Compounding caught in federal crosshairs

October 9, 2006

With conflicting statements from the Food & Drug Administration, Centers for Medicare & Medicaid Services, and a Federal District Court judge, the definition and legality of pharmacy compounding once again seems headed to the Supreme Court or Congress for sorting out.

August was a busy month for compounding pharmacies. They are facing the increased likelihood of new legislation to cover the practice. On Aug. 10, the FDA sent warning letters to three compounding pharmacists advising them to cease selling compounded drugs similar or identical to FDA-approved medications. Two weeks later, CMS administrator Mark McClellan sent a letter to Sen. Charles Grassley (R, Iowa) promising to create new payment codes for compounded drugs that would reimburse pharmacists at a much lower rate than the current codes. Finally, on Aug. 30, U.S. District Court judge Robert Junell issued a ruling that struck down FDA's current position that compounded drugs are not legal and approved drugs.

Medical Center Pharmacy v. Gonzalez was filed by 10 pharmacies against the FDA over its position on compounding for both humans and nonfood animals. In August the court responded to the pharmacies' request for a summary judgment on some of the case's issues.

Pharmacy and compounding advocacy groups are clearly quite happy with the ruling. "The court's ruling is a precedent-setting victory for millions of patients, their doctors who prescribe compounded medicines for them, and the compounding pharmacists who prepare their medications," said L. D. King, executive director of the International Academy of Compounding Pharmacists (IACP).

Consumer advocates, on the other hand, expressed concern with the lack of oversight for the practice of compounding. "I don't agree with the court's decision about what is and what is not a new drug," countered Larry D. Sasich, Pharm.D., MPH, FASHP, a consultant to the consumer advocacy group Public Citizen. "Courts in the past have tended to defer to the regulatory authority. It may wind up at the Supreme Court again."

The FDA has 60 days to appeal the decision, and, until that determination is made, the decision is unlikely to impact the agency's attitude toward compounding.

For CMS, the issue is not whether compounding creates a new drug, but rather how pharmacists should be reimbursed. In its letter to Grassley, CMS announced a plan to modify how Medicare will reimburse pharmacists for compounded inhalation drugs under Medicare Part B. According to the letter, CMS is considering a new formula "most probably at significantly lower payment rates."

Details of what precisely CMS will change for 2007 remain unclear, however. According to McClellan's senior adviser Larry Kocot, the new policy will be formally laid out later this fall.

IACP's King hopes that CMS proceeds carefully before changing the policy. "We want to make sure that any reimbursement doesn't preclude patients getting the medications they need," he explained.

Most likely the issue will come before Congress to provide clearer guidelines. "Eventually there may be more legislation on compounding," commented John Rector, senior VP and general counsel at the National Community Pharmacists Association. "Every time this administration argues that compounding is not lawful, they lose."