In September 2012, the Centers for Disease Control and Prevention (CDC), the Food and Drug Administration (FDA), the Tennessee Department of Health, and other state health departments began investigating a rare, non-contagious outbreak of fungal meningitis. As of June 3, 2013, 20 states had reported 745 infections (including fungal meningitis and other conditions), and 58 deaths were traced to injections of contaminated, preservative-free methylprednisone acetate produced by the New England Compounding Center (NECC). NECC, which self-identified as a compounding pharmacy – not a manufacturer – and was licensed by the state of Massachusetts, produced large volumes of drugs that were shipped across state lines to health care providers. Unlike traditional pharmacy practices, NECC produced drugs without individual prescriptions and made copies of existing commercially-manufactured drugs. These serious adverse events drew attention to compounded drugs (CDs). Six congressional hearings were held in 2012-2013 to understand the factors that led to these adverse events and ways to prevent future such incidents; these hearings are listed in Appendix B . In these hearings Members of Congress and stakeholders raised questions regarding how best to improve the safety of CDs while maintaining patient access to needed drugs. Issues raised at these hearings include the following: (1) what are CDs; (2) how are CDs made and by whom; (3) what is the role of CDs in health care delivery; (4) what are the federal and state roles in oversight of CDs; (5) how safe are CDs, and (6) what steps could be taken to prevent adverse events from CDs. This report provides background information about these issues that may be used to inform the policy discussion as Congress considers legislation. This report focuses on (1) available background information on CDs and compounding pharmacies; (2) changes in the role of CDs in healthcare delivery; (3) factors leading to an increase of compounding; (4) safety of CDs, including a table of selected publicly available adverse events; and (5) a brief summary of policy issues raised to date. This report includes material on CDs for human patients and does not include a discussion of veterinary drug compounding or the compounding of dietary supplements. Issues of public health and safety of CDs are tied to the regulation and oversight of CDs. This report includes brief information on federal, state, and professional efforts to increase the safety of CDs. Information on the federal regulation of CDs is addressed in other CRS reports: CRS Report R40503, FDA's Authority to Regulate Drug Compounding: A Legal Analysis , by Jennifer Staman, and CRS Report R43038, Federal Authority to Regulate the Compounding of Human Drugs , by [author name scrubbed]. Information on the regulation of commercially manufactured drugs can be found in CRS Report R41983, How FDA Approves Drugs and Regulates Their Safety and Effectiveness , by [author name scrubbed]. Compounding has been traditionally defined as a process where a pharmacist or a physician combines, mixes, or alters ingredients to create a medication tailored to the needs of an individual patient. Traditionally CDs are made in response to an individual prescription from a licensed health provider in the context of a pharmacist's and health care provider's professional relationship with a specific patient. CDs provide alternatives to standard commercially-manufactured drugs when such drugs do not meet the unique medical needs of a patient (e.g., due to a need for an allergen-free drug, weight-based dosing, or alternate modes of delivery), or are unavailable due to discontinuation, unavailability, or shortages. Shortages of sterile generic drugs and hospital outsourcing are cited as causes of increased the reliance of health care providers on CDs. Some have suggested that certain activities not traditionally associated with compounding be considered compounding. Such activities include the large-scale production of drugs to ease certain drug shortages, to meet outsourcing needs of hospitals, and to supply physician-administered drugs. Non-traditional compounding may include (1) the production and shipping of large volume of drugs across state lines; (2) production of drugs that are copies of FDA-approved commercially available drugs; (3) production of drugs outside of a personal relationship with a patient and without a prescription for an individual patient to receive a compounded version; and (4) providing products to third parties, such as hospitals, clinics, physician offices, and home health providers. These activities may be considered more akin to manufacturing than traditional compounding, which is considered part of the traditional practice of pharmacy. In this report, references to these types of activities will be called "non-traditional compounding." This report will be updated as necessary. Adverse events stemming from CDs in 2012 are the starting point for the current policy debate about existing regulatory oversight of CDs. The 2012 fungal meningitis outbreak was triggered by contaminated sterile CDs, injectable methylprednisolone, and