA’s view, repackaging involves taking a finished drug product from the container in which it was distributed by the original manufacturer and placing it into different containers. Repackaging also includes placing the contents of multiple containers of the same finished product into one container. Generally, repackaged drug products are not exempt from FD&C Act provisions related to premarket approval, misbranding, and adulteration. Further, the compounding provisions of the FD&C Act do not address repackaging. Thus, the guidance is intended to describe how the FDA will address repackaging conducted by pharmacies, federal facilities, and outsourcing facilities.

The guidance also addresses the repackaging of drugs on the FDA’s drug shortage list by hospitals and health systems, including repackaging of single-dose vials. Under Section 506F of the Act, select hospitals are exempt from registration requirements under the Act if certain conditions are met. A primary condition is that the drugs are, or have recently been, listed on the FDA’s drug shortage list and are repackaged for use by the hospital or health system. Section 506F, however, has a termination clause stating that when final guidance is issued clarifying the FDA’s policy regarding hospital pharmacy repackaging, Section 506F will no longer apply. Consequently, when the draft guidance becomes final, Section 506F will no longer apply and hospital repackaging operations should follow the final guidance.

As noted, the FDA will not take action for certain violations of the Act when a state-licensed pharmacy, federal facility, or outsourcing facility (including those within a hospital or health system) repackages drug products in accordance with certain conditions summarized below:

• The drug is repackaged in a state-licensed pharmacy, federal facility or outsourcing facility.
• If the drug is repackaged in a pharmacy or federal facility, it must be repackaged and distributed pursuant to (1) a valid patient-specific prescription or (2) a written order in a patient’s chart in a health care setting.
• The drug is repackaged under the direct supervision of a licensed pharmacist.
• The drug is repackaged in a manner that does not conflict with approved drug product labeling.
• The repackaged drug must be assigned a beyond-use-date (BUD). BUDs may vary depending on the type of drug being repackaged and the original product labeling.
• The repackaged drug is not sold or transferred by an entity other than the entity that repackaged the drug.
• The repackaged drug product is distributed only in states in which the facility repackaging the drug meets all applicable state requirements.
• Outsourcing facilities engaged in repackaging must follow additional requirements regarding labeling, drug product information, and adverse event reporting.

Please note that the conditions outlined above are not exhaustive. Clients should seek additional information from the draft guidance or by contacting a Quarles & Brady attorney. Public comment on the draft guidance will close on May 20, 2015.

Mixing, Diluting, and Repackaging Biological Products

The FDA mixing, diluting, and repackaging guidance describes conditions under which the FDA will not take action against state-licensed pharmacies, federal facilities, and outsourcing facilities engaged in mixing, diluting, or repackaging of biological products that are subject to licensure under Section 351 of the Public Health Service (PHS) Act. In its guidance entitled, Mixing, Diluting, or Repackaging Biological Products Outside the Scope of an Approved Biologics License Application; Draft Guidance for Industry; Availability, the FDA explains that it will not take action for violations of Section 351 of the PHS Act and Sections 502(f)(1) (labeling of drug products with adequate directions for use) and, where specified, 501(a)(2)(B) (concerning CGMP) of the FD&C Act if certain conditions are met.

Pharmacies, federal facilities, and outsourcing facilities are covered by this policy guidance when they mix, dilute, or repackage biological products outside the scope of the product's BLA according to the product's approved labeling. The FDA uses the terms "mixing, diluting, and repackaging" to describe distinct sets of activities, and the way that the FDA defines these terms could be determinative as to whether the guidance applies to your facility. For purposes of the guidance, the FDA has adopted the following definitions:

• "Mixing" means combining an FDA-licensed biological product with one or more ingredients.
• "Repackaging" means taking a licensed biological product from the container in which it was distributed by the original manufacturer and placing it into a different container without further manipulation of the product.

However, these activities do not include the mixing or diluting of a biological product at the point of care for immediate administration to a single patient after receipt of a patient-specific prescription or order for that patient. Similarly, the FDA does not consider the removal of a biological product from the original container for this purpose to be "repacking" the biologic.

