Document ID: FDA-2014-N-1459-0001
Agency: fda
Document Type: Notice
Title: Memorandum of Understanding Addressing Certain Distributions of
Compounded Human Drug Products Between the States and the Food and Drug Administration; New Proposed Draft; Availability
Posted Date: 2015-02-19T05:00Z

[Federal Register Volume 80, Number 33 (Thursday, February 19, 2015)]
[Notices]
[Pages 8874-8881]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-03420]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2014-N-1459]

Memorandum of Understanding Addressing Certain Distributions of 
Compounded Human Drug Products Between the States and the Food and Drug 
Administration; New Proposed Draft; Availability

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice of availability; withdrawal.

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SUMMARY: The Food and Drug Administration (FDA or the Agency) is 
announcing the availability for public comment of a draft standard 
memorandum of understanding (MOU) entitled ``Memorandum of 
Understanding Addressing Certain Distributions of Compounded Human Drug 
Products Between the State of [insert State] and the U.S. Food and Drug 
Administration.'' The draft standard MOU describes the responsibilities 
of the State that chooses to sign the MOU in investigating and 
responding to complaints related to compounded human drug products 
distributed outside the State and in addressing the interstate 
distribution of inordinate amounts of compounded human drug products.
    FDA is also announcing the withdrawal of an earlier draft standard 
MOU entitled ``Memorandum of Understanding on Interstate Distribution 
of Compounded Drug Products,'' which was issued in January 1999. The 
January 1999 draft standard MOU is superseded by the new draft standard 
MOU.

DATES: FDA is withdrawing its draft standard MOU that published on 
January 21, 1999 (64 FR 3301), as of February 19, 2015. Submit either 
electronic or written comments on the new draft standard MOU by June 
19, 2015. Submit comments on information collection issues under the 
Paperwork Reduction Act of 1995 by June 19, 2015 (see the ``Paperwork 
Reduction Act of 1995'' section of this document).

ADDRESSES: Submit written requests for single copies of the MOU to 
Edisa Gozun, Center for Drug Evaluation and Research, Food and Drug 
Administration, 10903 New Hampshire Ave., Bldg. 51, Suite 5100, Silver 
Spring, MD 20993-0002. Send one self-addressed label to assist that 
office in processing your request. See the SUPPLEMENTARY INFORMATION 
section for electronic access to the new draft standard MOU.
    Submit electronic comments on the new draft standard MOU or on the 
collection of information to http://www.regulations.gov. Submit written 
comments to the Division of Dockets Management (HFA-305), Food and Drug 
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Edisa Gozun, Center for Drug 
Evaluation and Research, Food and Drug Administration, 10903 New 
Hampshire Ave., Bldg. 51, Suite 5100, Silver Spring, MD 20993-0002, 
301-796-3110.

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 503A of the Federal Food, Drug, and Cosmetic Act (the FD&C 
Act) (21 U.S.C. 353a) describes the conditions that must be satisfied 
for drug products compounded by a licensed pharmacist or licensed 
physician to be exempt from the following sections of the FD&C Act: (1) 
Section 501(a)(2)(B) (21 U.S.C. 351(a)(2)(B)) (concerning current good 
manufacturing practice (CGMP) requirements), (2) section 502(f)(1) (21 
U.S.C. 352(f)(1)) (concerning the labeling of drugs with adequate 
directions for use), and (3) section 505 (21 U.S.C. 355) (concerning 
the approval of drugs under new drug applications or abbreviated new 
drug applications).
    One of the conditions to qualify for the exemptions listed in 
section 503A of the FD&C Act is that (1) the drug product is compounded 
in a State that has entered into an MOU with FDA that addresses the 
distribution of inordinate amounts of compounded drug products 
interstate and provides for appropriate investigation by a State agency 
of complaints relating to compounded drug products distributed outside 
such State; or (2) if the drug product is compounded in a State that 
has not entered into such an MOU, the licensed pharmacist, pharmacy, or 
physician does not distribute, or cause to be distributed, compounded 
drug products out of the State in which they are compounded in 
quantities that exceed 5 percent of the total prescription orders 
dispensed or distributed by such pharmacy or physician (see section 
503A(b)(3)(B)(i) and (b)(3)(B)(ii) of the FD&C Act).
    Section 503A(b)(3)(B) of the FD&C Act directs FDA to develop, in 
consultation with the National Association of Boards of Pharmacy 
(NABP), a standard MOU for use by the States in complying with section 
503A(b)(3)(B)(i).

II. Previous Efforts To Develop a Standard MOU

    In the Federal Register of January 21, 1999 (64 FR 3301), FDA 
announced the availability for public comment of a draft standard MOU, 
developed in consultation with NABP (1999 draft

[[Page 8875]]

standard MOU). Over 6,000 commenters submitted comments on the 1999 
draft standard MOU. Because of litigation over the constitutionality of 
the advertising, promotion, and solicitation provisions in section 
503A,\1\ the draft standard MOU was never completed. In 2013, section 
503A of the FD&C Act was amended by the Drug Quality and Security Act 
(DQSA) (Pub. L. 113-54) to remove the advertising, promotion, and 
solicitation provisions that were held unconstitutional, and FDA is 
implementing section 503A, including the provisions on the MOU. By this 
notice, FDA is withdrawing the 1999 draft standard MOU, and the new 
draft standard MOU made available today supersedes that draft standard 
MOU.
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    \1\ The conditions of section 503A of the FD&C Act originally 
included restrictions on the advertising or promotion of the 
compounding of any particular drug, class of drug, or type of drug 
and the solicitation of prescriptions for compounded drugs. These 
provisions were challenged in court and held unconstitutional by the 
U.S. Supreme Court in 2002. See Thompson v. Western States Med. 
Ctr., 535 U.S. 357 (2002).
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III. New 503A Guidance

