October 02,2006

Response From the Food and Drug Administration to Letter From Sen. Grassley on Compounding of Inhalation Drugs

The Honorable Charles E. Grassley


Committee on Finance

United States Senate

Washington, D. C. 20510-6200

Dear Senator Grassley:

Thank you for your letter dated July 13,2006, to Acting Commissioner Andrew C. von Eschenbach, M.D.? of the Food and Drug Administration (FDA or the Agency) and Administrator Mark McClellan of the Centers for Medicare & Medicaid Services (CMS). Your letter expresses concern about the inappropriate pharmacy compounding of inhalation drugs and inquires about FDA and CMS policies related to this practice.    This letter responds to your questions regarding the policies of FDA.    We understand that CMS has responded in a separate letter to your questions concerning the policies within their purview.

Traditional pharmacy compounding is the combining, mixing, or altering of ingredients in response to a prescription from a licensed practitioner to create a medication tailored to the needs of an individual patient.    Traditional compounding typically is used to prepare medications that are not available commercially, such as medication for a patient who is allergic to an ingredient in a mass-produced product, or diluted dosages for children.    It involves providing a service in response to a physician's prescription in order to accommodate the specialized need of a particular patient.

FDA believes that traditional pharmacy compounding can play a legitimate role in patient care.    Compounded inhalation drugs, however, like all compounded drugs, are not FDA approved, which means that FDA has not verified their safety and effectiveness.    FDA shares your concern about the risks associated with the inappropriate compounding of inhalation drugs.    In some cases, the processes used to compound these drugs may not prevent contamination or assure that they possess the strength, quality, and purity that they claim to have.    Because the patients who use these drugs often have serious hnderlying health conditions, these poor practices pose special risks.    FDA has taken enforcement action against firms engaging in the large-scale manufacture of unapproved inhalation drugs under the guise of traditional compounding.    Some of the inhalation drugs produced by these firms were contaminated, were dispensed without prescriptions, and were provided to patients in place of FDA-approved, commercially-available products.

In an effort to work with CMS on this issue of mutual concern, FDA recently commented by letter on proposed revisions to the Medicare reimbursement policy on nebulizer drugs. FDA's letter to CMS (copy enclosed) outlines the risks of compounded inhalation drugs, and explains how reimbursement policies may inadvertently create an incentive for the inappropriate compounding of these drugs.    The letter also offers proposed reimbursement alternatives for consideration by CMS.

FDA continues to focus on the inappropriate compounding of inhalation drugs, and offers the following specific responses to the questions in your letter.    Your questions are repeated below in bold followed by FDA's response.

Question1. Pharmaciesbelievethatitisthestateboardsofpharmacythatare responsible for regulating drug compounding; however, given the limitations in oversight by state boards of pharmacy, what is or should be the federal role in the regulation of pharmacy compounding?

Response: FDA recognizes that some pharmacies mistakenly believe that state boards of pharmacy are solely responsible for regulating drug compounding.    State boards of pharmacy are the primary regulators of pharmacies.    FDA's position is that the Federal Food, Drug, and Cosmetic (FD&C) Act establishes Agency jurisdiction over "new drugs," drugs which are not generally recognized as safe and effective for their labeled uses.    Indeed, FDA has a 90-year history of regulating pharmacies under the FD&C Act and its predecessor laws, and of treating compounded products that are not generally recognized as safe and effective as "new drugs."    When it takes enforcement actions relating to compounded drugs, FDA often works in cooperation with the state boards of pharmacy.

As you may be aware, FDA recently took the position in its brief in the Medical Center Pharmacy case that compounded drugs are new drugs.    As noted in greater detail below, the federal district court judge ruled against FDA on August 30,2006.