When a pharmacy, federal facility, or outsourcing facility engages in mixing, diluting, or repackaging a licensed biological product according to the description of these activities provided above, the FDA does not intend to take action for violations of Section 351 of the PHS Act or Sections 502(f)(1) or 501(a)(2)(B) of the FD&C Act when a fairly extensive list of conditions are met. A selection of these conditions are provided below:

• The biological product that is mixed, diluted, or repackaged is an FDA-licensed biological product, not a biological product licensed for further manufacturing use only or a bulk drug substance.
• If the biological product is mixed, diluted, or repackaged in a state-licensed pharmacy or a federal facility (but not an outsourcing facility), it is mixed, diluted, or repackaged after (a) the receipt of a valid prescription for an identified, individual patient directly from the prescribing practitioner, patient, or patient's agent; or (b) a written order in a patient's chart in a health care setting, unless it is mixed, diluted, or repackage (but not distributed) in advance of receipt of such a prescription or a written order in a patient's chart in a quantity that does not exceed the expected demand for the biological product within the beyond use date (BUD) on the product, based on a history of receipt of prescriptions or orders for such a biological product for that time period.
• The biological product is mixed, diluted, or repackaged by or under the direct supervision of a licensed pharmacist.
• Except as permitted for a single dose vial, the biological product is mixed, diluted, or repackaged in a way that does not conflict with the approved labeling for the licensed biological product.
• The biological product is not sold or transferred by an entity other than the entity that mixed, diluted, or repackaged the biological product. A sale or transfer does not include administration of a biological product in a health care setting.

Please note that the FDA will not, under any conditions, permit facilities to mix, dilute, or repackage cell therapy products, gene therapy products, or vaccines outside the scope of the product's approved BLA. Therefore, these products must only be prepared and, if applicable to that product's use, repackaged under an approved BLA.

Furthermore, the conditions outlined above are far from exhaustive. Clients should seek additional information from the draft guidance or by contacting a Quarles & Brady attorney. Public comment on the draft guidance will close on May 20, 2015.

Adverse Event Reporting for Outsourcing Facilities

The FDA also published draft guidance regarding adverse event reporting entitled Adverse Event Reporting for Outsourcing Facilities Under Section 503B of the Federal Food, Drug, and Cosmetic Act. Under 21 USC 353b(b), an outsourcing facility must submit adverse event reports to the FDA. The adverse event reporting requirements apply to prescription drug products, including compounded drug products, regardless of whether the outsourcing facility distributes them pursuant to prescriptions. Facilities that fail to report adverse events may be subject to regulatory and enforcement action.

What to Report?

Outsourcing facilities must report drug events that are both serious and unexpected. However, the FDA has urged outsourcing facilities to report all serious adverse drug events, regardless of their unexpected nature. A serious adverse drug event means any adverse drug experience occurring at any dose that results in death, a life-threatening adverse drug experience, inpatient hospitalization or prolongation of existing hospitalization, persistent or significant disability/incapacity, or a congenital anomaly/birth defect. Further, important medical events that may not result in death, be life-threatening, or require hospitalization may be considered a serious adverse drug event if, when based upon appropriate medical judgment, the event may jeopardize the patient and may require medical or surgical intervention to prevent one of the adverse events listed above. A drug event is unexpected if it is not listed in the current labeling for the drug product.

After receiving information about the adverse drug event, an outsourcing facility should investigate and identify the following data elements: (1) an identifiable patient (specified by age or age category, gender, initials, date of birth, name, or patient identification number); (2) an identifiable reporter (specified by name, profession, or contact information); (3) a suspect drug, including its known product attributes; and (4) a serious adverse event.

A facility must submit an Alert Report to the FDA as soon as possible, but no later than 15 calendar days after first receiving information about the adverse event. Reports should be submitted as long as the facility has information on at least the suspect drug and adverse event. Facilities should continue to investigate the adverse event and maintain records of the steps that were taken to attempt to seek additional information. If new information is obtained, facilities must submit a follow-up report within 15 calendar days of receipt of the new information and submit Form FDA 3500A.