    Immediately after the enactment of the DQSA, in December 2013, the 
Agency published a draft guidance on section 503A of the FD&C Act 
entitled ``Pharmacy Compounding of Human Drug Products Under Section 
503A of the Federal Food, Drug, and Cosmetic Act'' (2013 draft 503A 
guidance) (see 78 FR 72901 (December 4, 2013) announcing the 
availability of the draft guidance). That draft guidance described 
FDA's proposed policy with regard to specific provisions of section 
503A of the FD&C Act that require rulemaking or other action by FDA, 
such as the MOU provisions. Thirty-one commenters on the 2013 draft 
503A guidance offered FDA their views on the MOU provisions of section 
503A. FDA considered these comments in developing the new draft 
standard MOU. The final 503A guidance, published July 2, 2014 (see 79 
FR 37742 announcing the availability of the final 503A guidance), 
states that FDA does not intend to enforce the 5 percent limit on 
distribution of compounded drug products out of the State in which they 
are compounded until after FDA has finalized an MOU and made it 
available to the States for their consideration and signature. After 
considering any comments on the new draft standard MOU submitted to 
this docket, FDA intends to finalize the standard MOU and make it 
available for signature by individual States. FDA will determine at the 
time of publication of the final MOU how long it will allow States to 
consider whether to sign the MOU before FDA begins to enforce the 5 
percent limit in those States that have not signed an MOU.

IV. New Draft Standard MOU

    FDA has now developed a new draft standard MOU on which it is 
soliciting public comment. FDA has consulted with NABP in developing 
this new draft standard MOU. FDA also considered the comments submitted 
in 1999 on the previous draft standard MOU, as well as comments on the 
MOU provisions it received in connection with the published 2013 draft 
503A guidance. Key provisions of the new draft standard MOU are 
summarized and discussed in this section of the document and, where 
appropriate, compared to the provisions in the 1999 draft standard MOU.

A. Investigation of Complaints

    The new draft standard MOU provides that States that enter into the 
MOU will agree to:
     Investigate complaints relating to human drug products 
compounded in the State and distributed outside the State, including 
complaints about adverse drug experiences or certain product quality 
issues to, among other things, determine whether there is a potential 
public health risk or safety concern, and confirm that any risk or 
safety concern is adequately contained;
     As appropriate, take action to ensure that the relevant 
compounding pharmacy, pharmacist, or physician determines the root 
cause of the problem and eliminates any public health risk identified 
in relation to the complaint;
     Notify FDA within 72 hours of any complaints relating to a 
compounded human drug product distributed outside the State involving a 
potential public health risk or immediate safety concern, such as a 
report of a serious adverse drug experience or serious product quality 
issue, the State's initial assessment of the validity of the complaint, 
and any actions the State has taken or plans to take to address such 
complaints;
     Provide FDA with certain information about the complaint, 
including the following:
    [cir] Name and contact information of the complainant;
    [cir] name and address of the pharmacist/pharmacy/physician that is 
the subject of the complaint;
    [cir] a description of the complaint, including a description of 
any compounded drug product that is the subject of the complaint;
    [cir] the State's initial assessment of the validity of the 
complaint relating to a compounded human drug product distributed 
outside the State; and
    [cir] a description and date of any actions the State has taken to 
address the complaint; and
     Maintain records of the complaints it receives, the 
investigation of each complaint, and any response to or action taken as 
a result of a complaint, beginning when the State receives notice of 
the complaint. The draft standard MOU says that the State agrees to 
maintain these records for at least 3 years, beginning on the date of 
final action or the date of a decision that the complaint requires no 
action.
    The new draft standard MOU, as compared to the 1999 draft standard 
MOU, clarifies that the types of complaints of compounded human drug 
products that should be investigated include any adverse drug 
experience (not just serious adverse drug experiences, which were 
identified as an example of the types of complaints to be investigated 
in the 1999 draft standard MOU) and product quality issues that, if 
left uncorrected, could lead to potential public health risks or safety 
concerns. Even nonserious adverse drug experiences and product quality 
issues can be indicative of problems at a compounding facility that 
could result in product quality defects leading to serious adverse drug 
experiences if not corrected. For example, inflammation around the site 
of an injection can indicate product contamination from inadequate 
sterile practices at the compounding pharmacy. If the pharmacy has 
inadequate sterile practices, other more serious contamination could 
result in serious adverse events.
    FDA is clarifying that the complaints that States agree to 
investigate under the MOU are only those complaints that are made about 
compounded human drug products distributed outside the State. In 
contrast to the 1999 draft standard MOU, the new draft standard MOU 
does not contain a provision that would require the States entering 
into the MOU with FDA to agree to investigate alleged violations of the 
FD&C Act. Upon further reflection, FDA has tentatively concluded that 
it would be more appropriate for FDA to determine whether a particular 
action is a violation of Federal law. Of course, if any State 
identifies a potential violation of Federal law, it is encouraged to 
report it to FDA.
    Furthermore, the new draft standard MOU does not include specific 
directions to the States relating to how to conduct their investigation 
of