Nevertheless, FDA has long recognized that traditional pharmacy compounding serves an
important public health function.    Through the exercise of enforcement discretion, FDA
historically has not taken enforcement action against pharmacies engaged in traditional
compounding.    Rather, FDA has directed its enforcement resources toward firms that
manufacture large quantities of unapproved new drugs under the guise of traditional
compounding, or whose compounding practices result in significant violations of the new
drug, adulteration, or misbranding provisions of the FD&C Act.
FDA outlines its enforcement policy on pharmacy compounding in its Compliance Policy Guide (CPG) section 460.200 ["Pharmacy Compounding"].    A copy of this CPG is enclosed with this letter.    The CPG lists factors that the Agency considers in deciding whether to exercise enforcement discretion with respect to pharmacy compounding.    The factors in the CPG are not exhaustive, and FDA may consider other factors in particular cases.
Question 2. Is the FDA considering modifications to its pharmacy compounding compliance guide to further clarify what activities fall under the category of drug manufacturing?

Response: FDAissueditscurrentpharmacycompoundingCPGinMay2002,shortlyafter theSupremeCourtruled in Thompsonv. WesternStatesMedical Center,535U.S.357 (2002), that section 503A of the FD&C Act restricted constitutionally protected commercial speech.    FDA issued the CPG in final form, without opportunity for advance public comment, to fill the regulatory vacuum created by the Supreme Court's decision.    With release of the CPG, FDA requested comments and stated that it would review comments submitted to the Agency and revise the CPG, if appropriate.    That process is still underway.

Question 3. Does the FDA require additional and/or more explicit authorities to respond to allegations of inappropriate or illegal compounding of inhalation drugs, particularly in light of the district court ruling by Judge Robert Junell in Medical CenterPharmacy v. Ashcroj), on May 25,2006, that compounded drugs are not considered unapproved products under the Food, Drug, and Cosmetic Act?

Response: On August 30,2006, Judge Junell, issued a written opinion in the Medical Center Pharmacy case described above.    FDA and its U.S. Department of Justice counsel currently are considering the court's opinion, to gauge its scope and meaning, and to determine whether to appeal the court's ruling.

Question 4. My staff were told that the Medicare reimbursement rate for inhalation drugs is a major driving force for large volume compounding of such drugs, and these large providers can be identified easily by CMS's DME regional carriers.    As the agency responsible for oversight of DME suppliers, how often does CMS conduct audits of DME suppliers that provide compounded medications, and how are these audits initiated?    Does CMS coordinate with FDA on audits and inspections?

Response:    Since this question addresses Medicare reimbursement and CMS audits, FDA defers to CMS for an answer.

Question5. Itappearsthatoneaspectofthesolutiontoaddressingsomeofthe problems identified is raising awareness among health care,providers who prescribe inhalation drugs of the inappropriate or illegal'compounding of such drugs.    For example, is the FDA considering alerting physicians by sending out Dear Healthcare Provider letters and/or issuing a public health advisory to advise physicians of how some pharmacies orDMEsuppliers are manipulating the system to "switch" a patient from a prescribed drug to a compounded drug?

Response: FDAagreesthathealthcareprovidersmustunderstandtherisksassociatedwith compounded inhalation drugs, including the risk of patients being switched to these drugs without their knowledge or consent.    Conveying this information was one of FDA's objectives when it recently issued Warning Letters to three firms warning them to stop manufacturing and distributing thousands of doses of unapproved inhalation drugs under the guise of compounding.    The Warning Letters identifl a range of serious concerns posed by practices of these firms including inadequate quality control, concerns about potency, and compounding what essentially are copies of FDA-approved, commercially-available drugs without any patient-specific need.    FDA also issued a press release advising health care providers, patients, and other members of the public about the health risks connected with the practices of these firms, as well as other firms that likewise compound and distribute mass amounts of unapproved inhalation drugs.    Taken together, we expect the press release and the Warning Letters will raise patient and practitioner awareness about this important public health issue.

Question 6. The American Academy of Allergy, Asthma and Immunology and the American College of Allergy, Asthma and Immunology proposed a resolution urging the American Medical Association (AMA) to request that the FDA take enforcement action against pharmacies that are mass manufacturing medications under the guise of compounding and that CMS reconsider paying for these medications.    The resolution also calls for education of physicians regarding potential liability, since they are accountable for signing prescriptions for such medications, knowingly or unknowingly.    Has FDA spoken with AMA or other professional societies to coordinate an educational campaign on this issue?