was the worst recorded adverse event involving CDs, with news reports indicating that up to 14,000 individuals were exposed to this product. Contaminated sterile drugs pose the most serious threats to human health, and can cause death. Details on this event are listed in the following text box. The safety of CDs has been a concern of Congress for over two decades due to the expansion of non-traditional compounding. Potential safety risks for CDs include problems with potency (i.e., the dosage is inaccurate, either too strong or too weak), purity (e.g., the drug contains other chemicals that could be harmful), and contamination (the drug is contaminated with a bacteria, fungus, or virus). The FDA conducted surveys in 2001 and 2006 to assess identity, strength, quality and purity issues for CDs. In a non-random survey of compounded drugs available over the Internet, about one-third (33%) failed analytic testing, mostly regarding potency or uniformity of dosage. In these surveys, the rates of analytic testing failures for compounded drugs were higher than those for commercially-available drugs, where only 2% of drugs failed analytic testing. There is no specific federal or state requirement that an individual CD be tested for potency, purity, and sterility prior to being sold or administered. The compounder of a product may voluntarily perform such tests along with other quality control processes. Safety issues with CDs also have been found by state pharmacy boards. Certain states have started testing a certain percentage of compounded drugs for non-disciplinary purposes. For example, the State of Missouri Board of Pharmacy initiated a testing program in 2003 for compounded drugs and each year tests a certain number of finished products. Over the course of the testing program, 15% - 25% of the CDs were found to have problems with drug potency, ranging from a sub-potent drug with 0%—no active ingredient present—to a super-potent drug with almost 400% of the prescribed dosage. An inaccurate dose may present a risk of harm to the patient through a risk of toxicity (super-potent) or the risk of ineffective treatment (sub-potency) (see for example, Table C-1 , years 2010, 2007). The lack of resources to carry out testing of CDs appears to be a problem in several states. For example, a newspaper reported that Texas passed a law to provide for inspections of compounding pharmacies, but did not authorize funds for such purposes until 2007; once funded, testing dropped by two-thirds in 2012 compared to 2010 due to state budget cuts. There is no federal requirement for producers of CDs to report adverse events, so the actual number of individuals harmed by CDs is unknown. Policymakers have had concerns with CDs that date back almost two decades; these include reports of contamination of products that should be sterile, sub- or super-potent dosages, and impurities. Table C-1 provides a selected compilation of publicly available reports of adverse events involving CDs and other compounded medical products with details about the date, the number of states affected, the number of people affected, mortality (if any), drug involved, condition treated, and other characteristics, such as whether the product was shipped across state lines or was an off-label use. The vast majority of these adverse events involve sterile compounded products. Sterile compounded products include injectable drugs, IV-delivered drugs and solutions, inhalation drugs, and parenteral nutrition that are administered directly into the body and must be sterile to assure patient safety. There is no specific federal requirement for the reporting of adverse events with CDs; so that this information is by nature selective and cannot be used to draw inferences about the overall risks of CDs. Reports of incidents with CDs that do not rise to adverse events are excluded from the table. Table C-1 also includes other characteristics of CDs, including where it was evident that CDs were shipped across state lines, an element of non-traditional compounding and high-volume facilities, whether CD were prescribed for off-label uses, and whether a drug shortage was in effect. For example, a shortage of generic preservative-free methylprednisolone was reported by some sources prior to the 2012 fungal meningitis outbreak, which was caused by compounded versions of that drug. The 2012 fungal meningitis outbreak led to greater scrutiny by federal and state authorities of sterile CDs. In 2013, FDA and state authorities inspected certain facilities that produce sterile CDs and found a variety of safety concerns. Later, some, but not all, of these compounders issued product recalls due to sterility concerns. The next adverse event linked to a non-traditional compounding pharmacy occurred on May 24, 2013, when the FDA reported infections linked to contaminated sterile injectables; on May 28, 2013, the compounder recalled certain sterile products. Recalls of sterile CDs for 2013 are listed in the following text box. Traditional compounding is a process where a pharmacist or a physician "combines, mixes, or alters ingredients to create a medication