[[Page 8876]]

complaints. Rather, as recommended by comments previously submitted on 
the 1999 draft standard MOU, the details of such investigations are 
left to the States' discretion.
    States signing the new standard MOU would agree to notify FDA about 
certain complaints and provide FDA with certain information about the 
complaint so FDA could investigate the complaint itself, or take other 
appropriate action.\2\
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    \2\ FDA is currently considering whether to propose regulations 
or issue guidance documents to further its implementation of section 
503A(b)(3)(B) of the FD&C Act. Notice of any such action will be 
provided in the Federal Register.
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B. Inordinate Amounts

    The new draft standard MOU provides that States that enter into the 
MOU will agree to:
     Review compounding records during inspections of 
compounding pharmacies to identify whether the compounding pharmacy, or 
the compounding pharmacist or physician, is distributing inordinate 
amounts of compounded human drug products interstate;
     Notify FDA if the State identifies any pharmacy, 
pharmacist, or physician within its jurisdiction that has distributed 
inordinate amounts of compounded human drug products interstate;
     Take action regarding any pharmacy, pharmacist, or 
physician that distributes inordinate amounts of compounded human drug 
products interstate; and
     Provide FDA with certain information, including the 
following:
    [cir] The name and address of the pharmacy/pharmacist/physician;
    [cir] a description of the evidence indicating that the pharmacy/
pharmacist/physician has distributed inordinate amounts of compounded 
human drug products interstate, including a description of any 
compounded drug product that was distributed in inordinate amounts; and
    [cir] a description and date of any actions the State has taken to 
address the distribution of inordinate amounts of compounded human drug 
product interstate.
    In the new draft standard MOU, a pharmacist, pharmacy, or physician 
is considered to have distributed an inordinate amount of compounded 
human drug products interstate 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 pharmacist, pharmacy, or 
physician during that calendar month. FDA does not intend to include in 
the consideration of inordinate amounts those prescriptions dispensed 
to a patient (or patient's agent), where the patient (or patient's 
agent) to whom the drug is dispensed carries the drug across State 
lines after it has been dispensed to the patient (or the patient's 
agent) at the facility in which the drug was compounded.\3\ This 
concept would be called the 30 percent limit.
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    \3\ Drugs that a patient takes across state lines in this manner 
are distributed interstate. However, for reasons explained in this 
notice, FDA's draft standard MOU does not count them toward the 
limit on distributing inordinate amounts of compounded drug products 
interstate.
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    The 1999 draft standard MOU defined ``inordinate amounts'' as the 
number of compounded prescriptions dispensed or distributed interstate 
annually by a pharmacy or physician that is equal to or greater than 20 
percent of the total number of prescriptions dispensed or distributed 
(including both intrastate and interstate) by such pharmacy or 
physician; or the number of compounded prescriptions dispensed or 
distributed interstate annually by a pharmacy or physician that is less 
than 20 percent of the total number of prescriptions dispensed or 
distributed (including both intrastate and interstate) by such pharmacy 
or physician, but prescriptions for one or more individual compounded 
drug products (including various strengths of the same active 
ingredient) dispensed or distributed interstate constitute more than 5 
percent of the total number of prescriptions dispensed or distributed. 
The 1999 draft standard MOU also included an exclusion from 
calculations to determine inordinate amounts for ``local'' interstate 
distribution to patients within 50 miles of the compounding pharmacy, 
and for interstate distribution in response to a public health 
emergency or catastrophic event.
    Many comments on the 1999 draft standard MOU opposed the percentage 
limits it contained, and some comments on the 2013 draft 503A guidance 
opposed any definition of inordinate amounts that would significantly 
restrict interstate distributions under section 503A of the FD&C Act. 
Other comments suggested not defining ``inordinate amounts,'' leaving 
the definition up to the States, or defining the term as ``the amount 
that would be considered conventional manufacturing.'' FDA is proposing 
the 30 percent limit as the definition of ``inordinate amounts'' for 
the following reasons.
    Section 503A of the FD&C Act reflects Congress' recognition that 
human drug compounding may be appropriate when it is based on receiving 
a valid prescription or notation for an identified individual patient. 
However, drug products compounded under this section of the FD&C Act 
are not required to demonstrate that they are safe or effective, bear 
adequate directions for use, or conform to CGMP. Congress, therefore, 
imposed strict limits on the distribution of drug products compounded 
under this section to protect the public health and the integrity of 
the drug approval process.
    In particular, Congress did not intend for compounders operating 
under these statutory provisions to grow into conventional 
manufacturing operations making unapproved drugs, operating a 
substantial proportion of their business interstate. Although other 
provisions of the FD&C Act apply to state-licensed pharmacies and 
physicians that may qualify for the exemptions under section 503A of 
the FD&C Act (e.g., the adulteration provisions for making drugs under 
insanitary conditions), and although FDA may take action in appropriate 
cases against compounders that violate these provisions or that operate 
outside of the conditions in section 503A, Congress recognized that 
these compounders are primarily overseen by the States. If a 
substantial proportion of a compounder's drugs are distributed outside 
a State's borders, adequate regulation of those drugs poses significant 
challenges to State regulators. States face logistical, regulatory, and 
financial challenges inspecting compounders located outside of their 
jurisdiction. In addition, particularly if a compounder distributes 
drugs to multiple States, it can be very difficult to gather the 
scattered information about possible adverse events associated with 
those drugs, connect them to the compounder, and undertake coordinated 
action to address a potentially serious public health problem.
    Therefore, as a baseline measure, section 503A(b)(3)(B) of the FD&C 
Act limits the distribution of compounded human drug products outside 
of the State in which they are compounded under section 503A(a) to 5 
percent of the total prescription orders dispensed or distributed by a 
licensed pharmacist, pharmacy, or physician. It then directs FDA, in 
consultation with NABP, to develop a standard MOU that addresses the 
distribution of inordinate amounts of compounded human drug products 
interstate and provides for appropriate