Response:    An FDA representative attended the AMA's meeting where the resolution proposed by the American Academy of Allergy, Asthma and immunology and the American College of Allergy, Asthma and Immunology was discussed.    We understand that the AMA's House of Delegates recommended that the resolution be referred for decision by the AMA's Board of Trustees.    FDA will continue to monitor the progress of the resolution and, as appropriate, provide comments.    FDA also has spoken with several professional societies regarding compounded drugs.    Last October, for example, an FDA representative participated in a panel discussion on compounded inhalation drugs at the annual meeting of the American College of Chest Physicians.    FDA welcomes the opportunity to continue to work with professional societies on this matter of mutual interest and concern.

Question 7. CMS staff informed my staff that changing and creating HCPCS codes is labor intensive.    However, since the agency cannot distinguish payments for compounded inhalation drugs from payments for brand name or generic drugs, will CMS be considering modifications to how inhalational drugs are reimbursed?

Response:    Since this question addresses Medicare reimbursement, specifically, the development of HCPCS codes, FDA defers to CMS for an answer.

Question 8. Patients should be told when they are taking compounded inhalational drugs and why.    Who is or should be responsible for ensuring that compounded medications are labeled appropriately so that there is full disclosure regarding the risks and benefits of the drugs that patients are taking?

Response: As you know, compounded drugs do not undergo FDA pre-market approval, which includes review of proposed product labeling.    Thus, as a general matter, FDA does not ensure that compounded drugs are properly labeled before they are marketed.

There is no regulatory provision in the FD&C Act that explicitly requires the labeling of a compounded drug to disclose that the drug is compounded and that FDA has not evaluated its safety and effectiveness.    As with all drugs, however, compounded drugs are misbranded if their labeling is false or misleading.    Compounded drugs are likewise misbranded if their' labeling fails to include adequate warnings or if the drugs are "dangerous to health" when used in the manner suggested by their labeling.    However, FDA bears the burden of proof in order to apply these misbranding provisions.    Further, consistent with the FD&C Act, states may impose additional disclosure requirements on pharmacy-dispensed prescription drugs.

Question 9. Please keep the Committee apprised of FDA's actions related to CHASM'S citizen petition.

Response: FDA certainly will keep you informed of action that it takes in response to the Citizen Petition from the Consumer Health Alliance for Safe Medication (CHASM) and will send you a copy of FDA's response when it is released.

Question 10. What is CMS's position on maintaining reimbursement for nebulizers in Medicare Part B but restricting reimbursement for the inhalational drugs to Part D?    What is CMS's position on accreditation of compounding pharmacies in order to receive Medicare reimbursement?

Response: SincethisquestionaddressesMedicarereimbursementunderPartsBandD,and conditions of Medicare reimbursement, FDA defers to CMS for an answer.

Question 11. Has CMS considered requiring a determination of medical necessity for compounded inhalational drugs?

Response: Sincethisquestionaddressesthedeterminationofmedicalnecessityforpurposes of Medicare reimbursement, FDA defers to CMS for an answer.

Thank you again for your concerns about this important issue.    If you have further questions, please let us know.


David W. Boyer

Assistant Commissioner

for Legislation
2 Enclosures

Letter from Steven Silverman, FDA, CDER Office of Compliance, to Medicare on

Proposed Revisions to Nebulizers Policy (May 11,2006)

FDA Compliance Policy Guide (CPG), section 460.200 ["PharmacyCompounding"] (May 2002).


Public Health Service

Food and Drug Administration
Rockvine, MD 20857

MAY 11 2006

Paul J. Hughes, M.D.

Medical Director, DME PSC Regions A & B


7909 Parklane Road, Suite 190

Columbia, SC 29223

Adrian M. Oleck, M.D.

Medical Director, DME PSC Region C

TrustSolutions, LLC

8720 Castle Creek Pkwy

Suite 300

Indianapolis,IN 46250

Mark D. Pilley, M.D.