tailored to the needs of an individual patient" in response to a prescription from a health care provider. CDs can include different formulations of drugs (e.g., liquid instead of tablet), doses, and certain ingredients (e.g., allergen-free, dye-free). This report will use the phrase "traditional compounding" to reference the historical use of the term compounding. CDs can provide patients drugs tailored to their individual health needs. The benefits of traditional compounding include (1) providing individualized drugs when commercially-produced drugs do not meet the health requirements of an individual patient; and (2) maintaining access to certain prescription drugs that are not commercially available due to shortages, unavailability, or discontinuation, among other factors. The number of CDs made cannot be determined due to the lack of publicly available information. Currently no federal reporting requirement exists for producers of CDs with respect to their compounding activities. The most recent attempt to assess the number of CDs was through a survey commissioned by the FDA in 2001. This report estimated that 650 pharmacies filled about 13 million prescriptions for compounded prescription drugs per year. Some stakeholders estimate that anywhere from 1-5% of all prescriptions filled annually are for CDs, but the basis of this information cannot be verified. There is also no publicly available information on the types of CDs made, for instance, the percentage of CDs that include dosage, formulation, or ingredient alterations, or that are produced in response to shortages of commercially-manufactured drugs. The lack of information on the current scope of compounding presents challenges for public health authorities and policy makers. Pharmacists, or technicians supervised by a licensed pharmacist, and physicians can produce CDs. Compounding is part of the standard practice of pharmacy and is within the scope of state licensure of pharmacists and pharmacies. The number of pharmacists engaged in compounding on a regular basis is difficult to evaluate due to a lack of publicly available information. The most recent attempt to survey pharmacists, commissioned by the FDA, found that the majority of compounded prescriptions are filled by a small number of pharmacies, and for some, CDs are the majority of their business. Others provide different estimates. Janet Woodcock, Director of the FDA Center for Drug Evaluation and Research (CDER), stated in a recent interview that 28,000 pharmacies compound drugs nationwide. The American Pharmacists Association (APhA), a trade association of pharmacists, reports that there are 7,500 pharmacies in the United States that specialize in compounding. The International Academy of Compounding Pharmacies, a trade association representing the compounding profession, has 2,700 members. As of January, 2013 there were 163 pharmacies in the United States accredited by the Pharmacy Compounding Accreditation Board, which offers a voluntary accreditation process for compounding pharmacies. Existing sources of publicly available information on specific CD products include those listed by compounding pharmacies on their websites, products described by professional associations, products mentioned in scientific journals, and on CDC and FDA websites due to warning and other notices. These CDs include, among others, drugs for: pain management (including alternate delivery, combined medications, dosage variations), hormone replacement therapies for women (including bioidentical hormones) and men (e.g., testosterone), men's and women's health, sports medicine, weight-loss, dental care, veterinary care, pediatric patients, and hospice care. Some compounded products include items advertised as treatments for Autism/ADHD, "adrenal fatigue," or fat-elimination; the FDA and others have raised questions regarding these claims. As noted earlier, some enterprises have engaged in certain activities not traditionally associated with compounding, but have asserted that these activities should be considered compounding. Such activities include the large-scale production of drugs to ease certain drug shortages, to meet outsourcing needs of hospitals and to supply physician-administered drugs. Non-traditional compounders make a variety of products, including sterile injectables, parenteral nutrition, and drugs on the FDA shortage list. Sterile injectable CDs include epidurals (for childbirth and pain management), nerve-blocking agents, drugs for pain management, and antibiotics. Individuals might receive these products in a hospital, doctor's office, or other medical facility as a medication, an IV solution or nutrition. Some non-traditional compounders have large numbers of customers. For example, PharMedium, a large scale compounder, reported 2,300 hospital customers for a variety of compounded products. NECC, the compounder involved in the fungal meningitis outbreak of 2012, was listed on a FDA website as having over 20,000 customers, including physicians, clinics, and hospitals. Drug compounding has historically been the focus of state governments through their regulation of