[[Page 8877]]

investigation by a State agency of complaints relating to compounded 
human drug products distributed outside such State. Implementation of 
this provision requires FDA to determine whether a limit higher than 5 
percent would be appropriate, provided the States make certain 
agreements: A State agrees to appropriately investigate complaints 
relating to compounded human drug products distributed out of the State 
and agrees to address the distribution of amounts that would be 
inordinate.
    FDA tentatively concludes that if a State agrees to meet the 
conditions set forth in this MOU, distribution interstate up to the 30 
percent limit would not be inordinate. This conclusion is based on 
FDA's expectation that States signing the MOU would appropriately 
investigate complaints about compounded human drug products distributed 
out of State, and address compounders distributing an inordinate amount 
of compounded drug products out of the state in which they are 
compounded. FDA's current view is that its proposed limit would 
appropriately balance the benefits of access to compounded human drug 
products with the need to protect the public health and the drug 
approval system. We do not believe that an additional limit is 
necessary for the distribution of an individual compounded drug product 
such as that contained in the 1999 draft standard MOU.
    In developing the new draft standard MOU, we considered that 
patients can now obtain compounded human drug products from outsourcing 
facilities,\4\ which are not subject to volume restrictions on 
interstate distribution. This could mitigate the access concerns noted 
in some comments FDA received on the definition of ``inordinate 
amounts'' in the 1999 draft standard MOU, and in more recent comments 
expressing concerns about access if ``inordinate amounts'' is defined 
restrictively or the 5 percent limit is enforced.
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    \4\ The DQSA adds new section 503B to the FD&C Act (21 U.S.C. 
353b). Under section 503B(b) of the FD&C Act, a compounder may elect 
to become an outsourcing facility by registering with FDA. Products 
compounded in a registered outsourcing facility can qualify for 
exemptions from the FDA approval requirements in section 505 of the 
FD&C Act and the requirement to label products with adequate 
directions for use under section 502(f)(1) of the FD&C Act if the 
requirements in section 503B are met. Outsourcing facilities will be 
inspected by FDA and must comply with other provisions of the FD&C 
Act, such as CGMP requirements.
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    It is appropriate to provide a bright line test for when 
compounding pharmacies located in States that sign the MOU cross the 
line to conventional manufacturing that should be subject to all of the 
requirements of the FD&C Act, including the new drug approval and CGMP 
requirements. Congress provided such a bright line test, the 5 percent 
limit, for compounders located in States that do not sign the MOU.
    Some commenters in response to the 1999 draft MOU and the 2013 
draft 503A guidance were concerned with limitations on interstate 
distribution of compounded human drug products to contiguous States. In 
the 1999 draft MOU, the calculation of ``inordinate amounts'' excluded 
compounded human drug products that were distributed interstate but 
within 50 miles of the pharmacy or physician's office. After 
considering the provision in the 1999 draft MOU and the comments, FDA 
believes that the 30 percent limit on inordinate amounts provided in 
this new draft standard MOU is high enough that special calculations to 
address interstate distribution between contiguous States or over short 
distances are not needed. Moreover, the new draft standard MOU includes 
consideration of inordinate amounts of prescriptions dispensed to a 
patient (or patient's agent), if the patient (or patient's agent) to 
whom the drug is dispensed carries the drug across State lines after it 
has been dispensed to the patient (or patient's agent) at the facility 
in which the drug was compounded. We also do not intend to count as 
part of the 5 percent limit on distribution out of the State 
prescriptions dispensed to a patient (or patient's agent), if the 
patient (or patient's agent) to whom the drug is dispensed carries the 
drug across State lines after it has been dispensed to the patient (or 
patient's agent) at the facility in which the drug was compounded. We 
believe this treatment of these transactions where there are direct 
relationships among the patient, the prescriber, and the pharmacist or 
physician compounding the drug is consistent with section 503A of the 
FD&C Act.
    Finally, the new draft standard MOU does not exclude from the 
calculation of ``inordinate amounts'' interstate distributions in 
response to a public health emergency or catastrophic event. We believe 
the 30 percent limit affords adequate opportunity for interstate 
distributions and note that outsourcing facilities may be able to 
compound drugs in an emergency and drugs on FDA's drug shortage list, 
further mitigating access concerns.