Medical Director, DME PSC Region D

IntegriGuard, LLC

2121 North 117 Ave.

Suite 200

Omaha, NE 68164

RE:    Proposed Revisions to Nebulizers Policy

Draft LCD for Nebulizers (DL11499)

Dear Drs. Hughes, Oleck, and Pilley:

Thank you for the opportunity to comment on the proposed revisions to the Medicare nebulizer reimbursement policy. FDA is concerned that the proposed revisions do not distinguish FDA- approved, commercially-manufactured inhalation drugs from unapproved inhalation drugs compounded at pharmacies. Treating these drugs identically may create an incentive for the large-scale compounding of unapproved inhalation drugs. Because compounded inhalation drugs are not reviewed by FDA for safety or efficacy, often are not produced according to good drug manufacturing practice, and typically are not sterile, they may expose patients to unnecessary risk. This is especially the case given that FDA-approved inhalation drug sare readily available to patients.

FDA Is Concerned About Unapproved Compounded Inhalation Drugs.

FDA views traditional compounding as a pharmacy combining, mixing, or altering ingredients pursuant to a valid prescriptionto create a drug tailored to an individualpatient's needs. Traditional compounding typically produces drugs that are not commercially available, such as medication for a patient with an allergy to an FDA-approved product.'

FDA believes that a growing number of pharmacies are manufacturing and distributing unapproved inhalation drugs in a manner that goes well beyond traditional compounding. FDA has seen pharmacies compounding'millions of doses of inhalation drugs that are often copies of approved, commercially-available products, or that differ from FDA-approved drugs only in terms o fdosage, strength, or preservatives. These compounded inhalation drugs maybe distributed to patients in multiple states without documented, patient-specific medical need. Many times, physicians do not know that their patients are receiving compounded products. FDA is aware of pharmacies substituting compounded drugs for FDA-approved products, without physician approval.

Compounded drugs are not subject to FDA's drug approval process, which assures drug safety and efficacy, and they often are not produced under the good manufacturing requirements that FDA imposes on commercial drug manufacturers. FDA is concerned that, in some cases, the processes used to compound drugs may not prevent contamination or assure that the drugs possess the strength, quality, and purity reported o ntheir labels. These concerns are underscored by FDA analysis of compounded drugs, as well as enforcement actions by FDA and its state counterparts against contaminated compounded inhalation products. Examples include:

• FDA analyzed samples of compounded inhalation products as part of a compounded drug survey and found that the potency of some samples was below their labeled strength.

• Based on FDA investigative work, the Missouri Board of Pharmacy took enforcement action against a pharmacy that compounded and distributed mass quantities of contaminated albuterol/ipratropium solution to thousands of patients. Despite knowing of the contamination, the pharmacy failed to properly recall the contaminated drugs.

• FDA issued a warning letter to a California pharmacy using commercial-scale manufacturing equipment to compound mass quantities of inhalation drugs, without prescriptions fo rindividually-identified patients. The firm recalled its product due to microbial contamination and a joint FDA/Califomia inspection concluded that the firm was incapable of complying with good drug manufacturing practice.

The Proposed Policy Changes May Promote Compounding of Unapproved Inhalation Drugs.

TriCenturion's March 25, 2006, 'Dear Physician' letter asks for comments on four proposed policy changes, the first of which provides: "Payment for levalbuterol will be based on the allowance for albuterol.'    There is one FDA-approved levalbuterol product.    But the proposed policy would reimburse all levalbuterol products, including unapproved compounded products, at the same rate.

This policy may encourage pharmacies to compound unapproved levalbuterol products, rather than dispense the FDA-approved drug. The cost to pharmacies of dispensing unapproved, compounded drugs is generally much lower than the cost of dispensing FDA-approveddrugs. Hence the profits from these compounded inhalation drugs are correspondingly higher than profits from FDA-approved drugs. Pharmacies ca ncompound inhalation drugs inexpensively because these drugs do not undergo FDA's approval process, they often are not produced according to good drug manufacturing practice, and they generally are not sterile. FDA does not favor reimbursement policies that foster the compounding of inhalation drug that may pose risks not found in the approved products with which they compete.

