FDA Proposes Electronic Registration for All Manufacturers and Drugs

The US Food and Drug Administration needs an effective system for registering and tracking pharmaceutical manufacturers and their products to identify the facilities it needs to inspect, select products for testing and sampling, levy user fees, monitor adverse events, and uncover alternative sources of needed medicines. FDA has long maintained a list of all drug products distributed in the United States, including the names of their manufacturers, product formulations, and national drug code (NDC) numbers. The system, however, is rife with errors and omissions. Many manufacturers fail to register new products accurately, to report changes, and to remove discontinued drugs from the list. And, many listed products have incomplete or inaccurate information and erroneous NDC codes.

Jill Wechsler

OIG finds NDC errors

A recent analysis by the Office of the Inspector General (OIG) of the US Department of Health and Human Services found that some 34,000 of the 120,000 drugs listed in FDA's National Drug Code Directory no longer exist and that 9000 marketed drugs are not on the list. The OIG urged FDA to fix the system, and FDA responded that it had plans to do so. Developing an accurate and complete electronic drug-registation and listing process "has been a high priority for several years," an FDA official explained to Pharmaceutical Technology.

In fact, a few days after the OIG published its critical report in August 2006, FDA unveiled a proposed regulation that requires manufacturers, repackagers, relabelers, and drug-product salvagers to submit information about facility locations and marketed drug products to a new electronic drug registration and listing system. Knowing where drugs are made and who is making them will "help stop illicit and substandard manufacturers" that do not comply with good manufacturing practices (GMPs), FDA notes. This information also can facilitate efforts to implement product recalls, monitor adverse events, provide bar codes on all drug products, and identify sources of drugs to counter bioterrorism attacks and address emergencies. Conversion to an electronic system, moreover, supports broader efforts to ensure drug safety and quality, commented FDA Deputy Commissioner Janet Woodcock.

In Washington This Month

Registration requirements

This lengthy proposed rule calls for manufacturers to register their establishments within five days of beginning operations. All foreign manufacturers would have to register and provide information about their US agents and about importers for each drug made for the US market. Producers of excipients and other inactive ingredients would not have to register, but contract manufacturers and laboratories would. The proposed rule applies to human and animal drugs and biologics, including vaccines and therapeutics. It does not apply to blood banks, medical-device makers, or private-label distributors unless they perform manufacturing or relabeling activities. All registrants would have either to update their registration information whenever changes occur or confirm their information twice a year.

Major benefits also would come from integrating the data with the DailyMed electronic labeling system. This linkage not only would help detect errors and omissions in FDA's list, but also would expand public access to drug information and support electronic prescribing initiatives. By scanning a product's bar code, patients and providers would be able to retrieve the latest drug-labeling and safety information, thereby avoiding prescribing and dispensing errors in the process. FDA says the benefits of the new system ultimately justify implementation costs, which it estimates will be about $5.6–5.8 million per year.

Controlling codes

To achieve these gains, the new policy makes an important change in the NDC numbering process. The coding system was created in 1969 to facilitate automated processing of drug data by government agencies, hospitals, insurance companies, and drug manufacturers and distributors. Accurate product codes now are essential for claims processing and a host of regulatory and information functions, including providing proper reimbursement for pharmaceutical companies and pharmacy benefit managers by Medicare, Medicaid, and private payers, Woodcock points out.

No more bulks?

To facilitate implementation of this electronic registration process, FDA proposes to assign the full NDC code for drug products, instead of relying on manufacturers to submit code numbers to the agency. FDA now assigns only the labeler code, the first segment of the 10-digit code, and manufacturers add their own product and package numbers. Unfortunately, companies make coding errors, reuse NDC numbers from discontinued products, and often make changes to a drug without updating the code. These actions result in all the errors in the listing system that drew the OIG's criticism.

The new arrangement will ensure that the codes are "unique and unambiguous," FDA states. The agency plans to assign new codes prospectively to new products; manufacturers will be allowed to retain current numbers, provided they comply with the new rules. The agency considered a proposal to completely reassign all existing NDC numbers, but decided not to because it would cost almost $1 billion to implement and require major changes in data-processing systems used by manufacturers, pharmacy benefit managers, and others.

Control over NDC numbers is key to improving drug registration and many information systems. To get an NDC code for a new drug or dosage form, the manufacturer would have to provide all the required listing information: company name and contact information, drug name, package size and type, drug master file number (for active ingredients), active and inactive ingredients, dosage form, product imprints, and whether a drug is prescription or over-the-counter and for humans or animals. Requirements differ somewhat for repackaged or relabeled products and for drugs made for private-label distribution.