pharmacies. Recently questions have arisen regarding the extent the federal government can regulate the practice of compounding through the FFDCA. This section discusses federal and state authorities, as well as industry self-regulation. Federal authority over compounding largely stems from the Federal Food Drug and Cosmetics Act (FFDCA), enacted in 1938, and its subsequent amendments, including the Food and Drug Administration Modernization Act (FDAMA) of 1997, which added compounding-specific provisions to the FFDCA in Section 503A. Litigation over Section 503A's advertising provisions has created doubt, however, over the legal effect of FDAMA's compounding provisions. The precise limit to federal authority with respect to drug compounding remains uncertain as the federal authority to regulate traditional drug compounding has been discussed by very few courts, and each court that has approached the issue did so from a unique factual setting that colored the eventual outcome of the case. Courts appear to agree that the federal government can regulate compounding activity that is akin to manufacturing (i.e., non-traditional compounding), and courts have afforded deference to the FDA's interpretation of when a compounder is acting like a manufacturer, which appears to be within the FDA's discretion. However, there is not a bright-line distinction between behaviors that are "akin to manufacturing" and those of a traditional compounding pharmacy. As a result, uncertainty remains regarding the possible limits to the FDA's current authority to regulate traditional compounding practices. Even assuming that FDA has the authority to regulate traditional compounding, as a matter of policy, the FDA has generally declined to test the current limits of its authority to regulate compounding, preferring instead to defer to state governments with respect to the regulation of "traditional compounding." Traditional compounding is a component of the practice of pharmacy and has typically been regulated by the states as "part of their regulation of pharmacies" and the licensing of pharmacists as health care professionals. There is great variety in existing state legislation addressing CDs. Certain states have passed new laws, or are considering revisions of laws and regulations for compounding pharmacies, in part due to recent events. The National Association of Boards of Pharmacies (NABP) has listed summaries of approved and proposed state changes to permitted compounding practices. State boards of pharmacy evaluate pharmacists and pharmacies on compounding practices and facilities. Compounding from bulk ingredients is generally an approved part of pharmacy practice, with some states requiring all licensed pharmacies to offer compounding services. Some states follow NABP model language and permit a pharmacist to compound drugs to patients only upon receipt of a valid prescription from a doctor or other medical practitioner licensed to prescribe medication. Some states require a special license for compounding sterile medications, which requires special facilities and adherence to sterile methods. Other states license a separate class of pharmacy facility that produces drugs for pharmacies or other providers, such as central fill pharmacies. Finally, some states permit pharmacies to make exact copies of commercial products in response to discontinued products or drug shortages. Professional programs in pharmacy are accredited and pharmacists generally receive formal education and professional training with respect to the practice of compounding drugs. Pharmacists can participate in a voluntary accreditation process for compounding established by professional pharmacy organizations, and the U.S. Pharmacopeial Convention (USP). As of December 2012, 163 facilities nationwide have this accreditation. Professional standards and guidelines for CDs are established by the USP in published standards: Chapter 797 "Pharmaceutical Compounding – Sterile Preparations" for sterile products and Chapter 795 "Pharmaceutical Compounding – Non-Sterile Preparations." USP Standard 797 includes standards for facilities, procedures, and staff in order to produce safe sterile drugs, such as sterilizing equipment, a sterile clean room, special ventilation, and decontamination processes. Not all pharmacies or compounders adhere to these USP standards and these standards, unless required by state law, are voluntary. To date, 20 states have laws that require full adherence to USP Standard 797. USP standards are designed for pharmacy compounding and may not be suitable for large-scale production of CDs. Commercial production of drugs is addressed by the current good manufacturing practices (cGMP) required by Section 501 of the FFDCA for commercial manufacturers; cGMP requires certain manufacturing practices as well as adverse event reporting. Some believe that the number and types of CDs and other products (IV and parenteral nutrition) are increasing, coinciding with increasing demand for certain compounded products due to a variety of reasons, including (1) an increase in hospital outsourcing of CDs; (2) drug shortages, unavailability, and