What is the Future of Outsourcing Facilities?

PART II Policies, Enforcement, and Predictions

In this section, we will address policies and guidance that the FDA has published since the end of 2013, look at enforcement activities in this area, and make some predictions for the future of this market segment.

According to the FDA website, FDA published four guidances for these entities in 2014. One of the most important, in my opinion, was the Guidance on Current Good Manufacturing Practice – Interim Guidance for Human Drug Compounding Outsourcing Facilities Under Section 503B of the FD&C Act. Outsourcing facilities must comply with GMP requirements in 21CFR 211. In this document, which remains at the draft stage, some considerations and flexibility are provided for these firms. The Guidance on Insanitary Conditions at Compounding Facilities, published in 2016, serves as a companion guidance with detailed examples.

Table 1 Regulatory Policy Information for Compounding / Outsourcing

2014201520162017 (February)
Regulatory Policy Info Published410151

Table 1 demonstrates that in each year since the formation of 503B facilities, the FDA has published both draft and final guidances to assist the area in understanding and complying with requirements.

Not counted within the documents above is an important Notice published by the FDA in July 2016. Previously, 483s and resulting warning letters to these firms cited deviations from 21 CFR 211. According to the notice (bolded emphasis added is mine):

“In response to stakeholder input, and as noted above, FDA investigators now will make a preliminary assessment regarding the firm’s compliance with certain conditions of section 503A before closing an inspection, and if a Form FDA-483 is issued to the firm it will not include observations that represent deviations only from cGMP requirements unless the investigator’s preliminary assessment is that the firm compounds drugs that do not qualify for the exemptions under section 503A. After the inspection, FDA will conduct a thorough review of the evidence to evaluate whether the firm compounds all drugs in accordance with certain conditions of section 503A and other applicable provisions of Federal law. When FDA’s more thorough post inspection review differs from the FDA investigators’ preliminary assessment and reveals that a facility fails to produce drugs in accordance with the conditions of section 503A, FDA intends to consider citing cGMP violations in any regulatory action it decides to pursue.”

The important language here is that if a firm qualifies for the exemption from meeting cGMP requirements, the FDA “…will not include observations that represent deviations only from cGMP requirements…” It has been interesting to note, however, that warning letters issued to 503A firms after this time do cite manufacturing of drugs under ‘insanitary conditions’, and lack of compliance with the FD&C Act rather than citing lack of compliance with 21 CFR 211.  

Table 2 shows the disproportionate enforcement focus, in warning letters, that compounding pharmacies and outsourcing facilities have been subject to over the past 3 fiscal years. These 110 warning letters resulted from more than 350 inspections.ii The FDA Drug Compounding Progress Report states that they issued more than 130 warning letters to both 503A and 503B facilities. Using the FDA’s numbers, that means that just under 40% of firms that were inspected received a warning letter and suggests a sector of the industry that is not operating in a state of control and not showing any visible sign of improvement over the 3-year period. Note that the number of warning letters issued in FY2016 more than doubled over the number issued in FY2015. In all cases, warning letters to compounding pharmacies, including outsourcing facilities, makes up more than half of all drug warning letters issued in FYs 2014, 2015, and 2016. Among the observations and deficiencies identified are:  failure in facility design and maintenance, poor aseptic processing practices including gowning, and lack of procedures and controls.

Table 2.  Warning Letters issued to Compounding Pharmacies and Outsourcing Facilities

FY2013FY2014FY 2015FY 2016
TOTAL Warning Letters41*49**42102
Compounding pharmacies3 (7%)27 (55%)24 (57%)56 (55%)

*Includes one repackager not counted as either API or drug product

**Includes one warning letter regarding combination products, considered drug product

Firms are either not aware of the requirements and expectations and likely have not been following the inspections and enforcement actions being taken in this area. The FDA has been unusually prompt in publishing 483s issued to these firms, in contrast to 483s issued to the conventional pharma manufacturing sites. There is no reason for firms to be unaware of the expectations and the type of conditions and practices that the FDA finds to be objectionable.

The FDA enforcement for compounding pharmacies also includes recalls. Frequently these recalls include all products distributed and that remain within expiry. One of the reasons commonly cited for the recall is a lack of sterility assurance. Another reason for recalls are sub-potency or super-potency of products. The FDA Drug Compounding Progress Report states they have overseen “about 100 recalls involving compounded drugs.” This obviously does not include the instances where in one enforcement report a firm is documented as recalling between 50 and 100 different products. Again, the focus on this market sector appears disproportionate with its size.

I expect the number and percentage of warning letters issued to compounding pharmacies to continue to increase, along with the recall numbers. Until firms evaluate their own gaps and implement remediation, we will continue to see unrelenting enforcement in this area. The FDA has made it easy to learn from others’ mistakes by their rapid posting of 483s resulting from inspections of these firms. The GAO issued a report in November 2016 titled ‘DRUG COMPOUNDING FDA Has Taken Steps to Implement Compounding Law, but Some States and Stakeholders Reported Challenges’ that details actions they suggest the FDA take in the future. This report is a follow up from the GAO report in 2013 titled ‘DRUG COMPOUNDING Clear Authority and More Reliable Data Needed to Strengthen FDA Oversight.

I would, however, raise the question as to whether the 503B Outsourcing Facilities provide sufficient value to public health to justify the resources the FDA has focused on them in the development of policy, guidance, inspections and enforcement, and the risk these facilities continue to pose to public health. Does the risk benefit calculation work out in favor of the patient consumer? Or, is it time to consider that these facilities may not provide value commensurate with the risks they pose? Perhaps the FDA could comment on the value that these facilities provide considering the large number of serious enforcement actions being taken against this niche group of manufacturers.

You can read part one of this post here: Outsourcing Facilities: Are They Still Worth It and Were They Ever?