The second proposed policy change provides that "[playment for DuoNeb will be based on the allowance for separate unit dose vials of albuterol and ipratropium." As with the first proposed policy change, FDA is concerned that this new policy will promote compounding of unapproved inhalation drugs. DuoNeb is the only FDA-approved product that contains both albuteroland ipratropium. Reimbursing DuoNeb based on the allowance for separate units of albuteroland ipratropium encourages compounding pharmacies to steer patients toyards compounded albuterol/ipratropium combinations tha tare inexpensive to produce. As with compounded levalbuterol, pharmacies are able to make these compounded combinations less expensively because they do not undergo FDA approval, they often are not produced according to good drug manufacturing practice, and they generally are not sterile. While these deficiencies lower the production cost of the compounded products, they may put patients at risk.

Additionally, the draft proposed LCD for Nebulizers that is attached to the TnCenturion letter includes specific statements that could promote the inappropriate compounding of drugs. For example, the proposed policy states:

The medical necessity for administering albuterol and ipratropium in a non-compounded combined unit dose preparation (J7620) has not been established [emphasis supplied].

By asserting that the medical necessity for non-compounded combinations has not been established, this statement suggests that the medical necessity for administering compounded albuterol and ipratropium in a combined unit dose preparation has been established, which is not the case.

Consistent with its concerns about compounded inhalation products, FDA recommends that CMS consider limiting reimbursement of inhalation drugs to FDA-approved products, unless there is documented, patient-specific medical need for a compounded product. Additionally, CMS might consider reimbursing compounded drugs at a lower rate than FDA-approved inhalation drugs, because the compounded drugs generally are much less expensive to produce. In order to distinguish reimbursement claims for FDA-approved inhalation drugs from reimbursement claims for unapproved, compounded drugs, these drugs should be assigned different codes.


Thank you for the opportunity to provide FDA's views on the compounding of unapproved inhalation drugs and how the proposed Medicare reimbursement policy for nebulizers may encourage in appropriate compounding. If you have any questions, please feel free to contact me at (301) 827-8910.
Sincepely yours,  

Steven Silverman , Acting Deputy Director

U.S. Food and Drug Administration

Center for Drug Evaluation and Research

Office of Compliance

Appendix A - FDA's Regulatory Approach to Compounded Drugs

Under the Federal Food, Drug, and Cosmetic Act (FDCA), a 'new drug" may not be legally manufactured or sold in the United States unless it has been pre-approved by FDA as safe and effective for its intended uses. See 21 U.S.C. 5s 321(g) and (p), 352,353(b), and 355. When a pharmacist compounds a prescription drug, by definition, he or she creates a "new drug" under federal law because the compounded product is not "generally recognized, among experts . . . as safe and effective." See21U.S.C.$5321(p). In virtually all instances, compounded drugs have not been approved by FDA as safe and effective and thus are unapproved drugs.

FDA has long recognized, however, that traditional pharmacy compounding serves an important public health function by meeting the specialized medical needs of individual patients for whom commercially available approved drugs are inadequate or inappropriate. Accordingly, FDA historically has not taken enforcement actions against pharmacies engaged in the traditional practice of pharmacy. Rather, FDA has directed its enforcemen tresources against establishments that produce large quantities of unapproved new drugs under the guise of traditional compounding, and establishments whose activities result in significant violations of the new drug, adulteration, or misbranding provisions of the FDCA.

FDA's current enforcement policy with respect to pharmacy compounding is articulated in Compliance Policy Guide (CPG), section 460.200 rPharmacy Compounding"l(May 2002), which is attached to this letter. The CPG lists factors that the agency considers in deciding whether to exercise its enforcement discretion with respect to pharmacy compounding. These factors help different iate the traditional practice of pharmacy compounding from the large-scale manufacture of unapproved new drugs. They further address compounding that presents a threat to the public health or to the drug approval process (such as compounding drugs that are commercially available, FDA-approved drugs).

Attachment: Compliance Policy Guide (CPG),section460.200('Pharmacy Compounding"] (May 2002).

Guidance for FDA Staff and Industry

Compliance Policy Guides Manual

Sec. 460.200 Pharmacy Compounding

Submit written comments regarding this guidance document to the Dockets Management Branch (HFA-305). 5630 Fishers Lane, rm.1061, Rockville, MD 20852.