discontinuation of FDA-approved drugs; (3) interest in individualized products by physicians and consumers; and (4) an increased interest by pharmacists in new markets. As noted earlier, the exact number of business facilities engaged in non-traditional compounding is unclear. In 2013, the FDA inspected non-traditional compounding facilities that were engaged in sterile compounding and lists 39 facilities that it inspected located around the country. Some of these facilities, such as Central Admixture Pharmacy Services and PharMEDium Services have multiple locations. Press and other sources indicate growth of centralized compounding facilities that provide outsourcing and related activities to pharmacies and hospitals. Some of these compounding facilities include compounding pharmacies, central fill pharmacies, and outsourcing pharmacies. Some states, but not all, permit certain types of consolidated services, such as "shared services" or "central fill IV pharmacies," which make products for distribution among a variety of providers. For example, Med Prep Consulting, Inc. lists itself as a state-licensed central fill pharmacy and provides products to other pharmacies. Hospitals commonly compound drugs, IV solutions, and IV nutrition. For example, children's hospitals compound a variety of products such as pediatric dosages or products that are not commercially available. One source reports that increases in use of drugs dosed by weight, rather than in commercially-available dosing, and the expansion of treatment of disorders that require personalized dosing have led to a growth of hospital-based compounding. Trends in health care include increasing hospital consolidation and integration of hospitals, leading to consolidated purchasing and centralized production, including the production of CDs. For example, the Cleveland Clinic Health System, a network of 10 hospitals and 15 pharmacies, reported that in 2012, approximately 870,000 doses were compounded at its central facility. Cleveland Clinic reported that 56% of its products were compounded for the needs of specific patients; 44% were made in anticipation of patient needs in a large hospital, such as the preparation of syringes used in the operating room, epidurals, narcotic infusions, doses not commercially available, and medications that were unavailable due to drug shortages. Smaller facilities in rural areas may increase the outsourcing of CDs due to need for specialty intravenous products without the facilities to produce such products. Reductions in staff or insufficient staff or facilities to continue compounding; streamlining workflow; and cost savings may also be factors related to outsourcing by facilities. As noted earlier, there is limited information on the numbers of outsourced compounded products, as the records of compounding entities are not publicly reported. However, a 2013 report of the Office of the Inspector General (OIG) of the Department of Health and Human Services (HHS) on outsourcing of sterile products by hospitals found that 25% used "high-risk" sterile products, those made from non-sterile ingredients, while 92 % of hospitals used compounded sterile products that were not "high-risk". The reasons hospitals provided for outsourcing sterile compounded products include drug shortages and their lack of capacity to produce products that remained stable over time and thus had a long shelf-life. Stability and extended shelf-life permit hospitals to store products for use as patient needs emerge. Shortages were cited as a reason for outsourcing by 62% of hospitals, as were stability (69%) and extended shelf-life (62%). Shortages of commercially-available drugs, especially shortages of generic sterile products, play a central role in the increased demand for CDs. The drug shortages may be temporary or permanent and are due to a variety of factors including voluntary discontinuation of products, supply chain problems, and production issues, including safety problems at commercial manufacturers. Certain compounders advertise their ability to fill certain back-ordered drugs or those in short supply on their websites. Shortages of commercially-manufactured drug are predicted to continue, leading to continued demand for certain compounded products. Physicians, hospitals, and other health care providers may turn to compounders to meet a time-sensitive need when specific drugs may be temporarily unavailable. A 2013 report by the Office of the Inspector General (OIG) of the Department of Health and Human Services (HHS) surveyed hospitals participating in Medicare and found that many hospitals turn to compounding pharmacies to provide drugs to maintain supply due to shortages of commercially-manufactured FDA-approved drugs. According to the OIG report, 68% of hospitals indicated that they sought a CD due to a drug shortage. The FDA and other safety advocates are concerned because reportedly 73% of drug shortages are for sterile injectable generic drugs, which are some of the most difficult drugs to compound safely. Several generic commercial manufacturers have struggled with manufacturing problems that have led to