IP & FDA Challenges Related to Pharmaceutical Compounding of Human and Animal Drugs

Pharmacy Compounding

Out of approximately 56,000 U.S. pharmacies, about 7,500 specialize in pharmaceutical compounding. As such, these pharmacists spend a great deal of time preparing special medications and treatments for patients. Due to the nature of compounding, pharmacists who specialize in this practice are closely regulated by federal and state authorities. Drug compounding is a process by which a pharmacist or doctor combines, mixes, or alters ingredients to create a medication tailored to the needs of an individual patient. Compounding is typically used to prepare medications that are not commercially available. Compounders may swap out an ingredient that a patient may be allergic to or may change the dosage form into a more suitable form (e.g., taking a large tablet and making the drug product into a powder than can be swallowed easier).

There is quite a bit of grey area, however, when it comes to the FDA’s authority over pharmaceutical compounding. While the federal FDA maintains plenary authority over traditional drug approvals, manufacturing, and sales at the interstate commercial level, pharmacy compounding generally remains subject only to State regulation generally due to its low-scale and localized effect. Due to this distinction, the FDA largely stayed out of the business of compounded drugs in the past. However, a flood of tragedies related to pharmaceutical compounding has reopened the debate on FDA’s regulatory authority over compounded medications. The most notable of these tragedies was the 2012 meningitis outbreak at the Massachusetts-based New England Compounding Center (NECC), which resulted in large scale death and injury, and ended with a $200 million settlement. In November 2013, Congress also passed the Drug Quality and Security Act (DQSA) to help understanding when localized compounding begins to run afoul with the federal FDA laws. Particularly, Congress enacted Section 503A (individualized and identifiable patient) and 503B (compounding outsourcing facilities) to help the industry understand the nature of bulk product production. See DQSA, 113 Pub. L. No. 54, 127 Stat. 587 (2013).

What IP & FDA Challenges Do Compounding Pharmacies Face?

Patent infringement issues exist for compounding pharmacies. Compounding pharmacies take existing drugs and manipulate them for a specific patient. To date, this practice does not fall under the category of new drug manufacturing.But the fine line exists as to when compounding is truly localized and small scale versus manufacturing inordinate amounts at commercial scale. Usually large-scale commercialization is through the FDA’s NDA or ANDA approval route (the typical generic drug approval route). As such, compounding pharmacies frequently choose to bypass the FDA’s ANDA approval route. By not filing an ANDA, the compounder does not certify under to any of the brand company’s patents under the Paragraph IV process. The brand company loses the ability to vet out any patent litigation. Because the compounder does not go through the FDA approval process, it can launch the product right away.If the compounder launches its drug on a large scale, it can result in sudden market erosion, leaving the patentee with no option but to sue for patent infringement. It is no wonder that patentees are up in arms about the potential for compounding pharmacies to engage in patent infringement.

False advertising issues also exist for compounding pharmacies. A compounder’s false claims generally fall into four main categories, including statements that: (1) the FDA has found its drugs to be safe and effective and that they are tested for safety and effectiveness; (2) its drugs use FDA-approved “components” and “ingredients”; (3) it complies with the requirements of Section 503A or 503B; and (4) tout the supposed superiority of its products. The brand drug company or other ANDA approved generic companies may sue the compounder for false advertising of such claims. The federal Lanham Act’s unfair competition provisions may provide remedies. Accordingly, compounders should monitor any advertising, including websites, to avoid running afoul with state and federal unfair competition laws.

And It’s Not Just Human Drugs – Animal Drugs Face The Same Challenge

Compounding pharmacies also exist in the animal drug world. In the same way that human drugs are FDA approved, animal drugs can be approved under the New Animal Drug Application (NADA) process, or for an approved generic animal drug, the Abbreviated New Animal Drug Application (ANADA) process. The animal drug regime also allows for approvals on a conditional basis for conditional use in a minor species or in a major species under special circumstances. The seven major species are cattle, horses, pigs, chickens, turkeys, dogs, and cats. And while animal drugs may not have the same common popularity of human drugs, the compounding issues are the same. Farmers, veterinary clinics, and ranchers may not fully appreciate that compounded drugs are not the same as FDA approved drugs. And compounders may be tempted to bypass the patents by compounding patented drugs when the potential market may involve thousands of animals. The human effect can be felt if the animal in question is a food-producing animal. Compounders of animal drugs can also violate a brand drug company’s 7-year exclusive marketing rights (EMR) for getting a “MUMS” (Minor Use or Minor Species) drug approved.

Contact Upadhye Tang LLP Today

At Upadhye Tang LLP, we understand the intellectual property & FDA challenges related to pharmaceutical compounding for both the patent holder and compounding pharmacies. Our highly-skilled team advises compounders on how to minimize complaints of patent infringement and unfair competition so that they can focus on the legal creation of safe, effective, quality medications. We also assist patent holders in investigations and suing compounding pharmacies who have engaged in patent infringement. Contact Shashank Upadhye at Upadhye Tang LLP today for a confidential consultation about your case.shashank@ipfdalaw.com or 312-327-3326.


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