[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]



 
        EXAMINING IMPLEMENTATION OF THE COMPOUNDING QUALITY ACT

=======================================================================

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 30, 2018

                               __________

                           Serial No. 115-96
                           
                           
                           
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]               
 
 


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov
                        
                        
                        
                        
                             _________ 

                 U.S. GOVERNMENT PUBLISHING OFFICE
                   
29-991                  WASHINGTON : 2019      
 
 
                        
                        
                    COMMITTEE ON ENERGY AND COMMERCE

                          GREG WALDEN, Oregon
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
FRED UPTON, Michigan                 BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas            ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee          GENE GREEN, Texas
STEVE SCALISE, Louisiana             DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio                MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington   JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi            G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia     JERRY McNERNEY, California
ADAM KINZINGER, Illinois             PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia         BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida            PAUL TONKO, New York
BILL JOHNSON, Ohio                   YVETTE D. CLARKE, New York
BILLY LONG, Missouri                 DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana               KURT SCHRADER, Oregon
BILL FLORES, Texas                   JOSEPH P. KENNEDY, III, 
SUSAN W. BROOKS, Indiana                 Massachusetts
MARKWAYNE MULLIN, Oklahoma           TONY CARDENAS, California
RICHARD HUDSON, North Carolina       RAUL RUIZ, California
CHRIS COLLINS, New York              SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota           DEBBIE DINGELL, Michigan
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina
                         Subcommittee on Health


                       MICHAEL C. BURGESS, Texas
                                 Chairman
BRETT GUTHRIE, Kentucky              GENE GREEN, Texas
  Vice Chairman                        Ranking Member
JOE BARTON, Texas                    ELIOT L. ENGEL, New York
FRED UPTON, Michigan                 JANICE D. SCHAKOWSKY, Illinois
JOHN SHIMKUS, Illinois               G.K. BUTTERFIELD, North Carolina
MARSHA BLACKBURN, Tennessee          DORIS O. MATSUI, California
ROBERT E. LATTA, Ohio                KATHY CASTOR, Florida
CATHY McMORRIS RODGERS, Washington   JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia         KURT SCHRADER, Oregon
GUS M. BILIRAKIS, Florida            JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                     Massachusetts
LARRY BUCSHON, Indiana               TONY CARDENAS, California
SUSAN W. BROOKS, Indiana             ANNA G. ESHOO, California
MARKWAYNE MULLIN, Oklahoma           DIANA DeGETTE, Colorado
RICHARD HUDSON, North Carolina       FRANK PALLONE, Jr., New Jersey (ex 
CHRIS COLLINS, New York                  officio)
EARL L. ``BUDDY'' CARTER, Georgia
GREG WALDEN, Oregon (ex officio)

  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     1
    Prepared statement...........................................     3
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, opening statement.......................................     4
    Prepared statement...........................................     6
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     7
    Prepared statement...........................................     8
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, prepared statement.....................................     9
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................    10
    Prepared statement...........................................    11

                               Witnesses

Scott Gottlieb, Commissioner, United States Food and Drug 
  Administration.................................................    11
    Prepared statement...........................................    14
    Answers to submitted questions \1\...........................   236
George Williams, President-Elect, American Academy of 
  Ophthalmology..................................................    61
    Prepared statement...........................................    64
    Answers to submitted questions...............................   249
Bruce Brod, Chairman, Congressional Policy Committee, American 
  Academy of Dermatologists......................................    74
    Prepared statement...........................................    76
    Answers to submitted questions...............................   258
Shawn Hodges, Vice President, International Academy of 
  Compounding Pharmacists........................................    84
    Prepared statement...........................................    86
Jacob Olson, President and CEO, Skywalk Pharmacy, On Behalf of 
  The National Community Pharmacists Association.................   113
    Prepared statement...........................................   115
Jenn Adams, Senior Vice President, Clinical Product Solutions, 
  Pharmedium Services............................................   135
    Prepared statement...........................................   138
    Answers to submitted questions...............................   261
Molly Ventrelli, Vice President, Regulatory Affairs, Fresenius 
  Kabi...........................................................   144
    Prepared statement...........................................   146
    Answers to submitted questions...............................   268
Elizabeth Jungman, Director of Public Health, The Pew Charitable 
  Trusts.........................................................   151
    Prepared statement...........................................   153
    Answers to submitted questions...............................   273
Nancy Dargan, Former Patient of The New England Compounding 
  Center.........................................................   169
    Prepared statement...........................................   171
    Answers to submitted questions...............................   285

                           Submitted Material

Joint statement from the public health, manufacturing, and 
  outsourcing facility communities, submitted by Mr. Pallone.....   182
Statement of Hon. Michael D. Bishop, a Representative in Congress 
  from the State of Michigan, submitted by Mr. Upton.............   185
FDA slides, submitted by Mr. Green...............................   189
Statement of the American Society of Health-System Pharmacists, 
  submitted by Mr. Guthrie.......................................   196
Statement of the American College of Mohs Surgery, submitted by 
  Mr. Guthrie....................................................   202
Statement of Avella, submitted by Mr. Guthrie....................   206
Statement of the Outsourcing Facilities Association, submitted by 
  Mr. Guthrie....................................................   208
Statement of the American Society of Cataract and Refractive 
  Surgery, submitted by Mr. Guthrie..............................   211
Statement of the National Association of Chain Drug Stores, 
  submitted by Mr. Guthrie.......................................   222
Statement of the American Pharmacists Association, submitted by 
  Mr. Guthrie....................................................   227
Statement of the American Academy of Allergy, Asthma & Immunology 
  and the American College of Allergy, Asthma and Immunology, 
  submitted by Mr. Guthrie.......................................   231

----------
\1\ The committee did not receive a response to Mr. Gottlieb's 
  submitted questions for the record by the time of printing.


        EXAMINING IMPLEMENTATION OF THE COMPOUNDING QUALITY ACT

                              ----------                              


                       TUESDAY, JANUARY 30, 2018

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 11:00 a.m., in 
room 2123 Rayburn House Office Building, Hon. Michael Burgess 
(chairman of the subcommittee) presiding.
    Members present: Representatives Burgess, Guthrie, Barton, 
Upton, Shimkus, Latta, McMorris Rodgers, Lance, Griffith, 
Bilirakis, Long, Bucshon, Mullin, Hudson, Collins, Carter, 
Green, Schakowsky, Matsui, Sarbanes, Schrader, Eshoo, DeGette, 
and Pallone (ex officio).
    Staff present: Adam Buckalew, Professional Staff Member, 
Health; Karen Christian, General Counsel; Kelly Collins, Staff 
Assistant; Zachary Dareshori, Staff Assistant; Paul Eddatel, 
Chief Counsel, Health; Margaret Tucker Fogarty, Staff 
Assistant; Adam Fromm, Director of Outreach and Coalitions; Ali 
Fulling, Legislative Clerk, Oversight & Investigations, Digital 
Commerce and Consumer Protection; Jay Gulshen, Legislative 
Clerk, Health; Ed Kim, Policy Coordinator, Health; Bijan 
Koohmaraie, Counsel, Digital Commerce and Consumer Protection; 
Katie McKeogh, Press Assistant; Mark Ratner, Policy 
Coordinator; Jennifer Sherman, Press Secretary; Danielle 
Steele, Counsel, Health; Tiffany Guarascio, Minority Deputy 
Staff Director and Chief Health Advisor; Samantha Satchell, 
Minority Policy Analyst; Kimberlee Trzeciak, Minority Senior 
Health Policy Advisor; and C.J. Young, Minority Press 
Secretary.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess [presiding]. I would like to call the 
subcommittee to order.
    And I recognize myself for an opening statement.
    Today's hearing marks the Health Subcommittee's first look 
at the Compounding Quality Act, which passed under Title I of 
the Drug Quality and Security Act nearly 5 years ago. Prior to 
then, the last time Congress examined the drug compounding 
issue was in 1997, when it passed the Food and Drug 
Administration Modernization Act, touching upon the Food and 
Drug Administration's authority to regulate compounded drugs 
and establishing Section 503A in the Federal Food, Drug, and 
Cosmetic Act.
    A tragic outbreak of fungal meningitis in 2012, when the 
New England Compounding Center shipped over 17,000 contaminated 
vials of a compounded steroid medication throughout the 
country, resulted in one of the worst and most fatal drug 
safety incidents in the history of the United States, where 
more than 750 people developed fungal infections in 20 states 
and, subsequently, 60 people lost their lives. This outbreak 
prompted Congress to act, with the Energy and Commerce 
Committee taking the lead in the House, through a series of 
investigations and a series of hearings on the issue.
    Today we will convene two panels of witnesses. And I do 
want to welcome back Dr. Gottlieb, Commissioner of the Food and 
Drug Administration. Thank you for coming back to our 
subcommittee this morning.
    The agency has been very active over the last several 
months on drug compounding, most recently, releasing the 2018 
Compounding Policy Priorities Plan. Your insights today, Dr. 
Gottlieb, are certainly appreciated.
    Later in our second panel, we will hear directly from 
representatives of the pharmacies, physicians, patients, and 
manufacturers who will share their perspective on the 
implementation of Title I under the DQSA. We will also have a 
patient of the New England Compounding Center to share her 
personal story from the 2012 incidents and her experience since 
that time. All of the testimony from today's hearing are 
critical in our understanding of the compounding issue as the 
Food and Drug Administration works to strike the proper balance 
that would continue to advance patient safety while ensuring 
patients access to compounded medication.
    Being a physician who has worked with compounding 
pharmacists during my time in practice, I know the important 
role and the value that these individuals serve in the delivery 
of patient care. Compounded drugs serve a unique need of 
patients that cannot utilize an FDA-approved product due to, 
for example, an allergy to one of the product's ingredients or 
the primary route of the product's administration. Many of us 
remember the swine flu epidemic of 5 years when compounding for 
the anti-flu medications in an elixir form was absolutely 
critical to protect children who had been recently infected.
    Because of the process involved in creating a compounded 
medication, we all acknowledge the fact that proper oversight 
is necessary, whether by the Food and Drug Administration 
itself or a state's regulatory body, such as its board of 
pharmacy. Preventing poor compounding practices that can lead 
to contamination or erroneous product strength, quality, and 
purity is the goal we all aspire to, so that another New 
England Compounding Center does not happen. Thinking back to 
that fungal meningitis outbreak, I was not only heartbroken by 
the patients' lives lost or harmed, but I was also troubled by 
what seemed to be missed opportunities that could have 
prevented the tragedy.
    Title I of the DQSA accomplished two things. First, the law 
further clarified the Food and Drug Administration's authority 
to regulate traditional pharmacy compounding practices under 
Section 503A, which had seen several court challenges. Second, 
it added Section 503B to the Federal Food, Drug, and Cosmetics 
Act, creating a new category of drug compounders known as 
outsourcing facilities. These outsourcing facilities engage in 
larger-scale, national distribution of sterile drugs in bulk 
quantities and have, thus, heightened statutory requirements, 
such as complying with good manufacturing processes and being 
subject to certain registration, reporting, and inspection 
requirements.
    Over the last 4 years, the Food and Drug Administration has 
issued numerous draft and final guidance documents, proposed 
and final rules, and a draft memorandum of understanding to 
implement the Title I provisions. There has been discussion and 
debate over the manner that the agency has used to implement 
Title I.
    In my home State of Texas, there already exists in statute 
the framework and manner in which a compounding pharmacy should 
conduct its practice. Other stakeholders have also expressed 
concern around office-use compounding and the prescription 
requirement. I hope these and other issues in the drug 
compounding space will be discussed today.
    So, I am encouraged by the interest of all the stakeholders 
involved in this important debate, many of whom are represented 
today. I am certainly encouraged by the commitment of the Food 
and Drug Administration with Dr. Gottlieb's commitment to work 
with Congress in ensuring that patients have access to products 
that are tailored to their clinical needs while equipping 
agency officials with the requisite tools to protect public 
health.
    Again, I want to welcome our witnesses and thank you for 
being here.
    And I will recognize Mr. Green, 5 minutes, for an opening 
statement.
    [The prepared statement of Mr. Burgess follows:]