interruptions in supply of sterile generic drugs. For example, as of May 15, 2013, a major generic manufacturer in this business sector, Hospira, has recalled eight different sterile injectable drugs for 2012 and 2013. An alternative to sterile injectable CDs and generics are brand-name sterile injectables. These are less likely to be in short supply or suffer from quality problems; however, brand-name sterile drugs usually cost more than generic or compounded products. Recalls of products from compounding pharmacies may also exacerbate drug shortages. Ameridose and NECC ended production of certain sterile drugs in 2012-2013 due to problems with sterility, and these drugs were already in short supply. In 2013, compounders recalled certain products produced at these facilities; some of these products were drugs listed on the FDA shortages website. For example, drugs recalled by Med Prep in March 2013 include drugs on the FDA Current Drug Shortage Index. CD shortages heighten problems of patient access to commercially-manufactured generic drugs when there are shortages. Table 1 details the perceptions of hospitals about the effect of disruptions in supply of sterile products from compounding pharmacies. Almost 50% of respondents perceived that health care delivery would be seriously impacted, while 11.5% perceived that the effect on patient health would be life-threatening. A growth of interest in customized products, including allergen-free drugs, single administration of multiple drugs, and individualized formulations of drugs (such as liquids instead of tablets) may play a role in heightened demand for CDs. The sources of this demand include physician and patient demand as well as changing pharmacist business models. There appears to be an increase in marketing of CDs for treatment of common disorders, such as menopausal symptoms (e.g., "bio-identical" hormones), men's health, and weight loss, which may lead to an increase in demand for these CDs. Compounding may provide pharmacists alternatives to expand business growth. Pharmacy publications have emphasized how compounding pharmacists improve their own professional satisfaction through providing more individualized services and increased engagement with patients. This reflects an evolution to business models that expand pharmacist roles in areas of patient care beyond distributing commercially-manufactured products. A 2012 article in Business Week describes drug compounding as a growing business sector, and describes how focusing on compounding can provide a new market niche for community pharmacies. Some of these pharmacies may be exploring new business models due to increased competition with chain pharmacies and retailers to fill prescriptions for commercially-manufactured drugs. This account appears consistent with material on certain compounding pharmacies' websites that describe business development from community pharmacies into a market niche in compounded products (both prescription drugs and dietary supplements). Demand may be generated in part by off-label prescribing by physicians for a variety of reasons, including drug prices and shortages. As Table C-1 indicates, some of the incidents of contamination and adverse events are for CDs prescribed for off-label uses. Off-label prescribing allows physicians flexibility to prescribe medications they feel are necessary for patient health. Off-label use of a CD may present additional, but unknown risks. For example, two common off-label uses of sterile CD are a compounded version of a chemotherapy drug, Avastin, for use to treat macular degeneration, and preservative-free methylprednisolone for back pain. There have been recent adverse events with compounded Avastin, the main appeal of which is its lower price compared to FDA-approved drugs to treat macular degeneration (see Table C-1 , 2011). Preservative-free methylprednisolone is used to treat back pain (see Table C-1 , years 2013, 2012, 2002, 2001). Compounded versions of this drug by NECC were the cause of the 2012 fungal meningitis outbreak. The processes for creating sterile CDs require special equipment, facilities, and personnel training. When compounding exclusively with sterile ingredients, sterility must be maintained in all phases of production; when compounding with non-sterile ingredients, sterility must be achieved for the finished product requiring a sterilization process or related procedure that does not affect product stability. Regulators and industry agree that the highest risk to patient safety is from those sterile products made from non-sterile ingredients. Consumers, pharmacists, pharmacy compounders, hospitals, Congress, and state and federal regulators all have a stake in access to, and safety of, needed drugs. Increasing demand for CDs by patients and providers, drug shortages, consolidation of hospital services and other factors have led to changes in health delivery. The potential risks to public health of product failures have increased as non-traditional compounding has expanded. Given the expansion of sterile compounding, balancing patient access to CDs with patient safety has become more