Additional copies of this document may be. obtained by sending a request to the Division of Compliance Policy (HFC-230). Food and Drug Administration. 5600 Fishers Lane, Rodcville, MD 20857, or from the Internet at: http~lwww.fda.govloralcompliance_ref/cuIt.htm

U.S. Department of Health and Human Services

Food and Drug Administration

Office of Regulatory Affairs

Center for Drug Evaluation and Research

May 2002

Compliance Policy Guide

Compliance Policy Guidance for FDA Staff and




Sec. 460.200    Pharmacy Compounding

This guidance represents the Food and Drug Administration's(FDA's) current thinking on this topic. It does not create or confer any rights for or on any person and does not operate to bind FDA or the public. An alternative approach may be used if such approach satisfies the requirements of the applicable statutes and requlations.


This document provides guidance to drug compounders and the staff of the Food and Drug Administration (FDA) on how the Agency intends to address pharmacy compounding of human drugs in the immediate future as a result of the decision of the Supreme Court in Thompson v. Western States Medical Center, No. 01-344, April 29, 2002. FDA is considering the implications of that decision and determining how it intends to regulate pharmacy compounding in the longterm. However, FDA recognizes the need for immediate guidance on what types of compounding might be subject to enforcement action under current law. This guidance describes FDA's current thinking on this issue.


On March 16.1992, FDA issued a compliance policy guide (CPG),sectbn'T132.16 (later renumbered as 460.200) to delineate FDA's enforcement policy on pharmacy compounding. That CPG remained in effect until 1997 when Congress enacted the Food and Drug Administration Modernization Act of 1997.

On November 21,1997. the President signed the Food and Drug Administration Modernization Act of 1997(Pub.L105115) (the Modernization Act). Section 127 o fthe Modernization Act added section, 50314 to the Federal Food. Drug, and Cosmetic Act (the Act). to clarify the status of pharmacy compounding under Federal law. Under section 503A, drug producls that were compounded by a pharmacist or physician on a customized basis for an individual patient were entitled to exemptions from three key provisions of the Act: (1) the adulteration provision of section 501(a) (2)(B) (concerning the good manufacturing practice requirements); (2) the misbranding provision of section 502(f)(l) (concerning the labeling of drugs with adequate directions for use); and (3) the new drug provision of section 505 (concerning the approval of drugs under new drug or abbreviated new drug applications). To qualify for these statutory exemptions, a compounded drug product was required to satisfy several requirements, some of which were to be the subject of FDA rulemaking or other actions.

Section503A of the Act took effect on November 21, 1998, one year after the date of the enactment of the Modernization Act.  In November, 1998, the solicitation and advertising provisions of section 503A were challenged by seven compounding pharmacies as an impermissible regulation of commercial speech. The U.S. District Court for the District of Nevada ruled in the plaintiffs' favor. FDA appealed to the U.S. Court of Appeals for the Ninth Circuit On February 6, 2001, the Court of Appeals declared section 503A invalid in its entirely (Western States Medical Center v. Shalala. 238 F.3rd 1090 (9th Cir. 2001)). The government petitioned for a writ of certiorari to the U.S. Supreme Court for review of the circuit court opinion. The Supreme Court granted the writ and issued its decision in the case on April 29.2002.

The Supreme Court aftirmed the 9th Circuit Court of Appeals decision that found section 503A of the Act invalid in its entirety because it contained unconstitutional reslrictions on commercial speech (i.e., prohibitions on soliciting prescriptions for and advertising specific compounded drugs). The Court did not rule on, and therefore left in place, the 9th Circuit's holding that the unconstitutional restrictions on commercial speech could not be severed from the rest of section 503A. Accordingly, all of section 503A is now invalid.

FDA has therefore determined that it needs to issue guidance to the compounding industry on what factors the Agency will consider in exercising its enforcement discretion regarding pharmacy compounding.


FDA recognizes that pharmacists traditionally have extemporaneously compounded and manipulated reasonable quantities of human drugs upon receipt of a valid prescription for an individually identified patient from a licensed practitioner. This traditional activity is not the subject of this guidance.