C. Definitions

    The Appendix to the new draft standard MOU defines key terms used 
in the MOU, including ``adverse drug experience,'' ``serious adverse 
drug experience,'' ``product quality issue,'' ``serious product quality 
issue,'' and ``distribution.'' The definitions of ``adverse drug 
experience,'' ``serious adverse drug experience,'' ``product quality 
issue,'' and ``serious product quality issue'' are taken from relevant 
sections of FDA's regulations (see 21 CFR 310.305 and 314.81). For 
purposes of the new draft standard MOU, a ``distribution'' occurs when 
a compounded human drug product leaves the facility in which the drug 
was compounded. Distribution includes delivery or shipment to a 
physician's office, hospital, or other health care setting for 
administration and dispensing to an agent of a patient or to a patient 
for his or her own use. However, the definition notes that, to qualify 
for the exemptions under section 503A of the FD&C Act, a compounder 
must obtain a prescription for an individually identified patient 
(section 503A(a)), and the draft standard MOU would not alter this 
condition. Interstate distributions of compounded drug products would 
count toward the 30 percent limit whether or not the compounded drug 
products satisfied the prescription condition, or other conditions, in 
section 503A of the FD&C Act.
    Some comments on the 2013 draft 503A guidance state that provisions 
in the standard MOU relating to drug distribution should not apply to 
dispensed drugs. Although the comments do not share a single definition 
of dispensing, or offer a detailed definition, they generally take the 
position that a drug is dispensed when it is provided pursuant to a 
prescription or doctor's order, and that dispensing is not a form of 
distribution. We have not adopted this approach, and propose a 
definition of distribution that we believe is consistent with the text 
and purpose of section 503A of the FD&C Act. Under our draft standard 
MOU, a distribution occurs when a compounded drug leaves the facility 
where it was made, regardless of whether the drug is also deemed to be 
dispensed.
    Section 503A(b)(3)(B) of the FD&C Act directs FDA to include 
provisions in the MOU regarding the distribution of compounded drugs. 
The section does not define distribution to exclude dispensing, which 
Congress has done elsewhere when that was its intention.\5\

[[Page 8878]]

Our proposed definition implements the purpose of section 503A(b)(3)(B) 
of the FD&C Act, which is to limit and regulate compounded drugs that 
are sent out of the state in which they are made.\6\ Our definition is 
also consistent with the ordinary meaning of distribute; it is natural 
to say that an entity compounding under section 503A of the FD&C Act 
distributes the drugs it makes to patients and health care providers, 
just as the manufacturers of other regulated articles are said to 
distribute their products to their customers. The definition proposed 
by comments, on the other hand, would write an exclusion for dispensing 
into the statute where Congress did not. It would also mean that drug 
products compounded under section 503A of the FD&C Act are excluded 
from the MOU and the 5 percent limit, because, in order to qualify for 
the exemptions under section 503A, a compounder must obtain a valid 
prescription order for an individually identified patient. For the 
reasons stated previously in section IV.B of this document, we believe 
this would achieve the opposite of what Congress intended.
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    \5\ In different contexts, where it would further a regulatory 
purpose, Congress and the Agency have specifically defined 
distribute to exclude dispensing. See, for example, section 581(5) 
of the FD&C Act, which applies to Title II of the DQSA, and 21 CFR 
208.3, which applies to 21 CFR part 208 of our regulations. Section 
503A of the FD&C Act does not contain a similar definition, or 
specific direction to exclude dispensing from the meaning of 
distribution. We also note that these definitions were adopted for 
provisions that focus on conventionally manufactured drug products, 
which assign different obligations to dispensers than to 
wholesalers, packagers, or other intermediaries in light of the 
different role that dispensers play with respect to product labeling 
and the drug distribution chain. In contrast, section 503A of the 
FD&C Act focuses on compounded drugs, and the reasons for defining 
distribution to exclude dispensing in Title II of the DQSA or part 
208 do not apply.
    \6\ See discussion of the purposes of section 503A of the FD&C 
Act in section IV.B, supra.
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    In support of their alternative approach, commenters note that in 
section 503A(b)(3)(B)(ii) of the FD&C Act, Congress directed FDA to 
calculate the quantity of ``prescription orders dispensed and 
distributed'' when the Agency applies the 5 percent limit to 
compounders in states that do not sign the MOU. This language, however, 
supports FDA's proposed approach, because it makes clear that Congress 
understood the word distribute in this section to refer to filling 
prescription orders; otherwise it would not have directed the Agency to 
count the number of prescription orders that pharmacists and 
prescribers ``distributed.'' Nor is there anything to suggest that 
Congress understood distributed and dispensed to be mutually exclusive 
categories rather than overlapping categories. Given the statutory text 
and purpose, we believe that Congress referred to drugs dispensed or 
distributed in section 503A(b)(3)(B) of the FD&C Act to make clear that 
the Agency must not limit its calculation of total prescription orders 
to compounded drugs that the pharmacy or prescriber makes, but also 
include any other prescription orders, such as conventionally 
manufactured drugs, for which the pharmacist or prescriber serves 
solely as the dispenser.

V. Other Issues

A. Development of a Standard MOU

    A number of commenters on both the 1999 draft MOU and on the 2013 
draft 503A guidance suggested that FDA specifically negotiate MOUs with 
individual States, rather than develop a standard MOU. Section 503A of 
the FD&C Act requires the Agency to develop a standard MOU for use by 
the States. Furthermore, it would be impractical to develop an 
individualized MOU with every State, and creating individualized MOUs 
would create a patchwork of regulation of interstate distribution from 
compounders seeking to qualify for the exemptions under section 503A of 
the FD&C Act. This would be confusing to the health care community, as 
well as regulators.