                Prepared statement of Michael C. Burgess

    The Subcommittee will come to order.
    The Chair will recognize himself for an opening statement.
    Today's hearing marks the Health Subcommittee's first look 
at the Compounding Quality Act which passed under Title I of 
the Drug Quality and Security Act (DQSA) nearly 5 years ago. 
Before then, the last time Congress examined the drug 
compounding issue was in 1997 when it passed the Food and Drug 
Administration Modernization Act, touching upon the Food and 
Drug Administration's (FDA) authority to regulate compounded 
drugs and establishing section 503A in the Federal Food, Drug, 
and Cosmetics Act (FFDCA). However, the tragic outbreak of 
fungal meningitis in 2012, when the New England Compounding 
Center shipped over 17,000 contaminated vials of a compounded 
steroid medication throughout the country, resulted in one of 
the worst and most fatal drug safety incidents in U.S. history, 
where more than 750 people developed fungal infections in 20 
states and over 60 people died subsequently. This outbreak 
prompted Congress to act, with the Energy and Commerce 
Committee taking the lead in the House through a series of 
investigations and hearings on the issue.
    Today we will convene two panels of witnesses. First, I 
want to welcome Dr. Gottlieb, Commissioner of FDA, back to the 
Subcommittee this morning. The agency has been very active over 
the last several months on drug compounding, most recently 
releasing the 2018 Compounding Policy Priorities Plan. Your 
insights today are certainly appreciated.
    Later, we will hear directly from representatives of 
pharmacies, physicians, patients, and manufacturers who will 
share their perspective of the implementation of Title I under 
DQSA thus far. We will also have a patient of the New England 
Compounding Center to share her personal story from the 2012 
incident and her experience since that time. All of the 
testimonies from today's hearing are critical in our 
understanding of the compounding issue as FDA works to strike 
the proper balance that would continue to advance patient 
safety while ensuring patients' access to compounded medicines.
    Being a physician who has worked with compounding 
pharmacists during my practice, I know the important role and 
value these individuals serve in the healthcare delivery 
system. Compounded drugs serve a unique need of patients that 
cannot utilize an FDA-approved product due to, for example, an 
allergy to one of the product's ingredients or the primary 
route of the product's administration. Because of the process 
involved in creating a compounded medication, we all 
acknowledge the fact that proper oversight is necessary, 
whether by FDA or by a state's regulatory body, such as its 
board of pharmacy. Preventing poor compounding practices that 
can lead to contaminations or erroneous product strength, 
quality, and purity, is the goal we adhere to so that another 
New England Compounding Center does not happen again. Thinking 
back to that fungal meningitis outbreak, I was not only 
heartbroken by the patients' lives lost or harmed, but also 
troubled by what seemed as missed opportunities that could have 
prevented this tragedy.
    Title I of DQSA accomplished two things. First, the law 
further clarified FDA's authority to regulate traditional 
pharmacy compounding practices under section 503A which saw 
several court challenges. Second, it added section 503B to 
FFDCA creating a new category of drug compounders know as 
outsourcing facilities. These outsourcing facilities engage in 
larger-scale, national distribution of sterile drugs in bulk 
quantities and thus have heightened statutory requirements, 
such as complying with current good manufacturing practices and 
being subject to certain registration, reporting, and 
inspection requirements.
    Over the last 4 years, FDA has issued numerous draft and 
final guidance documents, proposed and final rules, and a draft 
memorandum of understanding (MOU) to implement the Title I 
provisions. There has been much discussion and debate over the 
manner the agency has implemented Title I of DQSA. In my home 
State of Texas, there already exist in statute the framework 
and manner in which a compounding pharmacy should conduct its 
practice. Other stakeholders have also expressed concerns 
around ``office-use'' compounding and the prescription 
requirement. I hope these and other issues in the drug 
compounding space will be discussed today. So, I am encouraged 
by the interest of all of the stakeholders involved in this 
important debate--many of whom are represented here today--and 
the commitment of FDA to work with Congress in ensuring 
patients have access to products that are tailored to their 
clinical needs while also equipping agency officials with the 
requisite tools to protect public health.
    I again want to welcome our witnesses and thank you for 
being here. I look forward to your testimony.

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman, for having this 
hearing.
    In 2012, the interstate distribution of contaminated 
compounded drug products led to an outbreak of fungal 
meningitis in 20 states, which tragically resulted in 64 deaths 
and left 750 people with infections that were often severe and 
cause long-term damage. The New England Compounding Center, the 
NECC, the entity responsible for the compounding and shipping 
of the contaminated drugs, had been the subject of prior 
complaints and had been investigated by both the FDA and the 
Massachusetts State Board of Pharmacy. However, in part, 
because of uncertainty over the validity of Section 503A of the 
Food, Drug, and Cosmetics Act, it was not clear which copy, the 
FDA or the state, was on the beat, and the NECC continued to 
operate.
    Unfortunately, while it was the most fatal incident to 
date, the NECC outbreak was not a one-off event. It certainly 
wasn't the first tragedy and hasn't proven to be the last. Just 
last year, we learned that at least 43 patients were left with 
diminished vision from a steroid antibiotic injection 
compounded by a Texas pharmacy. FDA studies have found quality 
problems with drugs compounded in other pharmacies, including 
sub- and super-potent drugs and contamination. According to one 
report, from 1990 to 2005, FDA became aware of almost 240 
serious illnesses and deaths associated with improperly 
compounding products, with the actual number likely to be 
greater since pharmacies are not required to report adverse 
events to the FDA. The Pew Charitable Trust published a report 
in 2014 that identified more than 25 reported compounding 
errors or potential errors linked to more than a thousand 
adverse events between 2001 and 2013.
    Following that NECC outbreak, Congress finally took action 
with the Compounding Quality Act, CQA, and the Drug Quality and 
Security Act, DQSA, was signed into law in 2013. In a sideline, 
I want to thank my colleagues Congressman Griffith and 
Congresswoman DeGette because we worked together on a 
bipartisan basis to solve this problem. It solved to protect 
patients and provide industry with clarity for drawing a 
distinct line between the authority between state boards of 
pharmacy and the FDA. CQA made two key changes in 
reestablishing the FDA role regarding traditional compounding 
under Section 503A, creating a new category of drug compounders 
deemed outsourcing facilities under Section 503B.
    The NECC outbreak and other adverse events underscored the 
need to establish a strong legal framework to provide for safe 
compounded medications that meet patients' needs while 
clarifying and strengthening oversight of such drugs to protect 
public health. There was an obvious need to address the growing 
number of enterprises that had cropped up during the time of 
legal uncertainty between the states and the FDA. Many of these 
enterprises had come to act like drug manufacturers operating 
outside FDA's standard oversight, often failing to meet current 
good manufacturing practices and skirting oversight by 
inappropriately operating under the guise of 503A pharmacy.
    DQSA was not perfect, and like all compromises, not every 
problem was solved to everyone's satisfaction, and not everyone 
got exactly what they wanted. During bipartisan, bicameral 
negotiations, we tried to address as many discrepancies as we 
could and satisfy the needs of patients, providers, 
pharmacists, and manufacturers. What is ultimately important is 
that DQSA fixed the problems that led to the deadly fungal 
meningitis outbreak and required the FDA to succeed where in 
the past it had not.
    Compounded medications fill an important role in our 
healthcare system, offer patients an option when an approved 
drug does not fit their needs. Patients' ability to timely 
access safe compound drugs is vital, and pursuit of this goal 
is something I believe we all share. I understand questions 
remain about the office stock, bulk lists, the memorandum of 
understanding, the interstate distribution, and copies of FDA-
approved products, and other issues. More needs to be done to 
foster a robust 503B sector, support traditional pharmacists, 
ensure patient access to needed medications, and inform 
providers on how they can get the drugs they need when they 
need them, so they can successfully treat their patients.
    As the FDA and stakeholders continue to work on the 
implementation of DQSA, and the agency, patients, providers, 
and industry continue to learn and adjust, I hope we can work 
together to refine the rules of the road, so patient access 
isn't unduly diminished and patient safety is upheld.
    Thank you, Mr. Chairman. I yield back my time.
    [The prepared statement of Mr. Green follows:]