While the new program promises more timely and accurate data, broader public disclosure could reveal some information that manufacturers might prefer to keep confidential (e.g., plant locations, active ingredient amounts, excipients, and names of foreign company agents). FDA says that it may agree to nondisclosure of some trade secret data, but that there are important reasons to permit access to most of the required information.

FYI

The agency explains, for example, that it must know the specific quantity of each active ingredient in order to ensure that an NDC number fits different product strengths. Similarly, FDA wants data on a drug's dosage form to distinguish tablets from, say, capsules. A box with 12 unit-of-use blisters would have a different code from each individual blister, a distinction that could enhance the accuracy and value of bar codes and, thus, reduce medication errors. Patients with allergies must know about excipients. And, information on tablet imprints would help FDA investigate reports of counterfeiting and adverse events.

It is likely to take several years to finalize the e-registration rule. In the meantime, FDA plans to start accepting electronic listings on a voluntary basis once it gets the system up and running. After the rule is on the books, FDA will issue new implementing guidance and e-filing policies.

Covering compounding?

The drug-registration rule would require companies that engage in the "manufacture, preparation, propagation, compounding, or processing" of drugs to list all treatments produced "for commercial purposes." At the same time, the proposal specifically exempts drugs produced for research, teaching, or testing purposes. And, registration is not required for pharmacies, hospitals, and clinics that dispense drugs based on legal prescriptions and "do not manufacture, repackage, or relabel drugs for sale other than in the regular course of the practice of pharmacy."

This language outlining the pharmacy exemption reflects the continuing debate over FDA's authority to regulate large-scale compounders as drug manufacturers. Compounding pharmacists, who are regulated by state law, traditionally produce liquid versions of solid oral-dosage forms for children and patients who cannot swallow pills. They also formulate custom medicines for patients who are allergic to certain excipients and dyes found in commercial products. To avoid being considered drug manufacturers, pharmacists perform such compounding in response to legal prescriptions for specific patients. Some drug formulation may be done in anticipation of receiving a certain number of prescriptions, but not in large volumes for sale through third parties or via Internet Web sites.

FDA, pharmacists, Congress, and the courts have struggled for years over just where to draw the line between legitimate compounding and large-scale operations that qualify as drug manufacturing. FDA wants large compounders to register and comply with GMPs and other requirements to ensure product quality. Growing concerns about drug safety and counterfeiting have generated support for tighter controls, particularly for sterile products to treat serious health conditions. An emerging fear is that compounders open the door for counterfeit active pharmaceutical ingredients (APIs) to enter the US market.

The scope of compounding is unclear. An FDA study in 2001 estimated that some 650 pharmacies fill more than 13 million prescriptions for compounded products each year. But this may be a minimum: FDA officials frequently cite estimates of 30 million compounded prescriptions. Another measure of compounding might be the number of specific problems linked to compounded products. Between 1990 and 2003, FDA says it identified more than 55 product-quality problems associated with compounded drugs, many resulting in recalls.

New warnings

In the past, FDA has challenged compounding in various product categories, including hormonal products, veterinary drugs, steroids, and injectibles. Last year, FDA sent a warning letter to a veterinary compounding facility in Nebraska for large-scale compounding of drugs for resale by third parties. Manufacturers and patient groups have petitioned FDA to take action against compounders. Last year, Wyeth filed a citizens' petition seeking restrictions on the compounding of hormonal therapies identical to its "Premarin."

The latest skirmish involves home health agencies' distribution of large volumes of compounded sterile liquids used in nebulizers by patients with asthma and other respiratory diseases. FDA sent a warning letter in August 2006 instructing CCS Medical (Clearwater, FL, www.ccsmed.com) to halt large-scale production of albuterol and other respiratory medications. A similar letter cites Rotech Healthcare (Orlando, FL, www.rotech.com) for failing to comply with GMPs in producing budesonide and albuterol inhalation products. Another letter to Lincare's Reliant Pharmacy Services (Clearwater, FL, www.lincare.com) reiterated concerns raised in a warning letter issued in December 2004.

In announcing this compliance action, Steven Galson, director of the Center for Drug Evaluation and Research (CDER), noted that using unapproved inhalation drugs that are not produced according to GMPs and "typically are not sterile" may "expose patients to unnecessary risk." Rotech said that even though it disagreed with FDA's findings, it would stop accepting prescriptions for inhalation products and begin the process of shifting some 30,000 patients to commercially available treatments.

