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October 14, 2012

Pharmacies Fought Controls

Industry at the Focus of Meningitis Outbreak Beat Back More Federal Oversight

By THOMAS M. BURTON, JAMES V. GRIMALDI and TIMOTHY W. MARTIN

In 1996, David Kessler, then the commissioner of the Food and Drug Administration, warned Congress that tiny drug-compounding pharmacies would spawn a "shadow industry" of unapproved drugs that "could result in serious adverse effects, including death."

Today, Dr. Kessler, who worked for Republican and Democratic administrations, seems eerily prophetic. A painkilling steroid from the New England Compounding Center has exposed as many as 14,000 patients to fungal meningitis, sickened 203 people and killed 15 people. The center has shut down, and health officials warn that the number of cases is expected to rise.

How these firms escaped closer regulation shows how little happens in Washington absent an emergency. Top lawmakers and federal officials tried for years to increase regulation. A countereffort by the industry and a series of court decisions helped beat that back. Federal agencies debated about who should crack down on the industry. Lawmakers eventually abandoned their push after deciding the issue wasn't important enough.

From 2001 to this year, the International Academy of Compounding Pharmacists spent about $1.1 million on lobbying, according to disclosure reports filed with Congress. In a newsletter to members, the academy described how it defeated a 2007 bipartisan draft bill that would have given the FDA more authority to regulate compounding pharmacies after hundreds of its pharmacists canvassed Capitol Hill urging lawmakers to abandon the proposed legislation.

It isn't known whether tighter regulations would have stopped the outbreak tied to the New England Compounding Center. Lawmakers in that 2007 bill proposed restricting distribution of compounded drugs across state lines, which could have prevented the steroid injections from reaching clinics in 23 states. They also proposed giving the FDA more power to inspect facilities.

But compounding pharmacies say they already face ample regulations from state pharmacy boards, and they point out the FDA already has some authority to inspect them. Drug makers that are fully regulated by the FDA can occasionally be implicated in cases involving lethal side effects or dangerous manufacturing problems.

The FDA said its "regulatory authority over compounding pharmacies is more limited by statute than it is for typical drug manufacturers" and that it "will continue to act...to protect public health." A spokesman for the Department of Health and Human Services, which oversees the FDA, said it urges Congress "to give FDA the authority it needs to ensure these kinds of outbreaks do not happen again."

Compounding pharmacies argue they fill in a gap in the pharmacy supply chain. For years, they were small operations that prepared tailored drugs for individual patients, such as a person who is allergic to inactive ingredients in a mainstream pill.

About 3,000 of them make sterilized injections. But David G. Miller, chief executive of the International Academy of Compounding Pharmacists, said the New England Compounding Center "is an aberration that clearly goes far beyond the definition of a compounding pharmacy."

In the 1990s, compounders began to grow. Regulators warned that their mixing of drugs made them more akin to pharmaceutical manufacturers, which must meet sterility standards set by the FDA and can't put drugs on the market without agency approval.

After regulators including Dr. Kessler called for greater oversight of the industry, Congress in 1997 passed a law that gave the FDA clearer authority to treat them like drug makers. Small pharmacies were exempt from FDA regulation, but those that advertised or solicited business faced greater FDA scrutiny.

In 2001-02, four people died, more than a dozen were injured and hundreds exposed after they received back-pain shots tainted with meningitis dispensed by two pharmacies in California and South Carolina. The pharmacist in charge at the California facility later surrendered his license after state regulators found nonsterile conditions.

Around that time, seven compounding pharmacies filed a lawsuit seeking to peel back the FDA's regulatory powers on the grounds that the provision on advertising violated the First Amendment. In 2002, the Supreme Court struck down the 1997 law in a 5-4 ruling that found the law was an unconstitutional prohibition against commercial free speech.

After that, the FDA tried to regulate the industry by issuing compliance policy guidelines. But those had little effect, attorneys say, because they don't carry the same weight as laws or formal regulations.

As early as 2005, high-ranking officials from the FDA and the agency that runs Medicare and Medicaid debated whether to curtail Medicare payments for compounded drugs, according to emails from Medicare staffers. But the agency waited for the FDA to take decisive action first.

"From what we have heard, FDA has had difficulty in its attempts to challenge inappropriate compounding so it is likely that it'd be very rare to have an FDA finding of a violation," according to a 2005 email by Kimberly Neuman, an analyst with The Centers for Medicare & Medicaid Services. Ms. Neuman declined to comment and referred questions to CMS, which didn't comment. FDA officials also declined to comment.

With other regulatory efforts stalling, Sens. Edward Kennedy (D., Mass.) and Pat Roberts (R., Kan.) in 2007 started work on a bill to give the FDA clear powers to regulate compounding pharmacies. One version would have, among other things, strengthened the FDA's powers to inspect all retail pharmacies that make or dispense compounded medications. It would have required compounded drugs to get the same premarket approval from the FDA as generic drugs, and would require clinical trials in some instances. It also called for steps to restrict distribution of compounded medications beyond state lines.

When staffers for Mr. Kennedy sent out the draft for comments, their office and others were inundated by visits from members of the IACP. Members from 30 companies made 285 visits to congressional offices and warned that tighter regulation would put their industry "in jeopardy," according to the group's spring 2007 newsletter.

"IACP is harnessing every available resource to...defeat the so-called 'Safe Drug Compounding Act of 2007,' " the newsletter said. It noted that, during a meeting, Mr. Roberts indicated he had pulled back his support of the draft bill.

The academy hired former Sen. Dennis DeConcini (D., Ariz.) to lobby on its behalf. In an interview, Mr. DeConcini said his job was to open doors for the academy president on Capitol Hill. "I thought they had merit to their case," he said.

Aides in the office of Mr. Kennedy, who died in 2009, ultimately shelved the legislation.

Sarah Little, a spokeswoman for Mr. Roberts, said there were concerns that the draft would outlaw compounding completely.

Sarah Sellers, a former FDA official who worked on compliance issues involving compounding at the agency, says that "political pressure from the compounders" ultimately defeated the legislation.

"There was a very strong legal effort and political campaign on the part of the compounders not only to influence the legislation but make sure it never saw the light of day," said Ms. Sellers, who now consults for drug makers.

Mr. Miller of the IACP said the compounding pharmacy group fought past legislation because it would have allowed the FDA to duplicate regulation assigned to states.

"Our association feels firmly that constitutionally, regulation is assigned to state boards of pharmacy," he said.

In 2009, a compounder in Ocala, Fla., accidentally caused the death of 21 ponies of the Venezuelan national polo team with high doses of a dietary supplement. Florida's pharmacy board issued a fine to Franck's Lab Inc. and reprimanded it.

The FDA inspected the lab three times in 2009 and sought a court injunction to stop it from further compounding animal medicines. Last year a federal district judge rejected the FDA's request, saying that existing law didn't give the agency such power over compounding pharmacies.

--Jonathan D. Rockoff contributed to this article.

Write to Thomas M. Burton at tom.burton@wsj.com and Timothy W. Martin at timothy.martin@wsj.com