                 Prepared statement of Hon. Gene Green

    Thank you Mr. Chairman.
    In 2012, the interstate distribution of contaminated 
compounded drug products led to an outbreak of fungal 
meningitis in 20 states, which tragically resulted in 64 deaths 
and left more than 750 people with infections that were often 
severe and caused long term damage.
    The New England Compounding Center (NECC), the entity 
responsible for compounding and shipping the contaminated 
drugs, had been the subject of prior complaints and had been 
investigated by both FDA and the Massachusetts state board of 
pharmacy.
    However, in part because of uncertainty over the validity 
of Section 503A of the Federal Food Drug and Cosmetic Act, it 
was not clear which ``cop''--the FDA or the state--was on the 
beat and the NECC continued to operate.
    Unfortunately, while it was the most fatal incident to 
date, the NECC outbreak was not a one-off event.
    It certainly wasn't the first tragedy and hasn't proven to 
be the last.
    Just late last year, we learned that at least 43 patients 
were left with diminished vision from a steroid antibiotic 
injection compounded by a Texas pharmacy.
    FDA studies have found quality problems with drugs 
compounded by other pharmacies, including sub- and super-potent 
drugs and contamination.
    According to one report, from 1990 to 2005, FDA became 
aware of almost 240 serious illnesses and deaths associated 
with improperly compounded products, with the actual number 
likely being greater since pharmacies are not required to 
report adverse events to the FDA.
    Pew Charitable Trusts published a report in 2014 that 
identified more than 25 reported compounding errors or 
potential errors linked to more than 1,000 adverse events 
between 2001 and 2013.
    Following the NECC outbreak, Congress finally took action 
and the Compounding Quality Act (CQA) of the Drug Quality and 
Security Act (DQSA) was signed into law in 2013.
    It sought to protect patients and provide industry with 
clarity by drawing a distinct line of authority between state 
boards of pharmacy and the FDA.
    CQA made two key changes: re-establishing FDA's role 
regarding traditional compounding under section 503A and 
creating a new category of drug compounders deemed 
``outsourcing facilities'' under section 503B.
    The NECC outbreak and other adverse events underscored the 
need to establish a strong legal framework to provide for safe 
compounded medications that meet patients' needs while 
clarifying and strengthening oversight of such drugs to protect 
public health.
    There was an obvious need to address the growing number of 
enterprises that had cropped up during the time of legal 
uncertainty between the states and FDA.
    Many of these enterprises had come to act like drug 
manufacturers operating outside FDA's standard oversight, often 
failing to meet current good manufacturing practices and 
skirting oversight by inappropriately operating under the guise 
of a 503A pharmacy.
    DQSA was not perfect, and like all compromises, not every 
problem was solved to everyone's satisfaction and not everyone 
got exactly what they wanted.
    During bipartisan, bicameral negotiations, we tried to 
address as many discrepancies as we could and satisfy the needs 
of patients, providers, pharmacists and manufacturers.
    What was ultimately important is that DQSA fix the problems 
that led to the deadly fungal meningitis outbreak and require 
the FDA to succeed where in the past, it had not.
    Compounded medications fill an important role in our health 
care system and offer patients an option when an approved 
product does not fit their needs.
    Patients' ability to timely access safe compounded drugs is 
vital, and pursuit of this goal is something I believe we all 
share.
    I understand questions remain about office stock, bulks 
lists, the Memorandum of Understanding and interstate 
distribution, copies of FDA-approved products, and other 
issues.
    More needs to be done to foster a robust 503B sector, 
support traditional pharmacists, ensure patient access to 
needed medications, and inform providers on how they can get 
the drugs they need when they need them so they can 
successfully treat their patients.
    As the FDA and stakeholders continue to work to implement 
DQSA, and the Agency, patients, providers and industry continue 
to learn and adjust, I hope we can work together to refine the 
rules of the road so patient access isn't unduly diminished and 
patient safety is upheld.
    Thank you and I yield back.

    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    Pending the arrival of the full committee chairman, Mr. 
Walden, let me recognize the gentleman from New Jersey, 5 
minutes for an opening statement.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Mr. Chairman.
    I would like to submit to the record a joint statement from 
the Association for Accessible Medicine's Biotechnology 
Innovation Organization, the National Association of County and 
City Health Officials, Pew Charitable Trusts, Pharmaceutical 
Research and Manufacturers of America, PharMEDium, and Trust 
for America's Health. If I could ask unanimous consent to have 
a copy of it----
    Mr. Burgess. Without objection, so ordered.
    Mr. Pallone. Thank you.
    [The information appears at the conclusion of the hearing.]
    Mr. Pallone. Mr. Chairman, thanks for holding today's 
hearing on the Compounding Quality Act, which passed with broad 
support from stakeholders and bipartisan, bicameral support in 
Congress in 2013. Passage of the Compounding Quality act was 
about patient safety. Congress came together in response to the 
horrible tragedy of actions by the New England Compounding 
Center, or NECC, that led to 64 people losing their lives. And 
despite a history of complaints and investigations by both the 
FDA and the Massachusetts State Board of Pharmacy, NECC was 
allowed to continue compounding products given to patients on a 
scale and in a manner that should never have been allowed. The 
new law was meant to clarify drug compounding laws. It was also 
supposed to make clear the lines and requirements for 
traditional pharmacies that want to compound and those 
pharmacies that compound on a larger scale.
    I think we all agree and support maintaining patient access 
to compounded drug products. Undoubtedly, there are patients 
with unique medical needs for which a traditional prescription 
drug product is not appropriate, whether for pediatric 
patients, seniors, or those with allergies. However, we must 
all remember that compounded drug products are not without 
risk. Compounded drug products are not reviewed by FDA prior to 
coming to the market for safety and effectiveness. Traditional 
compounding pharmacies are also not required to report on the 
compounded drug products they produce or report adverse events.
    While this law was intended to prevent another tragedy like 
the one at NECC, adverse events associated with compounded drug 
products are still occurring. Since passage of the law, there 
have been more than 140 recalls associated with compounded 
drugs. We have also seen reports of serious health events. For 
example, just last summer, 43 patients suffered vision 
impairment after receiving compounded eye injections of a drug 
containing a combination of a steroid and an anti-infective 
agent. Also, last year three infants received a compounded 
morphine preparation that was 25 times the strength that was 
indicated on the label, resulting in at least one 
hospitalization. These are just two examples of why clearly 
identified standards and requirements must be maintained if we 
are going to protect patient health.
    Recently, FDA released the agency's 2018 Compounding Policy 
Priorities Plan identifying next steps the agency will be 
pursuing in regards to implementing the Compounding Quality 
Act, including revisions to current guidance. As FDA moves 
forward, I would caution the agency to ensure that any 
revisions that it makes do not enable an environment that could 
allow for another NECC to occur. We must maintain appropriate 
patient safeguards and clear lines between what activities are 
permissible for traditional pharmacies and what activities are 
permissible for outsourcing facilities. Patient safety and the 
protection of public health must be at the forefront of any 
guidance revisions that the FDA considers, and the American 
people deserve confidence that the drug products they receive 
are safe and held to strong quality standards.
    So, I want to thank Commissioner Gottlieb and all of our 
witnesses for being here today. I want to go beyond just 
today's hearing, Commissioner, and mention that you have been 
really great at trying to reach out to Members of Congress, 
much more so than most of the agency leaders. So, thank you for 
that. And I look forward to a robust discussion about the 
implementation of the Compounding Act.
    I yield back, Mr. Chairman.
    [The prepared statement of Mr. Pallone follows:]

             Prepared statement of Hon. Frank Pallone, Jr.