B. Exemptions From the Interstate Distribution Provisions

    Some comments on the 2013 draft 503A guidance requested that we 
consider exempting certain drug products or types of compounding 
entities from the limits in the MOU and the 5 percent limit. For 
example, some comments recommended that we exempt nonsterile products 
or home infusion pharmacies.
    Congress did not exempt any particular drug products or compounding 
entities from the 5 percent limit. Furthermore, FDA believes that the 5 
percent limit and the MOU limit on inordinate amount provisions are 
important to distinguish pharmacy compounding from conventional 
manufacturing in the guise of compounding, and to protect consumers and 
the integrity of the drug approval process. American consumers rely on 
the FDA drug approval process to ensure that medications have been 
evaluated for safety and effectiveness before they are marketed in the 
United States. Drugs made by compounders, including those made at human 
drug compounding outsourcing facilities, are not FDA-approved. This 
means that they have not undergone premarket review of safety, 
effectiveness, or manufacturing quality. Therefore, when an FDA-
approved drug is commercially available, FDA recommends that 
practitioners prescribe the FDA-approved drug rather than a compounded 
drug unless the prescribing practitioner has determined that a 
compounded product is necessary for the particular patient and would 
provide a significant difference for the patient as compared to the 
FDA-approved commercially available drug product.
    In section 503A of the FD&C Act, Congress enacted several 
conditions to differentiate compounders from manufacturers and provided 
that only if they meet those conditions can they qualify for the 
exemptions from the drug approval requirements in section 505 of the 
FD&C Act. One of those conditions relates to limitations on the 
interstate distribution of compounded human drug products, and FDA 
intends to enforce those provisions to differentiate compounding that 
qualifies for the exemptions from conventional manufacturing in the 
guise of compounding that does not, and will apply the conditions to 
all types of drugs and all categories of compounding.

C. Information Sharing Between States and FDA

    Several commenters on the 1999 draft MOU proposed that signatories 
to the MOU would agree to share information on a variety of subjects. 
The new draft standard MOU provides that States will agree to notify 
FDA of any complaint relating to a compounded human drug product 
distributed outside the State involving a potential public health risk 
or immediate safety concern, such as a report of a serious adverse drug 
experience or serious product quality issue, and provide information 
about those events and issues. The new draft standard MOU also provides 
that States will notify FDA if they identify a pharmacist, pharmacy, or 
physician within their jurisdiction that has distributed inordinate 
amounts of compounded human drug products interstate. In addition, FDA 
regularly posts on its compounding Web site information about 
enforcement and other actions related to compounders that violate the 
FD&C Act, and it is obligated to share certain information with States 
under section 105 of the DQSA.

[[Page 8879]]

D. Enforcement of the 5 Percent Limit on Distribution of Compounded 
Drug Products Out of the State in Which They Are Compounded

    In the 2013 draft 503A guidance, FDA stated that it does not intend 
to enforce the 5 percent limit on distribution of compounded drug 
products outside of the State in which they are compounded until 90 
days after FDA has finalized a standard MOU and made it available to 
the States for their consideration and signature. Most commenters on 
the 2013 draft 503A guidance said this period was too short, but did 
not recommend a specific alternative. A few commenters recommended a 
different timeframe, one recommending 120 days and another recommending 
365 days. The 1997 Senate Committee Report for the Food and Drug 
Administration Modernization Act suggests that a 180-day period for 
States to decide whether to sign might be appropriate.\7\ The Agency 
proposes a 180-day period after the final standard MOU is made 
available for signature before FDA will enforce the 5 percent limit in 
States that have not signed the MOU, and invites public comment on 
whether this is the appropriate timeframe. FDA will announce at the 
time it publishes the final standard MOU and makes it available for 
signature when it intends to begin enforcing the 5 percent limit in 
States that do not sign.
---------------------------------------------------------------------------

    \7\ ``[U]ntil the State . . . enters into a memorandum of 
understanding (MOU) with the Secretary or 180 days after the 
development of the standard MOU, whichever comes first, the [section 
503A] exemption shall not apply if inordinate quantities of 
compounded products are distributed outside of the State in which 
the compounding pharmacy or physician is located.'' (U.S. Senate 
Committee Report, see note 2.)
---------------------------------------------------------------------------