How to Report

The FDA has not yet updated its electronic system to accommodate outsourcing facilities; therefore, reports, forms, and attachments must be provided in hard copy and sent via U.S. mail. Among other things, each report should include a cover letter that indicates whether the report is a 15-day Alert Report or 15-day Alert Report-Follow-Up. Additionally, the outsourcing facility should provide: (1) hospital discharge summaries, autopsies/death certificates, relevant laboratory data, and other critical clinical data; (2) a list of other medical products the patient was taking at the time he or she experienced the adverse event and the manufacturer of those products; (3) a copy of the current labeling for the compounded drug product that is the subject of the report; and (4) a list of each component of a compounded drug product and its manufacturer, if the compounded drug contains multiple components.

Records of all adverse events required to be reported must be maintained for 10 years. These facilities must allow the FDA to inspect the records and the physical facilities. Finally, the FDA expects outsourcing facilities to have written procedures describing the handling of all complaints regarding a drug product. The public comment period ends on May 20, 2015.

Draft Memorandum of Understanding Between States and the FDA

Finally, the FDA released a Draft Memorandum of Understanding describing the responsibilities of a state that enters into the MOU with the FDA to distribute compounded human drug products. The draft MOU outlines responsibilities relating to (1) investigating and responding to complaints of compounded human drug products distributed outside of the state, and (2) distributing "inordinate amounts" of compounded human drug products within the state. Importantly, the MOU does not apply to drugs compounded by registered outsourcing facilities.

This MOU is significant because under the FD&C Act, in order for a compounded human drug to be exempt from rules regarding CGMP compliance, labeling with adequate directions for use, and FDA approval prior to marketing, the compounding must have taken place in a state that enters into the MOU with the FDA. If the state does not enter into the MOU, compounded human drug products may be distributed out-of-state only in quantities of five percent or less of the total prescription orders dispensed or distributed by the licensed pharmacy, pharmacist, or physician.

Investigation of Complaints of Drugs Distributed Outside of the State

The draft MOU requires states to investigate complaints related to compounded human drug products distributed outside of the state that, if left uncorrected, could lead to potential public health risks. This includes adverse drug experiences and product quality issues. The investigations performed by the state must include a determination of whether there is a potential public health risk or safety concern, as well as a confirmation that any risk or safety concern associated with the product is adequately contained. If the complaint is found to be valid, the state must ensure that the compounding pharmacy, pharmacist, or physician determines the root cause of the problem and undertakes sufficient corrective action to eliminate any current or future risk. The state must also notify the FDA within 72 hours of receiving any complaint relating to a compounded human drug product distributed outside of the state.

Interstate Distribution of Inordinate Amounts

The draft MOU also requires states to review compounding records to determine if the pharmacy, pharmacist or physician is distributing “inordinate amounts” of compounded human drug products within the state. The amount is inordinate if “the number of units of compounded human drug products distributed interstate during any calendar month is equal to or greater than 30 percent of the number of units of compounded and non-compounded drug products distributed or dispensed both intrastate and interstate by such pharmacy, pharmacist, or physician during that month.” The FDA provides an exception for prescriptions dispensed to a patient when the patient carries the drug across state lines after it has been dispensed at the compounding facility.

If the state determines an amount to be inordinate, the MOU requires the state to take certain actions, which may include a warning letter, enforcement action, suspension or revocation of a license, or other action consistent with state law. The state must also notify the FDA within seven days of identifying a pharmacy, pharmacist, or physician within its jurisdiction that has distributed inordinate amounts of compounded drug products interstate.

Termination

The state or FDA may terminate the agreement upon 30 days’ written notice of termination. If the agreement is terminated, the FDA will post a notice of termination on its website. The state will also be required to notify all pharmacies, pharmacists, and physicians within the state and advise them that compounded human drug products may be distributed out-of-state only in quantities that do not exceed five percent of the total prescription orders dispensed or distributed by the licensed pharmacy, pharmacist or physician.

The public comment period for the draft MOU ends on June 19, 2015.

As indicated above, the draft guidance and MOU will have a significant impact on the pharmacy industry. For more information, contact Susan Trujillo at 602-229-5318 / susan.trujillo@quarles.com, Ed Rickert at (312) 715-5139 / ed.rickert@quarles.com or your Quarles & Brady attorney.