    Thank you, Mr. Chairman, for holding today's hearing on the 
Compounding Quality Act, which passed with broad support from 
stakeholders and bipartisan, bicameral support in Congress in 
2013.
    Passage of the Compounding Quality Act was about patient 
safety. Congress came together in response to the horrible 
tragedy of actions by the New England Compounding Center (NECC) 
that led to 64 people losing their lives. Despite a history of 
complaints and investigations by both the FDA and the 
Massachusetts State Board of Pharmacy, NECC was allowed to 
continue compounding products given to patients on a scale and 
in a manner that should have never been allowed. The new law 
was meant to clarify drug compounding laws. It was also 
supposed to make clear the lines and requirements for 
traditional pharmacies that want to compound and those 
pharmacies that compound on a larger scale.
    I think we all agree and support maintaining patient access 
to compounded drug products. Undoubtedly there are patients 
with unique medical needs for which a traditional prescription 
drug product is not appropriate, whether for pediatric 
patients, seniors, or those with allergies. However, we must 
all remember that compounded drug products are not without 
risk. Compounded drug products are not reviewed by FDA prior to 
coming to the market for safety and effectiveness. Traditional 
compounding pharmacies are also not required to report on the 
compounded drug products they produce or report adverse events.
    And while this law was intended to prevent another tragedy 
like the one at NECC, adverse events associated with compounded 
drug products are still occurring. Since passage of the law, 
there have been more than 140 recalls associated with 
compounded drugs. We've also seen reports of serious health 
events. For example, just last summer, 43 patients suffered 
vision impairment after receiving compounded eye injections of 
a drug containing a combination of a steroid and an anti-
infective agent. Also last year, three infants received a 
compounded morphine preparation that was 25 times the strength 
that was indicated on the label resulting in at least one 
hospitalization. These are just two examples of why clearly 
identified standards and requirements must be maintained if we 
are going to protect patient health.
    Recently FDA released the agency's 2018 Compounding Policy 
Priorities Plan identifying next steps the agency will be 
pursuing in regards to implementing the Compounding Quality 
Act, including revisions to current guidance.
    As FDA moves forward, I would caution the agency to ensure 
that any revisions that it makes does not enable an environment 
that could allow for another NECC to occur. We must maintain 
appropriate patient safeguards and clear lines between what 
activities are permissible for traditional pharmacies and what 
activities are permissible for outsourcing facilities. Patient 
safety and the protection of public health must be at the 
forefront of any guidance revisions FDA considers. The American 
people deserve confidence that the drug products they receive 
are safe and held to strong quality standards.
    I want to thank Commissioner Gottlieb and all of our 
witnesses for being here today. I look forward to a robust 
discussion about the implementation of the Compounding Quality 
Act.
    Thank you.

    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    The Chair now recognizes the gentleman from Michigan, Mr. 
Upton, 5 minutes for an opening statement.
    Mr. Upton. Well, thank you, Mr. Chairman, and I would ask 
unanimous consent to put Chairman Walden's full statement into 
the record.
    Mr. Burgess. Without objection, so ordered.
    [The prepared statement of Mr. Walden follows:]

                 Prepared statement of Hon. Greg Walden

    It has been nearly 5 years since enactment of the 
Compounding Quality Act as a part of the Drug Quality and 
Security Act. The signing of that law was set in motion by an 
unprecedented public health tragedy caused by the egregious 
actions of a compounding pharmacy in Massachusetts. The New 
England Compounding Center distributed contaminated drugs 
across America to be injected into the spines and joints of 
unsuspecting patients. Over 750 individuals were infected with 
fungal meningitis, more than 60 lost their lives, and those who 
were spared continue to suffer the devastating impact to this 
day. In fact, one of the witnesses we will hear from, Nancy 
Dargan, has bravely shared the heart wrenching details of her 
near-death experience and the consequences she and her loved 
ones continue to bear. While this devastating event was 
historic in its magnitude, it was not the first time patients 
had been harmed by improperly compounded products and it wasn't 
the last.
    Following the New England Compounding Center tragedy, this 
Committee worked to get to the bottom of what went wrong-
clearly the system for oversight of compounding had failed to 
protect public health. The Subcommittee on Oversight and 
Investigations conducted a thorough examination, and published 
a report that served as the basis for the policies of the 
Compounding Quality Act.
    While products approved by the FDA as being safe and 
effective should be relied on in the majority of circumstances, 
there is an appropriate role for compounded medical products in 
our health care system. Certain patients have unique medical 
needs and cannot be treated with available FDA-approved 
products. Furthermore, as we'll hear from our physician 
witnesses today, certain medical specialties require the 
availability of compounded medicines in their offices to 
provide timely and efficient treatment. In drafting the 
Compounding Quality Act, this Committee sought to strike the 
right balance.
    Where medications are compounded in advance of a patient 
specific prescription to be stored for future use, it is vital 
that they be prepared under heightened standards for safety and 
that FDA play a larger role. While it is important to maintain 
patient access to medications that can be tailored to meet 
their unique needs, it is just as important that sufficient 
safeguards are in place to ensure these medications are safe, 
work as intended, and prepared under sanitary conditions. 
Pharmaceutical compounding has traditionally been regulated at 
a state level, but when compounding begins to look more like 
manufacturing we have learned that patients are at the greatest 
risk. Over time, even before the 2012 meningitis outbreak, 
Congress has sought to increase the FDA's oversight where 
compounding goes beyond patient-specific activity. A 
prescription written for a patient is what clearly delineates 
between traditional compounding for an individual's needs, and 
manufacturing.
    While outsourcing facilities are intended to meet 
healthcare providers' needs for office-stock compounded 
products, it is also critical that implementation of the law 
does not undermine our nation's drug approval framework. The 
regulatory system for both innovative therapies and generic 
drug products, reflects an intricate balance, keeping us on the 
cutting edge of medicine while making more affordable 
medications available to millions of Americans. It now falls on 
FDA to uphold the integrity of that system, by making sure that 
outsourcing facilities do not evade the requirements of the 
Hatch-Waxman Amendments, and do not undermine the protections 
in place that drive pharmaceutical research and development.
    For FDA to achieve the goals of Congress, FDA must ensure 
that outsourcing facilities do not compound products that are 
essentially copies of approved drugs. That includes compounding 
that consists solely of preparing an approved product for 
administration as indicated in that product's labeling, or that 
involves no more than trivial modifications to approved 
therapies. FDA must also guarantee that bulk drug substances 
are not used in compounding by outsourcing facilities, until 
there has been a final determination that there exists a clear 
clinical need to do so.
    I'd like to thank all of our witnesses for being here 
today, particularly Commissioner Gottlieb, to share your 
expertise on this important topic. The Energy and Commerce 
Committee is committed to making sure that patients have access 
to safe and effective medicines that meet their needs, and this 
Compounding Quality Act is an important aspect of that goal.

    Mr. Upton. And also, a letter from our colleague, Mr. 
Bishop, enter the letter into the record.
    Mr. Burgess. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. So, Mr. Chairman, the 2012 outbreak of the 
fungal meningitis resulting from contaminated steroid 
injections manufactured by the New England Compounding Center, 
NECC, was certainly a failure of epic proportions. Of the 753 
people that were sickened by the outbreak, 264 called Michigan 
their home. Yes, we were the largest state hit. Nineteen of the 
64 deaths caused by the tragedy were from Michigan, and three 
of them were constituents of mine.
    I was chairman of the full Energy and Commerce Committee at 
the time that this happened, and we immediately launched a 
bipartisan investigation to find out what went wrong. I am not 
going to go through the full history of what happened then, but 
I will say that those at the NECC who were responsible were, in 
fact, brought to justice. And this committee crafted 
legislation to empower the FDA to ensure that the heinous acts 
of negligence like this one would never happen again. We wanted 
to fix the problem.
    That legislation, the Drug Quality and Security Act, DQSA, 
is currently being implemented by the FDA, and it takes a 
number of measures to ensure safety, not the least of which are 
much-needed restrictions on the use of bulk compounded material 
as opposed to FDA-approved products when there is not a 
clinical need to do so.
    I am pleased to see the new Commissioner here to update us 
on how DQSA implementation is going and what we in Congress can 
do to help move the process along. We appreciate cooperation, 
and again, the cooperation of Members on both sides of the 
aisle.
    And I will yield back the balance of my time.
    [The prepared statement of Mr. Upton follows:]

                 Prepared statement of Hon. Fred Upton

    The 2012 outbreak of Fungal Meningitis resulting from 
contaminated steroid injections manufactured by the New England 
Compounding Center (NECC) was a failure of epic proportions. Of 
the 753 people sickened by the outbreak, 264 call Michigan 
home. My home state was the hardest-hit. Nineteen out of the 64 
deaths caused by this tragedy were from Michigan and three of 
them were constituents of mine.
    I was serving as Chairman of the full Energy and Commerce 
Committee at the time this all happened and immediately 
launched an investigation to find out what went wrong. I won't 
go through the full history of what happened then, but I will 
say that those at NECC who were responsible were brought to 
justice and this committee crafted legislation to empower the 
FDA to ensure that heinous acts of negligence like this one 
never happen again.
    That legislation, the Drug Quality and Security Act (DQSA), 
is currently being implemented by the FDA. It takes a number of 
measures to ensure safety, not the least of which are much-
needed restrictions on the use of bulk-compounded material as 
opposed to FDA-approved products when there is not a clinical 
need to do so.
    I am pleased to see Commissioner Gottleib here to update us 
on how DQSA implementation is going and what we in Congress can 
do to help move the process along.

    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    And we do want to thank all of our witnesses for taking 
time to be here today and taking time to testify before the 
subcommittee. Each witness will have the opportunity to give an 
opening statement, followed by questions from members. We will 
have two panels today.
    The first panel, we will hear from Dr. Scott Gottlieb, the 
Commissioner of the United States Food and Drug Administration.
    Dr. Gottlieb, once again, we appreciate your being here 
today, and you are recognized for 5 minutes for your opening 
statement, please.