VI. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (the PRA) (44 U.S.C. 
3501-3520), Federal Agencies must obtain approval from the Office of 
Management and Budget (OMB) for each collection of information they 
conduct or sponsor. ``Collection of information'' is defined in 44 
U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or 
requirements that members of the public submit reports, keep records, 
or provide information to a third party. Section 3506(c)(2)(A) of the 
PRA (44 U.S.C. 3506(c)(2)(A)), requires Federal Agencies to provide a 
60-day notice in the Federal Register for each proposed collection of 
information before submitting the collection to OMB for approval. To 
comply with this requirement, FDA is publishing notice of the proposed 
collection of information set forth in this document.
    With respect to the following collection of information, FDA 
invites comments on these topics: (1) Whether the proposed collection 
of information is necessary for the proper performance of FDA's 
functions, including whether the information will have practical 
utility; (2) the accuracy of FDA's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used; (3) ways to enhance the quality, 
utility, and clarity of the information collected; and (4) ways to 
minimize the burden of the collection of information on respondents, 
including through the use of automated collection techniques, when 
appropriate, and other forms of information technology.
    Section 503A of the FD&C Act describes, among other things, the 
circumstances under which certain human drug products compounded by a 
licensed pharmacist or licensed physician are exempt from certain 
sections of the FD&C Act. One of the conditions to qualify for the 
exemptions listed in section 503A of the FD&C Act is that: (1) The 
human drug product is compounded in a State that has entered into an 
MOU with FDA that addresses the distribution of inordinate amounts of 
compounded human drug products interstate and provides for appropriate 
investigation by a State agency of complaints relating to compounded 
human drug products distributed outside such a State; or (2) if the 
human drug product is compounded in a State that has not entered into 
such an MOU, the licensed pharmacist, pharmacy, or physician does not 
distribute, or cause to be distributed, compounded human drug products 
out of the State in which they are compounded, more than 5 percent of 
the total prescription orders dispensed or distributed by such pharmacy 
or physician (see section 503A(b)(3)(B)(i) and (b)(3)(B)(ii).
    Section 503A(b)(3) directs FDA, in consultation with the NABP, to 
develop a standard MOU for use by states in complying with the 
provisions concerning the interstate distribution of inordinate amounts 
of compounded human drug products interstate and appropriate 
investigation by a State agency of complaints relating to compounded 
human drug products distributed outside such State.
    The new draft standard MOU contains the information collections 
that must be approved by OMB under the PRA. These information 
collections are described in this section of the document. For purposes 
of this analysis, FDA assumes that 25 States will sign the standard MOU 
with FDA.
    Under section III.a. of the new draft standard MOU, the State will 
notify FDA by email at StateMOU@fda.hhs.gov within 72 hours of 
receiving any complaint relating to a compounded human drug product 
distributed outside the State involving a potential public health risk 
or immediate safety concern, such as a report of a serious adverse drug 
experience or serious product quality issue. The notification will 
include the following information: (1) The name and contact information 
of the complainant, in the case of a complaint; (2) the name and 
address of the pharmacist, pharmacy, and/or physician that is the 
subject of the complaint; (3) a description of the complaint, including 
a description of any compounded drug product that is the subject of the 
complaint; (4) the State's initial assessment of the validity of the 
complaint relating to a compounded human drug product distributed 
outside the State; and (5) a description and date of any actions the 
State has taken to address the complaint. In addition, the States will 
maintain records of the complaints they receive, the investigation of 
each complaint, and any response to or action taken as a result of a 
complaint, beginning when the State receives notice of the complaint. 
The States will maintain these records for at least 3 years, beginning 
on the date of final action or the date of a decision that the 
complaint requires no action.
    Based on our knowledge of State regulation of compounding practices 
and related complaints, we estimate that annually a total of 
approximately 25 States (``no. of respondents'' in table 1, row 1) will 
notify FDA within 72 hours of receiving any complaint relating to a 
compounded human drug product distributed outside the State involving a 
potential public health risk or immediate safety concern. We estimate 
that each State will notify FDA annually of approximately 3 complaints 
it receives (``no. of responses per respondent'' in table 1, row 1), 
for a total of 75 notifications of complaints sent to FDA (``total 
annual responses'' in table 1, row 1). We estimate that preparing and 
submitting this information to us as described in the MOU will take 
approximately 0.5 hours per response (``average burden per response'' 
in table 1, row 1), for a total of 37.5 hours (``total hours'' in table 
1, row 1).
    We also estimate that a total of approximately 25 States (``no. of 
recordkeepers'' in table 2) will prepare and maintain records for 3 
years of the complaints they receive, investigations of complaints, and 
on any State action

[[Page 8880]]

taken or replies to complaints. We estimate that each State will 
receive approximately 3 complaints annually and will prepare and 
maintain approximately 5 records per each complaint the State receives, 
for a total of 15 records per State (``no. of records per 
recordkeeper'' in table 2), and a total of 375 records annually across 
all States (``total annual records'' in table 2). We further estimate 
that preparing and maintaining these records will take approximately 1 
hour per record (``average burden per recordkeeping (in hours)'' in 
table 2), for a total of 375 hours (``total hours'' in table 2).
    Under section III.a. of the new draft standard MOU, investigations 
performed by the State under this MOU will ensure that (1) the root 
cause of the problem that is the subject of the complaint is 
determined, (2) any risk or safety concern associated with the 
compounded human drug product is adequately contained (i.e., there is 
no ongoing risk to the public), and (3) sufficient corrective action 
has been taken to eliminate any future public health risk.
    Under section III.b of the new draft standard MOU, the States will 
notify FDA by email at StateMOU@fda.hhs.gov within 7 days of 
determining that a pharmacist, pharmacy, or physician within their 
jurisdiction has distributed inordinate amounts of compounded human 
drug products interstate, as described in the MOU. The notification 
should include the following information: (1) The name and address of 
the pharmacist/pharmacy/physician; (2) a description of the evidence 
indicating that the pharmacist/pharmacy/physician has distributed 
inordinate amounts of compounded human drug products interstate, 
including a description of any compounded drug product that was 
distributed in inordinate amounts; and (3) a description and date of 
any actions the State has taken to address the distribution of 
inordinate amounts of compounded human drug products interstate.
    We estimate that annually a total of approximately 25 States (``no. 
of respondents'' in table 1, row 2) will notify FDA of their 
determination that a pharmacist, pharmacy, or physician has distributed 
inordinate amounts of compounded human drug products interstate. We 
estimate that each State will notify FDA annually of approximately 2 
determinations it makes (``no. of responses per respondent'' in table 
1, row 2), for a total of 50 determinations (``total annual responses'' 
in table 1, row 2). We estimate that preparing and submitting this 
information to FDA as described in the MOU will take approximately 0.5 
hours per response (``average burden per response'' in table 1, row 2), 
for a total of 25 hours (``total hours'' in table 1, row 2).
    Under section V of the current draft standard MOU, a State may 
designate a new liaison to the MOU by notifying FDA's administrative 
liaison in writing. If a State's liaison becomes unavailable to fulfill 
its functions under the MOU, the State will name a new liaison within 2 
weeks and notify FDA.
    We estimate that annually a total of approximately 13 States (``no. 
of respondents'' in table 1, row 3) will notify FDA of a new liaison to 
the MOU. We estimate that each State will submit to FDA annually 
approximately 1 notification of a new liaison (``no. of responses per 
respondent'' in table 1, row 3), for a total of 13 notifications of a 
new liaison (``total annual responses'' in table 1, row 3). We estimate 
that preparing and submitting each notification as described in the MOU 
will take approximately 0.2 hours per response (``average burden per 
response'' in table 1, row 3), for a total of 2.6 hours (``total 
hours'' in table 1, row 3).
    Under section VI of the new draft standard MOU, a State may 
terminate its participation in the MOU by submitting to FDA a 30-day 
notice of termination.
    We estimate that annually a total of approximately 1 State (``no. 
of respondents'' in table 1, row 4) will notify FDA that it intends to 
terminate its participation in the MOU. We estimate that this State 
will submit to FDA annually approximately 1 notification of termination 
(``no. of responses per respondent'' in table 1, row 4), for a total of 
1 notification (``total annual responses'' in table 1, row 4). We 
estimate that preparing and submitting the notification as described in 
the MOU will take approximately 0.2 hours per notification (``average 
burden per response'' in table 1, row 4), for a total of 0.2 hours 
(``total hours'' in table 1, row 4).
    Under section VI of the new draft standard MOU, if a State does not 
adhere to the provisions of the MOU, FDA may post a 30-day notice of 
termination on its Web site. As a result of this action by FDA, the 
State will notify all pharmacists, pharmacies, and physicians within 
the State of the termination and advise them that compounded human drug 
products may be distributed (or caused to be distributed) out of the 
State only in quantities that do not exceed 5 percent of the total 
prescription orders dispensed or distributed by the pharmacist, 
pharmacy, or physician.
    We estimate that annually a total of approximately 1 State (``no. 
of respondents'' in table 3) will submit 1 notification of termination 
as described in the MOU (``no. of disclosures per respondent'' in table 
3) to the pharmacists, pharmacies, and physicians in its State for a 
total of 1 notification of termination (``total annual disclosures'' in 
table 3). We estimate that preparing and submitting each notification 
will take approximately 1 hour per notification (``average burden per 
disclosure (in hours)'' in table 3), for a total of 1 hour (``total 
hours'' in table 3).
    FDA estimates the burden of this collection of information as 
follows:

                                 Table 1--Estimated Annual Reporting Burden \1\
----------------------------------------------------------------------------------------------------------------
                                                    Number o
Compounding MOU between FDA and     Number of     responses per   Total annual   Average burden    Total hours
             States                respondents     respondent       responses     per response
----------------------------------------------------------------------------------------------------------------
State notifies FDA of                        25               3              75             0.5             37.5
 compounding complaints it
 receives......................
State notifies FDA of the                    25               2              50             0.5             25
 distribution of inordinate
 amounts of compounded drug
 products......................
State notifies FDA of a new                  13               1              13             0.2              2.6
 liaison to the MOU............
State notifies FDA of its                     1               1               1             0.2              0.2
 intent to terminate
 participation in the MOU......
                                --------------------------------------------------------------------------------
    Total......................              64               7             139             N/A             65.3
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of
  information.

[[Page 8881]]

                               Table 2--Estimated Annual Recordkeeping Burden \1\
----------------------------------------------------------------------------------------------------------------
                                                                                 Average burden
Compounding MOU between FDA and     Number of       Number of     Total annual         per
             States               recordkeepers    records per       records      recordkeeping    Total Hours
                                                  recordkeeper                     (in Hours)
----------------------------------------------------------------------------------------------------------------
State recordkeeping for 3 years              25              15             375               1            375
 of compounding complaints.....
                                --------------------------------------------------------------------------------
    Total......................              25              15             375               1            375
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of
  information.

                           Table 3--Estimated Annual Third-Party Disclosure Burden \1\
----------------------------------------------------------------------------------------------------------------
                                                     Number of                    Average burden
 Compounding MOU between FDA and     Number of      disclosures    Total annual   per disclosure    Total hours
             States                 respondents   per respondent    disclosures      (in Hours)
----------------------------------------------------------------------------------------------------------------
State notification to                          1               1               1               1               1
 pharmacists, pharmacies, and
 physicians that its
 participation in the MOU has
 been terminated by FDA.........
                                 -------------------------------------------------------------------------------
    Total.......................               1               1               1               1               1
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of
  information.

VII. Request for Comments

    FDA invites comments from interested persons on the new draft 
standard MOU that would establish an agreement between the signatory 
States and FDA regarding the appropriate investigation by such States 
of complaints relating to compounded human drug products distributed 
outside the State, and the distribution of inordinate amounts of 
compounded human drug products interstate. The Agency is providing a 
120-day comment period.
    After considering any comments on the new draft standard MOU 
submitted to this docket, FDA intends to finalize the standard MOU and 
make it available for signature by individual States. FDA will 
determine at the time of publication of the final MOU how long it will 
allow States to consider whether to sign the MOU before FDA begins to 
enforce the 5 percent limit in those States that have not signed an 
MOU.
    Interested persons may submit either electronic comments regarding 
this document to http://www.regulations.gov or written comments to the 
Division of Dockets Management (see ADDRESSES). It is only necessary to 
send one set comments. Identify comments with the docket number found 
in brackets in the heading of this document. Received comments may be 
seen in the Division of Dockets Management between 9 a.m. and 4 p.m., 
Monday through Friday, and will be posted to the docket at http://www.regulations.gov.

VIII. Electronic Access

    Persons with access to the Internet may obtain the draft standard 
MOU at http://www.regulations.gov.

    Dated: February 12, 2015.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2015-03420 Filed 2-18-15; 8:45 am]
BILLING CODE 4164-01-P