Rx & The Law

Federal Compounding Statue Declared Unconstitutional and Void:  A Return to the Bad Old Days?

By Kenneth R. Baker, B.S.Pharm., J.D.
Vice President, General Counsel
Pharmacists Mutual Insurance Company

In 1997 the United States enacted the FDA Modernization Act.  The full statute went into effect one year later.  The Act was codified as § 353a of the Food, Drug, and Cosmetic Act [FDCA].  The law provided that certain portions of the FDCA as it related to new drug applications, labeling and inspections would not be applied to pharmacy compounding, if:

… the drug product is compounded for an identified individual patient based on the unsolicited receipt of a valid prescription order or a notation, approved by the prescribing practitioner, on the prescription order that a compounded product is necessary for the identified patient, if the drug product meets the requirements of this section ….  21 USC §353a

Prior to the Act, it could be argued that by a strict reading of the federal drug laws, a pharmacist could have been required to submit a new drug application to the FDA prior to compounding any prescription.  The pharmacist would then have to wait from six months to several years for approval.  By the time approval would arrive, of course, it is unlikely the patient would any longer care. 

The FDA contended that it had the right to enforce federal law on compounding pharmacies.  It did not, it said, only because it decided to exercise its “enforcement discretion”.  Thus the FDA permitted most pharmacists to compound drugs without meeting the stringent standards of the FDCA.[1]  According to the FDA, it could regulate compounding any time it decided.  There were no rules.  The FDA Modernization Act of 1997 established rules.  It placed restrictions on pharmacy compounding, but also protected pharmacists who compounded from FDA “enforcement discretion”.

After § 353a went into effect, many compounding pharmacies voiced objections to some of the restrictions in the Act.  Several of these joined together and brought a lawsuit in federal court to enjoin the FDA from enforcing the objectionable sections. Specifically these pharmacists objected to §§ 353a(a), (b)(3) and (c)[2]  Two of these subsections mandated that compounding pharmacists could not promote or advertise particular compounded drugs. The pharmacists argued these subsections, (a) and (c), violated the First Amendment’s guarantee of free speech.  On this commercial free speech issue, the Federal District Court, sitting in Nevada, handed the pharmacists a victory in 1999.  Importantly, the District Court, while holding that the advertising restrictions must be stricken from the law, it concluded that the remainder of the Act was valid.  The Court said:

Therefore, the court finds that the speech-related portions of the § 353a are severable, leaving the remainder of the statute to operate as it was enacted.  ….  For the foregoing reasons, the court … enjoins the FDA from enforcing the speech-related restrictions contained in §§ 353a(a) and (c).  

The Government appealed to the 9th Circuit Court of Appeals.  The Court of Appeals delivered its opinion on February 6, 2001.  The Court of Appeals agreed with the District Court that §§ 353a(a) and (c) violated the First Amendment, but the Court of Appeals went further.  It held the entire law void.  The Court said:

Thus, we hold that § 353a[a] and § 353a[c]’s restrictions on commercial speech violate the First Amendment {free speech}.  These provisions may not be severed from the rest of the provisions in § 353a.  Accordingly, § 353a is invalid in its entirety.  {Emphasis added}[3].

If you believe this is good news for the compounding pharmacist, you may be mistaken. The “old days” were not good.  Pharmacists are now left without the protection of § 353a.  We may now return to the “old days” when the pharmacist was caught between federal bureaucrats who held that federal law gave them the right to close compounding pharmacies “any time they chose” and state boards of pharmacy who felt that the states controlled the practice of pharmacy, including compounding.

After the demise of § 353a, does the FDCA apply to compounded prescriptions?  Is a new drug application required under § 355?  By what authority are compounded prescriptions exempt from §§ 351(a)(2)(B), 352(f)(1), and 355?  Is pharmacy back to relying upon the FDA’s exercise of its “enforcement discretion”?

The FDA Modernization Act § 353 was passed after much time and work because it was necessary to clarify the law under which pharmacists could compound.  Unless the Court of Appeals reconsiders or the Supreme Court reverses the non-severable part of the decision, a new § 353a must be drafted and passed.  Pharmacists need rules to protect them from potentially arbitrary “enforcement discretion”.

[1] See discussion in Western States Medical Center v. Shalala, 69 F.Supp.2d 1288, 1292 (Dist NV 1999), Rev., --- F.3d ---- (9th Ct. App.), 2000 WL 33153172, 2001.  Also See FDA Guidelines 1992.
[2] § 353a. Pharmacy compounding
(a) In general 
Sections 351(a)(2)(B), 352(f)(1), and 355 of this title shall not apply to a drug product if the drug product is compounded for an identified individual patient based on the unsolicited receipt of a valid prescription order or a notation, approved by the prescribing practitioner, on the prescription order that a compounded product is necessary for the identified patient, if the drug product meets the requirements of this section, and if the compounding—
….
(c) Advertising and promotion
A drug may be compounded under subsection (a) of this section only if the pharmacy, licensed pharmacist, or licensed physician does not advertise or promote the compounding of any particular drug, class of drug, or type of drug. The pharmacy, licensed pharmacist, or licensed physician may advertise and promote the compounding service provided by the licensed pharmacist or licensed physician.
§(b)(3) dealt with the percentage (5% to 20%) of the compounding pharmacies business could be compounding.
[3] Western States Medical Center v. Shalala, --- F.3d ----, 2000 WL 33153172, 2001 Daily Journal D.A.R. 1391 (9th Cir.(Nev.) Feb 06, 2001) (NO. 99-17424).

This article discusses general principles of law and risk management. It is not intended as legal advice. Pharmacists should consult their own attorneys and insurance companies for specific advice. Pharmacists should be familiar with the policies and procedures of their employers and insurance companies, and act accordingly.