 STATEMENT OF SCOTT GOTTLIEB, COMMISSIONER, UNITED STATES FOOD 
                    AND DRUG ADMINISTRATION

    Dr. Gottlieb. Thank you, Chairman Burgess, Ranking Member 
Green, members of the subcommittee. I appreciate the invitation 
to testify at today's hearing on implementation of Title I of 
the Drug Quality and Security Act.
    We are all here together today because, more than 5 years 
ago, we grappled with the devastating consequences of the 2012 
outbreak of fungal meningitis caused by the manufacturer that 
was compounding under the guise of a state-licensed pharmacy 
that shipped contaminated compounded drugs throughout the 
country. It led to more than 750 illnesses and 60 deaths in 20 
states.
    Because of this tragedy, Congress acted to ensure that 
something like this would never happen again. No one wants to 
see another such outbreak occur, and I am personally committed 
to ensuring that FDA does its part to help prevent future 
deaths from poor quality compounded drugs.
    The 2012 outbreak as well as other issues we have seen 
through our compounding oversight underscore the need to 
improve compounding practices and more robust oversight of 
compounders, supported by close federal and state 
collaboration. It also highlighted the need for a clear legal 
framework that would provide for compounding to meet patients' 
needs while also equipping the FDA with authorities to address 
unlawful practices that threaten the public health.
    Unfortunately, since enactment of DQSA, there have been 
other tragedies and cases of serious and unnecessary patient 
harm which reinforce why our work is so critical. The FDA's 
compounding program is a priority for the FDA, given its 
profound public health implications, and we are committed to 
implementing the DQSA framework.
    We have issued 24 draft guidances and final guidances, a 
final rule, and three proposed rules, and a draft MOU with the 
states. We have held eight meetings with the Pharmacy 
Compounding Advisory Committee to discuss 48 bulk drug 
substances nominated for use in compounding, as well as six 
categories of drug products nominated for the list of drugs 
that present demonstrable difficulties for compounding.
    On the oversight and enforcement front, since enactment of 
the DQSA, the FDA has conducted nearly 500 inspections and we 
have issued more than 180 warning letters advising compounders 
of significant violations of federal law. We have overseen more 
than 150 recalls involving compounded drugs, and we have worked 
with DOJ on multiple civil and criminal enforcement actions and 
set up a joint task force with them.
    But I know there is still a lot left to be done, and I know 
that there are some who say we haven't implemented certain 
aspects of DQSA with the speed you had hoped. We have had our 
own challenges addressing certain aspects of this complex 
framework, including our constant challenge to make sure we are 
striking the right balance between safety and access, and 
addressing the oftentimes very divergent views on these issues. 
I want you to know I am personally committed and involved in 
these efforts and committed to getting these things right, to 
making sure that we strike a careful balance and take measure 
of your concerns.
    In implementing the DQSA over the years, FDA has aimed to 
develop policies that support the growth of the outsourcing 
facility sector. Compounding pharmacies and outsourcing 
facilities can help meet the legitimate patient needs when an 
FDA-approved drug is not available to meet such medical needs. 
We know that we must balance the critical role that compounding 
plays in helping patients and providers advance public health 
while ensuring that compounders do so in a manner that protects 
patients from poor quality compounded drugs and does not 
undermine the drug approval process.
    And so, our actions to date, as well as the comprehensive 
2018 Compounding Policy Priorities that we unveiled a few weeks 
ago, focus squarely on protecting patients from harm and 
establishing regulatory clarity, so our outsourcing facilities 
can meet important protections in Section 503B and our quality 
standards.
    One of my key goals is to make it more feasible and lower 
cost for a large swath of pharmacies to transition to becoming 
outsourcing facilities, which are subject to greater FDA 
oversight. We are also working to help ensure patient access to 
compounded drugs when they need them. For instance, we are 
taking steps to help providers identify outsourcing facilities 
that make, or would be willing to make, compounded drugs for 
office stock to treat patients who have medical need for them.
    Let me be clear on one thing. I am committed to getting the 
things we have committed to done. All of the commitments made 
under the plan I released 2 weeks ago will be completed in 
2018.
    I would like to just close by briefly mentioning another 
critical public health matter. Today we took new action to 
address the epidemic of opioid addiction. We took steps to 
limit the dispensing of Loperamide, an OTC drug, that is 
increasingly being abused for its opioid-like qualities when it 
is taken at very high doses and dangerous doses. I hope you 
will take the time to look at the statement we issued, as we 
continue to work together to address this critical public 
health crisis. There is no magic bullet to solving this crisis. 
It is only going to be through continued and vigilant steps, 
like the one we took today, that I can hope we can start to 
reverse some devastating trends.
    I look forward to answering your questions today and 
continuing to share more with you during the year ahead, as we 
build on our past efforts as part of our public health mission.
    [The prepared statement of Dr. Gottlieb follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    
    Mr. Burgess. The Chair thanks the gentleman for his 
testimony, and we will move into the question portion of the 
hearing. I will begin with questioning and recognize myself for 
5 minutes.
    Commissioner, in the information you provided us, you had a 
list of adverse events associated with drugs prepared by 
compounding facilities in the past 5 years. Presumably, that is 
the lifetime of the DQSA. The one at the top of the list has 
been mentioned by a couple of people on the dais this morning, 
in Texas, some steroid antibiotic eye injections that caused 
problems with vision loss. Is there something more that could 
have been done in DQSA to prevent this or was the problem found 
more rapidly because of the tools that you were given in the 
DQSA? Help us sort of understand. Here is something that 
happened in my backyard. Is it something that we should have 
worked harder to prevent or was, in fact, the outbreak less 
than it would have been because you had tools to use?
    Dr. Gottlieb. Well, thank you for the question, 
Congressman.
    I think, as we start to exercise these new authorities, we 
are learning a lot. The scope of the kind of enforcement 
activities we take have also changed. In the early days of 
implementation and historically, a lot of the focus has been on 
issues of sterility with things like eye drops or things that 
are used intravenously or intramuscular injections.
    I think what we are seeing more and more, and where we are 
starting to focus more of our inspectional activities, is on 
formulations that are compounded in ways where they might be 
super-potent. The challenge is that, when the pharmacies make 
potency errors, it is usually a logarithmic, log error, so 
thereby a factor of 10 or 20. So, you can get potencies that 
can cause significant harm.
    I think this underscores the need to make sure that, when 
drugs are being compounded on a wide basis and distributed on a 
wide basis, it is done in facilities where we can apply GMP 
standards to them. And this is, in part, why I think Congress 
contemplated the whole creation of the 503B structure, where 
drugs that would be used on a wider scale would be compounded 
under that kind of supervision.
    Mr. Burgess. Let me ask you a question. Obviously, it was 
before your tenure when we had the hearings after the New 
England Compounding Center problems. But it was clear to some 
of us during the course of those investigations and the work 
that the committee did--and Chairman Upton was correct to 
reference it; this committee, the full committee, took the 
leadership on this issue. But there were places where the FDA 
clearly fell short of its responsibility to protect public 
health, despite what appeared retrospectively to be clear 
warnings that the New England Compounding Center was engaged in 
dangerous activities. So, are you confident that the FDA now 
has the clear authority it needs to ensure that we don't see a 
repeat of those things that happened in 2012?
    Dr. Gottlieb. I testified at those hearings as a private 
citizen in 2013 here in Washington. I was working at a think 
tank at the time and weighed in at the time. I think I felt 
what Congress contemplated was a framework that gave the FDA 
the proper tools to provide oversight over this industry. But I 
think we need to keep in mind that we are now implementing a 
framework on an industry that is vast, that grew up, that was 
allowed to grow up largely outside regulatory purview for a 
long period of time, and retrofitting a regulatory framework 
back onto an already existing industry is always a difficult 
task.
    Do I believe the authorities and the tools that we are able 
to exercise are robust? I do. I think that it is going to take 
time to get them fully implemented and get the kinds of tools 
and practices we want applied over that industry. And it is 
superimposed on an environment where, admittedly--and people 
have good arguments on both sides of this debate--there has 
been some discussion around how FDA is using those authorities 
and whether they are using them in an appropriate fashion. I 
believe we are and I believe we need to continue to move 
forward.
    Mr. Burgess. Yes, I expect we may hear about that this 
morning in our second panel. I guess that is the concern. Or 
what I would like to ask is the efforts that you and the agency 
have taken to engage the physician community, patient 
community, other stakeholders, where they may have perhaps the 
feeling that things have tightened up too much.
    Dr. Gottlieb. Well, this isn't going to work unless we are 
working closely with the providers and the state authorities. 
This law, Congress contemplated a framework that very much was 
envisioned where FDA would have close collaboration with 
medical societies and state authorities, and there was a lot of 
shared jurisdiction between the Federal and the state framework 
around both the 503A and the 503B facilities. States dually 
inspect a lot of the 503B facilities.
    So, I think it is going to be very important for us to 
continue to work closely with the state communities and the 
provider groups. I believe we have. I think that there is more 
alignment there than perhaps is widely perceived, as obviously 
some 503A pharmacies that want to engage in certain practices 
where there is a line that we need to draw to make sure that we 
are providing the proper oversight, and I think we are going to 
hear about that tension today. I think that is a large place 
where we still have some area of disagreement.
    Mr. Burgess. Very well. I want to be respectful of 
everyone's time because we do have a long hearing today. I am 
going to recognize Mr. Green for 5 minutes for questions.
    Mr. Green. Thank you, Mr. Chairman.
    Thank you, Dr. Gottlieb, for being here this morning, but 
also the good work you are doing at the FDA.
    I appreciate the continued emphasis the FDA has put on the 
issue of compounding drugs and hope to keep working with the 
agency on implementation in our shared goal of striking the 
right balance, so we can promote patient access without 