FDA believes that an increasing number of establishments with retail pharmacy licenses are engaged in manufacturing and distributing unapproved new drugs for human use in a manner that is clearly outside the bounds of traditional pharmacy practice and that violates the Act Such establishments and their activities are the focus of this guidance. Some "phamacies" that have sought to find shelter under and expand the scope of the exemptions applicable to retail pharmacies have daimed that their manufacturing and distriiution practices are only the regular course of the practice of pharmacy. Yet, the practices of many of these entities seem far more consistent with those of drug manufacturers and wholesalers than with those of retail pharmacies. For example. some firms receive and use large quantities of bulk drug substances to manufacture large quantities of unapproved drug products in advance of receiving a valid prescription for them. Moreover some firms sell to physicians and patients with whom they have only a remote professional relationship. Pharmacies engaged in activities analogous to manufacturing and distributing drugs for human use may be held lo the same provisions of the Act as manufacturers.


Generally, FDA will continue to defer to state authorities regarding less signiftcant violations of the Act related to pharmacy compounding of human drugs. FDA anticipates that, in such cases. cooperative efforts between the states and the Agency will result in coordinated investigations, referrals, and follow-up actions by the states.

However, when the scope and nature of a pharmacy's activities raise the kinds of concerns normally associated with a drug manufacturer and result i n significant violations of the new drug, adulteration, or misbranding provisions of the Act, FDA has determined that it should seriously consider enforcement action. In determining whether to initiate such an action, the Agency will consider whether the pharmacy engages in any of the following acts:

1. Compounding of drugs in antidpation of receiving prescriptions, except in very limited quantities in relation to the amounts of drugs compounded afler receiving valid prescriptions.

2. Compounding drugs that were withdrawn or removed from the market for safety reasons. Appendix A provides a list of such drugs that will be updated in the future, as appropriate.

3. Compounding finished drugs from bulk active ingredients that are not components of FDA approved drugs without an FDA sanctioned investigational new drug application (IND) in accordance with 21 U.S.C. 355(i) and 21 CFR 312.

4. Receiving, storing, or using drug substances without first obtaining written assurance from the supplier that each lot of the drug substance has been made in an FDA- registered facility.

5. - Receiving, storing, or using drug components not guaranteed or otherwise determined to meet official compendia requirements.

6. Using commercial scale manufecturing or testing equipment for compounding drug products.

7. Compounding drugs for third parties who resell to individual patients w offering compounded drug products at wholesale to other state licensed persons or commercial entities for resale.

8. Compounding drug products that are commercially available in the marketplace or that are essentially copies of commercially available FDA-approved drug products. In certain circumstances, it may be appropriate for a pharmacist to compound a small quantity of a drug that is only slightly different than an FDA-approved drug that is commercially available. Int hese circumstances FDA will consider whether there is documentation of the medical need for the particular variation of the compound for the particular patient.

9. Failing lo operate in conformance with applicable state law regulating the practice of pharmacy.

The foregoing list of factors is not intended to be exhaustive. Other factors maybe appropriate for consideration in a particular case.

Other FDA guidance interprets or clarifies Agency positions concerning nuclear pharmacy, hospital pharmacy, shared service operations. mail order pharmacy. and the manipulation of approved drug products.


Ditrict offices are encouraged to consult with state regulatory authorities to assure
coherent application of this guidance to establishments that are operating outside of the traditional practice of pharmacy.

FDA-initiatedregulatory action may include issuing a warning letter. seizure. injunction, and/or prosecution. Charges may indude, but need not be limited to, violations of 21 U.S.C. $5 351(a)(Z)(B), 352(a), 352(f)(l). 352(0), and 355(a) of the Act.

Issued: 3/16/1992

Reissued: 5/29/2002



Adenosine phosphate: All drug produds containing adenosine phosphate.

Adrenal cortex: All drug produds containing adrenal cortex.

Aminopyrine: All drug produds containing aminopyrine.

Astemizde: All drug produds conKming astemizde.

Azaribine: All drug produds containing azaniine.

Benoxaprofen: All drug products containing benoxaprofen.

Bithionol: All drug products containing bithionol.

Bromfenac sodium: All drug products containing bromfenac sodium.

Butamben: All parenteral drug products containing butamben.

Camphoratedoil: All drug products containing camphoratedoil.