complex. Thus, some stakeholders believe that changes in business trends, such as drug shortages and outsourcing of compounding, must be taken into consideration in considering changes in professional standards and federal and state oversight and regulation of CD. Three issues have emerged in the congressional hearings about CDs and in legislation introduced in the 112 th and 113 th Congress (see Table A-1 ): (1) adverse event reporting, (2) labeling, and (3) modifying federal oversight of non-traditional compounding. These issues will be discussed in the following section. There is a lack of publically available information on the number and types of adverse events involving compounded drugs, as there is no requirement that compounders report adverse events to federal authorities, and state requirements vary. Adverse event reporting is not required by federal regulators for producers of CDs as it is for prescription, non-prescription drugs, and dietary supplements. Without knowing the total number of compounded products made, as well as the total number of adverse events, it is difficult to ascertain the overall safety of CDs or to understand the benefits and risks of using CDs. The publicly-available information on CDs is published by public health authorities, FDA inspections of facilities listed on websites, records of state licensing boards, and reports in professional journals documenting adverse events. Adverse events can be voluntarily reported to the FDA MedWatch database, but without mandatory reporting, the completeness of the information cannot be ascertained. Labeling specifying that a drug or another product is compounded is not a universal requirement. Due to the complexity of the supply chain and the growth of non-traditional compounding, patients and providers may not realize that a drug has been compounded. Unlike traditional compounding where a patient is given a prescription by a physician for a CD, non-traditional CDs are not necessarily identified as compounded. Given the potential benefits and risks of CDs, an argument could be made for providing patients this information as part of informed consent for medical treatment. Informed consent for treatment is an ethical and a legal requirement to ensure that a patient fully understands the potential risks and benefits of a medical procedure. CDs and other compounded solutions pose potential risks and benefits that may be different from commercially-manufactured products. Informed consent is based on a patient's knowledge and understanding of a medical procedure; as most patients assume that drugs are commercially-manufactured, this additional information could be seen as necessary to the ethical pursuit of informed patient consent. Policymakers have raised questions regarding how best to improve the safety of CDs while maintaining patient access to needed medications, including the need for new legislation and increased accountability. In testimony to Congress, FDA administrators have expressed reservations about non-traditional compounding activities that are akin to manufacturing (i.e., non-traditional compounding) and their potential risks to public safety. The FDA recommends increased federal oversight of sterile compounding and certain other high-risk activities. Attempts to clarify federal authority over non-traditional compounding is represented in certain elements of bipartisan legislation of the Senate Committee on Health, Education, Labor and Pensions (HELP) and in legislation introduced in the 112 th and 113 th Congress. These proposals all include increased clarity in the federal oversight role for compounding drugs. For example, a provision in the draft HELP legislation would create new authorities for FDA oversight of "compounding manufacturers" (i.e., non-traditional compounders) (see Table A-1 ). Some Members of Congress argue that new FDA authorities should await better implementation of existing authorities. For example, a House Committee on Energy and Commerce report questions whether a lack of enforcement by FDA and state authorities of certain vendors is an issue. The report cites safety violations at NECC in prior years, which do not appear to have been resolved despite FDA involvement. Some in the compounding pharmacy industry believe that the current safety issues are isolated to certain vendors and that compounding, in general, is not unsafe. Some compounding associations have reservations about the FDA having new authorities; others support increased FDA oversight. Many acknowledge that compounded health care products have become more complex and health delivery more complicated. In a recent report, the Association of Health-System Pharmacists (AHSP) and American Hospital Association (AHA) noted that there was general support from stakeholders in these associations for (1) FDA oversight of certain non-traditional compounding pharmacies (e.g., providing a CD without a prescription and shipped over state lines); (2) improved communication between state and federal regulators; (3) a list of "do-not-compound" CDs; and (4) improved access to USP compounding monographs that provide guidance to compounders