compromising patient safety. I am encouraged to see the FDA is 
actively working to implement the patient safety measures that 
are included in the DQSA.
    In particular, I am pleased to see that FDA is taking steps 
to encourage registration of 503B outsourcing facilities. In 
your 2018 Compounding Policy Priorities Plan you suggested the 
FDA will be taking a more risk-based approach to the 
development and implementation of current good manufacturing 
practices, or CGMPs. I understand FDA is working on revising 
the 2014 draft guidance to apply CGMP requirements in a way 
that is tailored to the nature of the specific operations 
conducted by an outsourcing facility and move away from one-
size-fits-all. I appreciate the agency's goal of improving 
patient safety by making the regulatory framework more flexible 
by recognizing volume as a factor in its risk-based evaluation.
    Can you elaborate more about the agency's thinking around 
what has been referred to as ``503B-light''?
    Dr. Gottlieb. Thanks for the question, Congressman.
    What I am envisioning is a framework where--the GMP 
standards are not a fixed standard. It is a risk-based 
standard. We want to try to devise that framework in a way 
where we could titrate the level of the regulatory touch to 
what the facility is doing, the size of the facility, how many 
drugs they are developing, how they are shipping them, whether 
the drugs are oral drugs or they are parenteral drugs that are 
going to be injected, which would be sterile drugs and have 
higher risk.
    The idea is that, by trying to adjust the level of the 
regulatory oversight to the level of risk, we could potentially 
allow more 503A facilities to make the conversion into being 
503B facilities. That is why we are taking the time to revise 
that guidance.
    There are things where we have some flexibility, like 
retention of samples, lot release, the stability studies that 
we require, where if it is a pharmacy doing something on a 
small scale, not shipping widely, compounding drugs that are 
relatively low-risk, we might be able to dial back some of that 
level of regulatory oversight versus someone who is engaging in 
larger-scale manufacturing. But, again, with the goal of seeing 
more 503A pharmacies become 503B pharmacies where they are able 
to engage in the kinds of things that some pharmacies want to 
do.
    We want to bring down the cost of doing that. We have done 
some economic analysis around what it would cost. I think it is 
still a little bit too expensive to see some of the small 503A 
pharmacies opting into that. So, we are trying to take another 
crack at that.
    Mr. Green. OK. Thank you.
    And I do have concerns about the possibility of creating a 
two-tiered system. In the pursuit of flexibility, I am 
concerned of the impact this may have on 503B facilities that 
compound biologics, which are especially vulnerable to 
degradation.
    How would you respond to these concerns? Can you tell me 
how you plan to ensure that CGMPs that apply to 503Bs will hold 
these facilities to the highest standards of sterility and 
stability?
    Maybe I didn't understand that language.
    [Laughter.]
    Dr. Gottlieb. I understand your concerns. I share them. The 
first thing I am going to do is come up with a better name for 
it than ``503B-light,'' before that takes hold.
    But I will tell you that we are very mindful of that. So, 
for example, you reference biological products. They are 
particularly vulnerable to contamination and to bacterial 
growth. That would be something that would be higher-risk, 
where we would apply more oversight.
    We are talking about trying to create a standard that is 
flexible, as is all our GMP oversight. It is a risk-based 
framework. If a pharmacy is engaging in small-scale 
manufacturing of relatively low-risk products, they wouldn't be 
subject to all of the same requirements that someone who is 
engaging in large-scale manufacturing of higher-risk sterile 
products would be. As they move through the continuum of risk, 
our level of oversight would increase. It needs to be a 
flexible standard. It is a flexible standard in every other 
realm of our regulation. It ought to be here. But you are 
absolutely right that there is a continuum of risk, and we need 
to be very mindful that we are matching our regulatory touch 
appropriately to that level of risk.
    Mr. Green. Could you submit your economic analysis for the 
record, for the committee?
    Dr. Gottlieb. I can provide it just off the cuff right 
here. When we looked at it--and again, this was very 
preliminary work and it is in draft form--but when we looked at 
it, we estimated that it would cost a large manufacturer about 
a million dollars to become a 503B facility, a large pharmacy, 
and a medium-sized pharmacy, about $600,000. We think that 
there are things we can do to further titrate the level of 
regulatory touch, that there are more buckets. Because, again, 
a 503A pharmacy that wants to engage in relatively low-risk 
compounding but still ship, but they are developing low-risk 
products on a small scale in small batches, there are ways, I 
think, to adjust the level of regulation to more appropriately 
match the level of risk that they are creating.
    Mr. Green. Well, I understand you want to use resources 
where the problem is.
    Dr. Gottlieb. Exactly.
    Mr. Green. And I appreciate that.
    Dr. Gottlieb. We want to be efficient.
    Mr. Green. Thank you, Mr. Chairman. I know I am out of my 
time.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    The Chair recognizes the gentleman from Texas, the vice 
chairman of the committee, full committee, Mr. Barton, 5 
minutes.
    Mr. Barton. Thank you, Mr. Chairman.
    And, Commissioner, thank you for being here. I want to echo 
what Mr. Pallone said. You have been accessible, and we 
appreciate your personal availability to the members of the 
subcommittee.
    I have been on this committee for 32 years. We have got an 
ongoing sense of friction or tension between the FDA and the 
compounding pharmacist. It is kind of a love-hate relationship.
    A lot of my compounding pharmacists in Texas are fairly 
active in the national compounding associations. They have a 
feeling that the big, old bad federal FDA picks on them. How 
would you respond to that? Do you think your FDA picks on 
compounding pharmacists? Or do you think that they are being a 
little bit too sensitive?
    Dr. Gottlieb. Well, I am not going to comment on their 
feelings and their motives. I am certainly sensitive to the 
concerns; I would say that, Congressman. This is an important 
reason why we want to make sure we are working closely with the 
states. Because I think if we are working cooperatively with 
the states, and the states are able to assert their 
responsibilities and obligations under DQSA, but in concert 
with us, I think that the more that we can rely on local 
regulation, the more that local pharmacies are going to feel 
that they have a closer continuity to the nexus of the 
oversight, if you will.
    Mr. Barton. OK. Well, that leads to my next question. It is 
almost like you and I coordinated. I was going to ask this, you 
were going to answer that, then I would follow up.
    What is the current relationship in terms of a working 
relationship or a cooperative relationship between the FDA and 
the state regulatory authorities that oversee compounding 
pharmacists? Do you think it has improved? When we had the 
problem back in 2010-2011 that led to the bill that you have 
talked about, Massachusetts and the Federal FDA didn't seem to 
get along at all. They didn't talk to each other, didn't share 
information. Today would you say that that relationship has 
improved, is good? How would you characterize it?
    Dr. Gottlieb. Well, I will tell you the relationship is a 
lot better today and gets better with time. I think it is 
continuing to expand in terms of the scope of the collaboration 
and just through the contact we are having with state 
authorities. Those relationships are important to sound 
regulation being built. We invite states to join us on 
inspections. We hold monthly meetings with the National 
Association of Boards of Pharmacy. We provide training to state 
compliance officers. There are frequent telecons with state 
officials.
    You don't have to take my word for it. You could look at 
the GAO report in 2016 that looked at this very question of 
what the perception was of the states of FDA's communication 
with the states, and 60 percent said very or somewhat 
satisfied. They were very or somewhat satisfied with the 
communication. Now a ``D'' usually doesn't sound good, but in 
this context I think it was. It was supportive of my contention 
that the relationships are much improved from where they were 
when I was at FDA the last time, prior to NECC. Twenty-three 
percent reported they were dissatisfied. We want to work on 
that. I think, hopefully, if I come back here a year from now 
and we are talking about this, we are going to be able to talk 
about an even more cooperative environment.
    Mr. Barton. With respect to the opioid crisis, are there 
some special task forces, special programs, extra effort being 
utilized right now between the FDA and the state regulatory 
authorities? And kind of as a secondary question, would you 
consider the opioid crisis more of a federal issue or a state 
issue, or is it about 50/50?
    Dr. Gottlieb. Well, I think it is an everything issue. I 
have said before that I think that this is beyond the scope, 
certainly, of any one agency, but even the Federal Government, 
to try to tackle it. We are going to need to work closely with 
local officials to try to address this crisis. And we have been 
doing that. We have had a lot of conversations with local 
officials, state AGs, on different things that we could be 
doing in collaboration with the states around various aspects 
of this crisis.
    I would say that the one thing that I am still very 
concerned about is the level of federal oversight in the IMFs, 
in the international mail facilities. I have spoken with some 
of the Members about this, and trying to get more resources 
into those facilities, particularly FDA resources. We play an 
important role in those facilities doing track and trace and 
analysis on some of the synthetic fentanyl coming in and doing 
investigations to trace them back to their source. And that is 
a big concern of mine.
    Mr. Barton. The last question, the Pharmacy Compounding 
Advisory Committee currently has no one on it who is a 
compounding pharmacist. Don't you think there should be at 
least one voting member who is an actual compounding pharmacist 
on that committee?
    Dr. Gottlieb. We are going to be issuing a solicitation 
probably within days--the FR notice is with my office--to 
solicit a new member or members on that committee. So, there 
will be an opportunity to expand the composition of that 
committee. As you know, there are 12 members on that committee. 
One is appointed by the NABP, one by USP. It leaves 10 members. 
Of those, seven are licensed pharmacists. I think five are 
physicians in total. So, there is good clinical representation. 
To the extent that someone with a business perspective of being 
a pharmacist can add to the composition of that committee in a 
thoughtful way, that is something we would certainly think 
about.
    There is one compounding pharmacist on the committee. He is 
the industry rep.
    Mr. Barton. But he doesn't get to vote.
    Dr. Gottlieb. He doesn't get to vote, you are right. We 
will certainly take this into consideration. I have heard the 
concerns of Members on this. We will certainly take it into 
consideration as we think about the new solicitation.
    Mr. Barton. I would encourage that.
    And I yield back.
    Mr. Burgess. The gentleman yields back. The Chair thanks 
the gentleman.
    The Chair recognizes the gentlelady from California, Ms. 
