Drugs

Court Nixes FDA Compounding MOU with States

The DC federal court has granted summary judgment to seven compounding pharmacies throughout the U.S. that challenged an FDA 10/2020 Final Standard Memorandum of Understanding (MOU) establishing an agreement between state boards of pharmacy and the agency. The agreement would require those boards that sign it to identify and report information on pharmacies within their state that distribute “inordinate amounts” of compounded drugs interstate.

Under Section 503A of the Federal Food, Drug, and Cosmetic Act, the court said, pharmacies in states that sign the MOU may compound drugs exempt from the act’s otherwise applicable new drug laws. Pharmacies in states that do not sign the MOU must comply with a 5% limit in Section 503A that removes the new-drug exemption for pharmacies that distribute compounded drugs interstate in quantities that exceed 5% of their total prescription orders.

The seven compounding pharmacies alleged two procedural violations in FDA’s development of the MOU and also said the agency exceeded its statutory authority in defining several key statutory terms. Specifically, they said the agency violated Section 503A by not developing the MOU through regulation and violated the Regulatory Flexibility Act by failing to analyze the MOU’s impact on small pharmacies.

FDA asked the court for summary judgment in its favor, alleging that the pharmacies lack standing to bring the suit and that their claims otherwise fail on the merits.

However, the court determined that the pharmacies have standing and held that the MOU is a legislative rule and thus subject to the Regulatory Flexibility Act’s procedural requirements.

“The Final Standard MOU constitutes one choice among many available to FDA when implementing Section 503A,” the court said. “Its ultimate decision has significant binding legal consequences for plaintiffs and pharmacies across the country, and it signals a substantive change in the current legal regime governing interstate compounding. The Final Standard MOU is therefore a legislative rule. As a result, FDA was required to comply with the Regulatory Flexibility Act before issuing it. It did not. The court, accordingly, will remand the MOU to FDA to either prepare a regulatory flexibility analysis … or to certify that the MOU ‘will not … have a significant economic impact on a substantial number of small entities.”

The court said it would ask FDA for a progress report in 60 days.

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