Carbetapenlanecitrate: All oralgel drug products containing carbetapentanecitrate.

Casein. iodinated: All drug products containing iodinated casein.

Chlorhexidine gluconate: All tinctures of chlorhexidine gluconate formulated for use as a patient preoperative skin preparation.

Chlormadinone acetate: All drug produds containing chlonnadinone acetate.

Chloroform: All drug products containing chloroform.

Cisapride: All drug produds containing asapride.

Cobalt: All drug products containing cobalt salts (except radi0adiv.e forms cobalt and its
salts and cobalamin and its derivatives).

Dexfenfluramine hydrochloride: All drug products containing dexfenfiuramine hydrochloride.

Diamthazole dihydrochloride: All drug products containing diamthazole dihydrochloride.

Dibromsalan: All drug products containing diromsalan.

Diethylstilbestrol:All oral and parenteral drug products containing 25 milligrams or more of diethylstilbestrdper unit dose.

Dihydrostreptomycinsulfate: All drug products containing dihydrostreptomycinsulfate.

Dipyrone: All drug products containing dipyrone.

Encainide hydrochloride: All drug products containing encainide hydrochloride.

Fenfluramine hydrochloride: All drug products containing fenfluramine hydrochloride.

Flosequinan: All drug products containing flosequinan.

Gelatin: All intravenous drug products containing gelatin.

Glycerol, iodinated: All drug products 'containing iodinated glycerol.

Gonadotropin,chorionic: All drug products containing chorionic gonadotropin sofanimal origin.

Grepafloxacin: All drug products containing grepafloxacin.

Mepazine: All drug products containing mepazine hydrochlorideor mepazine acetate.

Metabrornsalan: All drug products containing rnetabromsalan.

Methamphetaminehydrochloride: All parenteral drug products containing methamphetamine hydrochloride.

Methapyrilene: All drug products containing methapyrilene.

Methopholine: All drug products containing methopholine.

Mibefradiddihydrodrloride: All drug products containing mibefradidihydrochloride.

Ntrafurazone: All drugproducts containing nitrofurazone (except topical drug products formulated for dermatalogic application).

Nomifensine maleate: All drug products containing nomifensine maleate.

Oxyphenisatin: All drug products containing oxyphenisatin.

Oxyphenisatin acetate: All drug products containing oxyphenisah acetate.

Phenacetin: All drug products containing phenacetin.

Phenformin hydrochloride: All drug products containing phenformin hydrochloride.

Pipamazine:All drug products containing pipamazine.

Potassuium arsenite: All drug products containing potassium arsenite.

Potassium chloride: All sold oral dosage form drug products containing potassium chloride that supply 100 milligrams or more of potassium per dosage unit (except for controlled-release dosage forms and those products formulated for preparation of solution prior to ingestion).

Povidone: All intravenous drug products containing povidone.

Reserpine: All oral dosage form drug products containing more than 1 milligram of reserpine.

Sparteine sulfate: All drug products containing sparteine sulfate.

Sulfadimethoxine: All drug products containing sulfadirnethoxine.

Sulfathiazole: All drug produds containing sulfathiazole (except those formulated for
vaginal use).

Suprofen: All drug products containing soprofen (except ophthalmic solutions).

Sweet spirits of nitre: All drug products containing sweet spirits of nitre.

Temafloxacin hydrochloride: All drug products containing temafloxacin.

Terfenadine: All drug products containing terfenadine. 3,3'.4',5tetrachlorosalicylanilide: All drug products containing 3,3',4',5 tetrachlorosalicylanilide.

Tetracycline: All liquid oral drug products formulated for pediatric use containing tetracycline in a concentrationgreater than 25 rnilligrams/rnilliliter.

Ticrynafen: Afl drug products containing ticrynafen.

Tribromsalan: All drug products containing tribrornsalan.

Trichloroethane: All aerosol drug products intended for inhalation containing trichloroethane.

Troglitazone: All drug products containing troglitazone.

Urethane: All drug products containing urethane.

Vinyl chloride: All aerosol dmg products containing vinyl chloride.

Zirconium: All aerosol drug products containing zirconium.

Zomepirac sodium: All drug products containing zmepirac sodium.