Eshoo, for 5 minutes, please.
    Ms. Eshoo. Thank you, Mr. Chairman, for holding this 
hearing.
    And, Commissioner Gottlieb, it is good to see you, and 
thank you for your testimony and your work on this issue.
    We spoke, I think it was last summer, about--at that point, 
there was a recent incident of patients being harmed by 
compounded products. Specifically, there were 50 patients, some 
of whom went blind after receiving a compounded antibiotic 
during cataract surgery last July.
    I was talking to a doctor friend this last week. I said, 
``What's the most common surgery in the country?'' And he said 
cataracts. So, that really broadens this out when you think of 
50 patients, some of whom went blind during their cataract 
surgery. It wasn't too regular for them.
    Obviously, we need to do everything we can to protect 
patient safety, so that these incidents stop happening, 
including, I think, following up on the warning letters.
    There are two areas that I have always thought that are 
absolutely fundamental to what we do, both when I was in county 
government and here in the House of Representatives. That is 
public health and public safety. The two are combined in this 
issue.
    So, what I want to ask you is, of the dozens of warning 
letters posted by FDA, how often have you pursued enforcement 
action? And what else can the agency do with its enforcement 
resources to ensure that compounded drugs are safe?
    Dr. Gottlieb. I appreciate the question. It gets at 
something that we are trying to work, which is to improve our 
collaboration with DOJ to try to make sure that we can bring 
enforcement action when we see something particularly 
egregious, so we issue a warning letter and a firm is non-
compliant. That was the genesis of the task force that we 
formed with DOJ. It is early days; I think it is yielding 
dividends in terms of our ability to work cooperatively. But 
this is something that we are looking at, pushing on, trying to 
do more of.
    Ms. Eshoo. Have there been any enforcement actions?
    Dr. Gottlieb. There has absolutely been enforcement 
actions, and there is activity that we have in progress. 
Obviously, we are always working on various activities. But I 
am hopeful that we will be able to continue to work effectively 
with DOJ in this regard.
    Ms. Eshoo. In the two sections of the Compounding Quality 
Act--let me say something, because I listened to the 
conversation earlier about the FDA, what Congress did, what 
happened, and then, what Congress did. I think it is important 
for all of us to recall that the FDA had not been given 
authority by the Congress in this very area when the tragedy 
that took place out of Massachusetts, that spread out over the 
country, took place. So, I know there are a lot of questions to 
be raised, but the FDA did not have the authority. In my book, 
I think that the Congress didn't maybe on a proactive basis 
examine the issue and give the agency the authority.
    At any rate, in the two sections of the Compounding Quality 
Act, it defines that drugs may only be compounded from bulk 
drug substances when FDA-approved drugs are in shortage. Now, 
recently, the agency announced enforcement discretion related 
to an interim list of substances that include more than a 
hundred approved drugs.
    So, what specific steps are you going to take to ensure 
that there is a legitimate clinical need for the bulk drug 
substances currently being used by compounders and how are you 
going to enforce this?
    Dr. Gottlieb. I think you are referring to the 503B bulk 
drugs list, right?
    Ms. Eshoo. Right. Right.
    Dr. Gottlieb. So, as you know, we received about a thousand 
nominations for different drugs to be on that list. We have 
selected 200 that we allowed onto that list under what we call 
Category I drugs. Now what we need to do is go through and 
reexamine all 200 to make sure they belong on that list. And we 
believe some of them are going to fall off and perhaps many 
will fall off. Some might be added, but probably many are going 
to fall off.
    We are going to issue in March a guidance document that I 
outlined in the 2018 plan we put out that is going to define 
the parameters in which we are going to do those assessments. 
And then, we need to go through and assess each drug 
individually, which, as you know, is a resource-intensive 
process. Each evaluation is between 20 and 80 pages long.
    Probably the first complement of drugs that we will render 
a decision on will be this fall. It is probably going to be a 
small number. It may be five drugs. But we need to go through 
that entire list.
    But it is important to put in perspective where that 200 
came from. Those were drugs that were currently being 
compounded off of bulk substance at the time that this law was 
implemented. So, what we effectively did was freeze the market. 
What we said was we don't want to create more compounding, but 
we also don't want to start pulling things out of the 
marketplace and create access issues, especially with respect 
to the outsources, because we want to see this industry grow 
up, for one. And on the second hand, we have now new regulatory 
tools to assert good manufacturing practices. So, we can 
provide more oversight. So, the idea was to freeze the market 
while we, then, did those assessments, which is what we are 
doing now.
    Ms. Eshoo. Thank you very much, Commissioner. I couldn't 
mean that more. You are in such an important role in the life 
of our country. So, thank you very much.
    Thank you, Mr. Chairman.
    Mr. Burgess. The Chair now would like to recognize the 
gentleman from Kentucky, the vice chairman of the Health 
Subcommittee, Mr. Guthrie.
    Mr. Guthrie. Thank you, and thank you, Mr. Chairman.
    Thank you, Commissioner, for being here today.
    I kind of want to follow up on what was just said. Five 
years ago there was a judge in Kentucky, a very prominent 
citizen, Eddie Lovelace of Albany, Kentucky, who went in for a 
routine procedure and was contaminated with medicine from the 
New England Compounding Center and died just shortly after what 
was going to be a routine procedure. Obviously, his family and 
the whole community is devastated, and Dr. Lovelace is just one 
person who was affected by this awful outbreak. And this was 
tragic and it is the reason I believe we must ensure compounded 
drugs are safe while striking a good balance of access to 
compounded drugs.
    It is the theme of what you have said this morning, but I 
thought I would just give you a more open-ended look at it. 
Because in your testimony you mention the balance that is 
needed. And so, I just want to give you the floor to, how are 
you ensuring that Americans have access to lawfully-marketed 
compounded drugs while ensuring safety? You have addressed that 
just earlier, but I just give you the time.
    Dr. Gottlieb. I think the way to ensure that, to be very 
direct, is to make sure this law gets implemented. I think that 
this was a good vision by Congress and it is a good framework 
that provides FDA with the tools that it needs to provide 
proper oversight. We need to now make sure it gets implemented.
    I think where we are going to be able to continue to 
improve the posture of the industry, and the ability of this 
industry to provide the critical products that patients need 
and access to drugs, is going to be to try to see the 503B 
outsourcing sector become more viable. I think many of us, when 
this law was first implemented, envisioned that that sector 
would grow much more quickly than it has. And I think if there 
are things that we can do through regulation, and I think that 
they are, to help that industry continue to expand, that is 
going to be important because, ultimately, that is going to 
provide more access to the kinds of sterile drugs that some 
people need on a wider scale and need to be distributed to 
institutions. The 503A facilities provide a critical function 
on a local level, giving patients differentiated products 
through the practice of pharmacy, so that they can get products 
that are individualized, tailored to their clinical needs.
    Mr. Guthrie. Do you think 503A should report adverse 
outcomes to the FDA?
    Dr. Gottlieb. As you know, the bulk of the adverse events 
that are reported by 503 facilities are typically either not 
reported or reported to the states. The states do share that 
information with us. They are not directly reported to FDA.
    Would it help FDA target its inspections better if they had 
access to that information more readily? I would have to say it 
would. It would make it more efficient. A lot of our 
inspections of 503A facilities are for-cause inspections, are 
on the basis of information. But I think that this is also an 
area where, through our cooperation with the states, we are 
going to get access to that information where we need it. 
Because if we are working closely with the states, they are 
going to help guide us where we should be inspecting. Because, 
for example, a 503A facility might be engaging in activities 
that tip it over into being a 503B and subject to the federal 
scheme.
    Mr. Guthrie. Thank you. Thank you for those answers.
    And if I could change the subject just for about a minute 
or so left, I had an oncologist that contacted my office. Her 
daughter is an intern in the office. I know her pretty well. 
And she was stating concern on the shortage of saline, so to 
change it a little bit. She said it has been exasperated by the 
flu epidemic this year. We see these shortages in just basic 
medicines. And so, can you please provide the most recent FDA 
developments of the saline shortage?
    Dr. Gottlieb. There are two different components to this, 
or, actually, three different components to this. There were 
these small bags that were in shortage prior to the hurricane 
that struck Puerto Rico, the 100-milliliter bags that are 
typically used to dilute drugs and, then, administer drugs to 
patients. That shortage was exacerbated by the hurricane 
because one of the primary manufacturers of those bags is 
located in Puerto Rico and was knocked out of production. That 
facility is now back in full production. In fact, all the 
facilities that we have concerns about in Puerto Rico are now 
back on grid power and most of them are at full production.
    And we have brought in additional supply from additional 
facilities out of ex-U.S. manufacturing sites, to make up for 
that shortfall. So, there should be much more supply coming 
into the market.
    There is also a shortage of the larger-volume bags. While 
we haven't declared a shortage, there are spot shortages of the 
1-liter bags that are used for volume repletion, and those are 
also being strained by the flu, the flu outbreak. We have taken 
additional steps to bring in additional supply of the 1-liter 
bags as well.
    There is also some tight supply of the empty 1-liter bags 
because a lot of compounding pharmacies and hospitals, when 
they can't get access to filled bags, they buy empty bags and 
fill them themselves in a compounding-type facility.
    We have taken additional steps. We are going to have more 
to say about this on Thursday. I was going to put it out today, 
but we were delayed in getting our information out. We are 
going to be putting out a statement on Thursday talking about 
the steps we are taking to get more of those empty bags onto 
the market. Some of those were manufactured in Puerto Rico.
    I will just close by saying that the time it takes for a 
bag to go from the manufacturing line to your hand in the 
hospital as a clinician is about 6 weeks. I don't know this 
isn't a more efficient supply chain, but that is what I have 
been quoted. It takes weeks for it to make its way to the 
provider setting. And so, the additional supply that we have 
brought on--and it is substantial--is going to take some time 
to flow through the market.
