House passes Drug Quality and Security Act; Senate passage is likely

September 29, 2013

Bill includes voluntary oversight by FDA of outsourced compounded pharmaceuticals, national distributor licensure, and a timetable for serialization and drug tracking

Pharma track-and-trace, and tighter regulation of compounding pharmacies, is almost here.

In the middle of a high-tension day (Sept. 28) when the House spent hours debating the funding of the Affordable Health Care Act—and the government itself—the legislators paused to approve (by voice vote, indicating a non-controversial action) HR 3204, the Drug Quality and Safety Act. Earlier in the week, both Rep. Fred Upton’s (R-MI) Energy and Commerce Committee and Sen. Tom Harkin’s (D-IA) HELP Committee issued press releases acclaiming a bicameral, bipartisan breakthrough in getting House and Senate versions of the law unified. Sen. Harkin issued a statement applauding the passage, and urging full consideration by the Senate.

In retrospect, the Senate took a gamble, earlier this year, in combining bills addressing supply chain security and compounding pharmacy regulation. The former has been tossed back and forth for years (the so-called pedigree rules for tracking drugs go all the way back to the Prescription Drug Marketing Act of 1987, passed during the Reagan Administration), while the latter rose to public attention in the aftermath of the NECC compounding scandal, from last year, which has killed, at current count, 64 patients and sickened hundreds more. The House had passed a supply-chain security bill only (HR 1919) last spring, and subsequent hearings about including drug compounding had mixed reactions. But the gamble worked, and insofar as press statements are concerned, the compounding legislation carried the supply-chain legislation through to passage.

The key decisions in HR 3204 for compounding:

  • Voluntary federal registration as an “outsourcing facility” for compounding. The bill does not define how such a facility differs from the corner pharmacist (unregistered for the purposes of this law) who might be compounding individual doses for customers.
  • Beginning in FY 2015, a registration fee of $15,000, and an additional $15,000 (inflation-adjusted) for inspections will be assessed on outsourcing facilities.
  • A list will be developed of drugs for which compounding at an outsourcing facility is to be avoided.
  • Compounded drugs from outsourced facilities will have a label saying “this is a compounded drug” or equivalent language.
  • Enhanced communication is to occur between state boards of pharmacy and FDA for warnings or other compliance issues at outsourcing facilities.

Title II of the bill covers supply chain security:

  • Manufacturers, wholesale distributors, repackagers and third-party logistics providers (a first for the latter) will have a federal registration process to undergo
  • Drugs will be labeled and tracked at the lot level (not the unit, or individual package, level) beginning in January 2015, with staged increases in traceability capability throughout the supply chain
  • Ten years from enactment of the bill, FDA will issue guidance on an electronic, interoperable system for tracking drugs at the unit level
  • Dispensers (essentially, pharmacies) will capture drug identification label information, or have that data stored by their distributor/supplier; FDA will analyze the burdens and capabilities of dispensers with fewer than 25 employees, and provide appropriate guidance.

In Congressional testimony earlier this year, FDA had made a push for a new regulatory category addressing high-volume compounders, but they, as well as pharmacy associations, had pushed back, trying to keep regulation at the state level. For compounding pharmacies, the bill’s big concession is to make registration voluntary. In practice, hospitals and others who rely on outsourced compounding will prefer to work with registered facilities—but it remains to be seen how well this will be followed. The bill specifies neither cGMP nor USP <797> manufacturing guidance—but those might come in when FDA issues its regulations.

On the track-and-trace front, it is ironic that the California Board of Pharmacy, had just completed its latest “e-pedigree meeting” as the bill was passed in the House. The bill includes a statement--

"[N]o State or political subdivision of a State may establish or continue in effect any requirements for tracing products through the distribution system … which are in consistent with, more stringent than, or in addition to, any requirements” of the new bill.

--which pretty much stops the California e-pedigree rules in their tracks. There are aspects of the new bill that align well with the California regs, including licensure and labeling timelines, but the big exception is lot-level rather than unit-level tracking in 2015. The ten-year delay in unit-level tracking is, to put it mildly, a very cautious approach to serializing and tracking drug packages, but most of the actors in drug distribution—manufacturers, wholesalers, retailers, medical associations and a variety of patient advocacy groups—had swung their support to the bill. The House committee listed 49 associations, societies and companies that had expressed their support.

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