Charges that home healthcare companies are substituting compounded products for prescription nebulizer medications prompted Senate Finance Committee Chairman Charles Grassley (R-IA) to launch a probe of these activities last March. The investigators found the use of unregistered below-grade bulk chemicals, and Astra Zeneca and other pharmaceutical manufacturers provided Grassley's staffers with independent tests of compounded drug samples indicating different concentrations, failed sterility tests, and bacterial contamination that could cause infections in people with weakened immune systems. In response to Grassley's report, the Centers for Medicare and Medicaid Services (CMS) said it would revise its coding system to reduce Medicare payments for inhalant drugs produced by compounders, as opposed to products from registered manufacturers.

Unclear authority

CMS payment curbs may have a bigger impact on compounders than FDA warnings, which compounders often contest or ignore. Agency efforts to compel large compounders to comply with GMPs and other regulations have been thwarted for years by conflicting laws and overlapping federal and state jurisdictions. Congress sought to clarify FDA's authority over compounding by adding language to the FDA Modernization Act of 1997 (FDAMA) that defined and set standards for legal pharmacy formulating. A provision prohibiting advertising of compounded products, however, opened the door to a legal challenge, and the Supreme Court ruled in 2002 that the entire FDAMA compounding provision was invalid because of its unconstitutional restriction on commercial speech.

FDA responded with a Compliance Policy Guide in May 2002 to clarify which compounder actions warrant enforcement action. Those actions include:

• distributing inordinate amounts of compounded products out of state;

• using unapproved bulk active ingredients that fail to meet official compendial requirements;

• using commercial-scale manufacturing or testing equipment;

• producing drug products that are essentially copies of commercially available FDA-approved products;

• producing drug products for third-party sale or wholesale distribution.

At a hearing in October 2003 before the Senate Committee on Health, Education, Labor, and Pensions, Galson of CDER described FDA's efforts to find the "right mix" between FDA and state regulation of drug compounding. He cited FDA's growing concern about large-scale drug manufacturing in the guise of pharmacy compounding and about insufficient controls on equipment and facilities to ensure product quality, particularly for difficult-to-compound sterile and modified-release drugs. Some drugs are compounded "for economic reasons rather than genuine medical need," he noted, expressing concern about the promotion of compounded products as "better" than available commercial therapies.

Meanwhile, the legal battle over compounder regulation continues. In the Wedgwood Village Pharmacy case three years ago, a New Jersey state court affirmed that FDA can inspect and regulate compounders. A recent ruling from a US District Court in Texas, however, (Aug. 30, 2006, Medical Center Pharmacy et al. v. Gonzalez) provides strong support for compounders' claim that their activities are legal and exempt from FDA regulation. If FDA wants to inspect a compounder, it first must prove that the pharmacy does not qualify for the compounding exemption, according to the Texas judge, who notes that compounding serves a clear public interest if it complies with local laws.

This ruling could encourage Congress to craft new legislation to clarify FDA authority to regulate high-volume compounding as part of next year's user fee renewal campaign. Such a move would be supported by patient groups such as the Allergy and Asthma Network Mothers of Asthmatics and the Consumer Health Alliance for Safe Medication (CHASM), which have pressed for tighter controls on compounding by Congress and FDA. In a petition filed with FDA in March 2005, CHASM (which acknowledges support from pharmaceutical manufacturers) requested that all compounded drug products carry labels stating that they are not regulated by FDA and have not been tested for safety, efficacy, or sterility.

Compounding pharmacists counter that such proposals reflect efforts by drug manufacturers to kill off competition. The International Academy of Compounding Pharmacists (Sugar Land, TX, www.iacprx.org) claims that only states have jurisdiction over compounding and that their operations are legal if they fill valid prescriptions, no matter how high the volume or whether products cross state lines.

Although FDA would deny the pharmacy exemption to compounding "for commercial distribution," the new e-registration rule avoids addressing drug compounding issues directly. A more efficient and rigorous FDA drug-registration system linked to NDC codes, however, aims to identify illegal manufacturers better and, in the process, would clarify further those compounding operations that produce misbranded drugs. And, a more efficient and accurate listing process would free FDA resources to focus more on compliance and make it more difficult for large-scale compounders to slip through the cracks. Such possibilities are sure to draw lots of public comment.

Jill Wechsler is Pharmaceutical Technology's Washington editor, 7715 Rocton Ave., Chevy Chase, MD 20815, tel. 301.656.4634, jwechsler@advanstar.com