on making certain CDs. Appendix A. Legislation Introduced in the 113 th Congress Affecting Drug Compounding The following table summarizes selected provisions of the two pieces of legislation on compounding introduced to date in the 113 th Congress. It includes provisions that address issues discussed in this report, but it does not provide a full summary of the legislation. Appendix B. Congressional Hearings on CDs 2012-2013 (in Reverse Chronological Order) "Examining Drug Compounding," hearing of the Subcommittee on Health of the Committee on Energy and Commerce, U.S. House of Representatives, May 23, 2013. Executive Session, S. 959 Pharmaceutical Compounding Quality and Accountability Act, hearing of the Committee on Health, Education, Labor, and Pensions, U.S. Senate, May 22, 2013. Ordered to be reported with an amendment in the nature of a substitute favorably. "Pharmaceutical Compounding: Proposed Legislative Solution," hearing of the Committee on Health, Education, Labor, and Pensions, U.S. Senate, May 9, 2013. "A Continuing Investigation into the Fungal Meningitis Outbreak and Whether It Could Have Been Prevented?", hearing of the Subcommittee on Oversight and Investigations, Committee on Energy and Commerce, U.S. House of Representatives, April 26, 2013. "Pharmacy Compounding: Implications of the 2012 Meningitis Outbreak," hearing of the Committee on Health, Education, Labor, and Pensions, U.S. Senate, November 15, 2012. "The Fungal Meningitis Outbreak: Could It Have Been Prevented?", hearing of the Subcommittee on Oversight and Investigations, Committee on Energy and Commerce, U.S. House of Representatives, November 14, 2012. Source : House Committee on Energy and Commerce: http://energycommerce.house.gov/hearings ; Senate Committee on Health, Education, Labor and Pensions: : http://www.help.senate.gov/hearings/ . Appendix C. Selected Adverse Events Involving Compounded Drugs and Solutions

Summary: Compounding has been traditionally defined as a process where a pharmacist or a physician combines, mixes, or alters ingredients to create a medication tailored to the needs of an individual patient. Traditionally compounded drugs (CDs) are made in response to an individual prescription from a licensed health provider in the context of a pharmacist's and health care professional's relationship with a specific patient. Some have suggested that certain activities not traditionally associated with compounding be considered compounding. Such activities include the large-scale production of drugs to ease certain drug shortages, to meet outsourcing needs of hospitals, and to supply physician-administered drugs. Non-traditional compounding may include (1) the production and shipping of large volume of drugs across state lines; (2) production of drugs that are copies of FDA-approved commercially available drugs; (3) provision of CD without a prescription for an individual patient to receive a compounded version and outside of a professional relationship; and (4) production of products to third parties, such as hospitals, clinics, physician offices, and home health providers. These activities could be considered more akin to manufacturing than traditional compounding, which is considered part of the traditional practice of pharmacy. Adverse events involving contaminated compounded drugs have drawn attention to the growing use of non-traditionally compounded drugs in health care delivery. Shortages of sterile generic drugs and hospital outsourcing are cited as causes of increased numbers of CDs produced by non-traditional compounders. Efforts to assess the risks and benefits of CDs on public health and safety are complicated by the lack of publicly available information, including the absence of a federal adverse event reporting requirement, and the lack of information about the number of drugs compounded, the types of drugs compounded, and the number of businesses in this market. Policymakers have raised questions regarding how best to improve the safety of CDs while maintaining patient access to needed medications. Drug compounding has historically been the focus of state governments through their regulation of pharmacies. Recently questions have arisen regarding the extent to which the federal government can regulate the practice of compounding through the Federal Food, Drug, and Cosmetic Act (FFDCA). Policy discussions include proposals to clarify federal oversight of high-risk activities and products, to improve federal and state coordination, and to increase use of existing federal authorities. This report provides background information on CDs and non-traditional compounding pharmacies relevant to policy discussions. This includes an overview of the 2012 fungal meningitis outbreak, recent safety alerts and recalls of compounded drugs, definitions of traditional compounding and non-traditional compounding, information on the CDs produced and by whom, information on the demand for non-traditional compounding, including the role of shortages of sterile injectable drugs, hospital out-sourcing, and patient and provider demand, and information on adverse events involving compounded drugs.