    Mr. Guthrie. Thank you for your attention to that. You all 
have been really good to work with.
    Thank you.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    The Chair recognizes the gentlelady from Illinois, 5 
minutes for questions, please.
    Ms. Schakowsky. Thank you, Dr. Gottlieb. But I want to 
apologize that I missed much of your testimony. We have a 
number of hearings going on that I had to be at.
    I also wanted to thank you for meeting with some of us 
about Essure, the contraceptive device that I know has harmed 
many women, from meeting with some of those women. So, I hope 
we can continue that conversation because I am very concerned 
about it.
    Most people presume that the prescription that the doctor 
writes for them, and they fill it, is safe and effective. This 
is true because the FDA is considered the absolutely gold 
standard in drug review.
    We have all talked about now the 64 people who tragically 
died because of this drug at the New England Compounding 
Center. So, obviously, that was an impetus for passing the 
Compounding Quality Act to improve safety.
    And so, I wanted to just say that drugs that enter the 
bloodstream, the eye, the spine, are supposed to be sterile, 
but the FDA has received adverse events reports that these 
compounded products were contaminated, reminiscent of the 
problems at the NECC.
    There have also been reports of sub-/super-potent drug 
products in 2016. Three babies received compounded morphine 
that was 20 times stronger than the label indicated. One of 
those infants had to be rushed by helicopter to a nearby 
children's hospital.
    So, here's my first question: Commissioner Gottlieb, the 
FDA has been active in implementing the Drug Quality and 
Security Act. There have been over two dozen guidance documents 
issued, four rules, numerous public engagements focused on 
proper implementation of this law. While these are meaningful 
steps, what more can we do to reduce the number of adverse 
events associated with compounded drug products?
    Dr. Gottlieb. I will just start out by echoing your 
concerns, Congresswoman. All drugs have risks. We know that. 
But I don't think anyone should be put at risk because a drug 
was improperly manufactured. At the very least, we should 
guarantee that a drug that purports to be manufactured in a 
certain way and purports to be sterile is actually a sterile 
product. That is the bedrock and the essence of what we are 
trying to achieve with respect to the authorities under this 
law.
    I think that there are things that we can do going forward, 
including continued implementation. We have heard the concerns 
of Congress that certain aspects of how we have implemented 
this have been slower than Congress expected. I think we didn't 
fully appreciate the complexity of this law. But I think, as we 
continue to implement this framework, we are going to be able 
to exert even better and more efficient oversight. And that is 
going to increase the level of safety and assuredness that the 
public can have.
    I think there is more that we can do on the enforcement 
side as well, getting back to the other question. That is going 
to be an area that we continue to look at, both in terms of 
what we are doing, how we target our inspections based on what 
we are learning, looking at issues like potency now because we 
see those coming up more, as well as what additional resources 
we can put against it.
    This is a program--and I don't want to get too deep into 
the resource question; I will save it for an appropriations 
hearing, but----
    Ms. Schakowsky. Feel free. Feel free.
    [Laughter.]
    Dr. Gottlieb. But this is a program where we do operate by 
in some cases begging, borrowing, and stealing from other 
aspects of the agency, other parts of the agency. For example, 
the team that I have, the policy team in the Drug Center that 
is working on the guidance development that you referenced and 
a lot of this policy development, is four people. They borrow 
resources from the review divisions, but, remember, those 
reviewers that they are tapping have PDUFA goals and BsUFA 
goals and GDUFA goals. They have user fee goals against their 
time that they have to prioritize their time in certain ways.
    So, I think that there is certainly an opportunity to think 
about how we can grow this program in ways that could better 
address some of those safety issues.
    Ms. Schakowsky. What more do you think the FDA could and 
should do to ensure safety at 503A compounding pharmacies?
    Dr. Gottlieb. I think getting in place the MOU is going to 
be an important step. The MOU will provide for adverse event 
reporting back to FDA through the states. And so, I think that 
as we get that framework in place, I think that there is going 
to be a lot more we could do to better target our inspectional 
resources in areas of risk, in areas where the 503A facilities 
might be crossing into being a 503B facility that would be 
subject to GMP standards.
    So, I am hopeful. We are making good progress on that. We 
are going to have it out this year. I am hopeful that, as we 
get that agreement in place with the states, that is going to 
increase our level of oversight.
    Ms. Schakowsky. Well, we will be looking at that. Thank you 
very much.
    I yield back.
    Mr. Burgess. The gentlelady yields back. The Chair thanks 
the gentlelady.
    The Chair recognizes the gentleman from Michigan, 5 minutes 
for questions, please.
    Mr. Upton. Thank you, Mr. Chairman.
    And, Dr. Gottlieb, it is good to see you here again. We 
appreciate your go-to attitude in trying to get things right. 
We understand that and we are with you every step. We 
appreciate your work on opioids, something that impacts every 
one of our districts.
    And I have to say, as we worked on the Cures legislation 
out of this committee, the $500 million extra that we added to 
the FDA budget was almost a no-brainer. So, we appreciate the 
work of your crew, and we want to make sure that you have the 
resources to make sure that things, in fact, are safe and that 
you are not missing any steps.
    I have got a couple of specific questions for you. 
Hopefully, I can get through all three.
    It is critical that, until the clinical need list is 
issued, the FDA not permit bulk drug substances to be used in 
compounding, absent a final determination of clinical need, 
once all statutory criteria have been satisfied. Can you 
confirm that, once the FDA has identified its criteria for 
clinical need, that bulk drug substances, including those that 
the FDA has currently placed in Category I, would not be 
permitted to be used in compounding, absent such a 
determination?
    Dr. Gottlieb. Well, we have put out the essential copies of 
this, which you know, the essential copies guidance. We are 
going to have the criteria for the development of the bulk 
drugs list for the 503B facilities, which is what I believe you 
are referring to, because we are further along on the bulk 
drugs lists for the 503B facilities, we will have that criteria 
out in March. And by the end of the year, we will have 
specified some bulk drugs that should either come on or off 
that list. There could be some that fall out pretty quickly 
from that list, based on safety considerations or a clear lack 
of clinical need. And so, we are going to do those assessments.
    Then, we are going to also have to contemplate how we 
change our inspectional priorities to prioritize inspecting or 
taking action on the basis of 503B facilities compounding drugs 
that might not be on that list. Right now, under our risk-based 
framework, we need to change some protocols in terms of how we 
go about looking for some of those other questions, to your 
point.
    Mr. Upton. Is the President's budget going to include more 
money for inspections?
    Dr. Gottlieb. Well, I don't want to get ahead of the 
President. So, I am not fully aware of what is going to end up 
in the budget. It is probably a question best put to OMB at 
this point.
    Mr. Upton. It was never Congress' intent that small tweaks 
to approve drugs, like minor changes in concentration or 
inactive ingredients, would satisfy the criteria for clinical 
need and open the door to compounding from bulk substances 
under the DQSA. Would you agree that a clinical need can only 
be found where there exists a genuine patient need unable to be 
addressed by approved drug products requiring a significant 
change from the approved drug?
    Dr. Gottlieb. Well, again, Congressman, I don't want to get 
ahead of my career officials who right now are drafting 
guidance to define that very question. But the type of 
definition that you put forward would certainly seem to comport 
with a reasonable interpretation of what a final standard would 
be.
    Keep in mind, also, that we articulated in the essential 
copies guidance, and we are going to re-articulate in the 
guidance that we put out in March, that if there is an FDA-
approved product available that you can compound from, you have 
to compound from that product. So, if a 503B facility is 
compounding from bulk, but they can otherwise be compounding 
from an FDA-approved product, for example, diluting it down if 
they are providing a more dilute formulation to satisfy a 
certain clinical need, they have to start with that FDA-
approved product. That is a principle that we have put forward. 
I think that is going to address some of the issues that have 
been raised with respect to what is on and not on the 503B 
bulks list at this time.
    Mr. Upton. And when do you think that order will be made?
    Dr. Gottlieb. That is a principle that I believe we put 
forward. I believe that is articulated in the copies guidance 
that we just put out, but it is going to be re-articulated in 
the March guidance that we put out. The question will then 
become, well, when are you going to take enforcement action 
solely on the basis of that issue? Because it is one thing for 
us to put out a guidance. If people don't follow our guidance, 
we have to take enforcement action. And that is where I 
mentioned that we are going to relook at protocols and how we 
prioritize our enforcement activity, on the basis of those 
kinds of considerations as well.
    But, as you know, we have a risk-based framework. We 
prioritize our limited inspectional resources and enforcement 
resources in places where we believe there is direct patient 
risk. And we are still in a realm where we are dealing with a 
lot of direct patient risk before we just look at, for example, 
economic harm, although that certainly is within the criteria 
that we look at and will be within our protocols.
    Mr. Upton. Thank you. I yield back.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    The Chair recognizes the gentlelady from Colorado, Ms. 
DeGette, 5 minutes for questions, please.
    Ms. DeGette. Thank you, Mr. Chairman.
    As Mr. Green mentioned, he and Congressman Griffith and I 
worked really hard after that terrible tragedy of the New 
England Compounding Center to come up with our Compounding 
Quality Act, which was subsequently folded into the Drug 
Quality and Security Act. We are really proud of that 
bipartisan work. But, as we are seeing today, it takes constant 
tweaking and review to make sure that these pieces of 
legislation are working.
    Commissioner Gottlieb, one of the things that I am hearing 
from a lot of stakeholders about is what to do about office 
use. A lot of providers are saying that people are having 
difficulty accessing types of medication because of the 
requirement that we have for prescription. Now what they say is 
that these medicines are not lucrative enough to use 503B 
outsourcing facilities, but that the patients need them. And 
so, there are shortages.
    I want to be clear. I have got strong reservations about 
undermining or loosening the DQSA's prescription requirement in 
any way, given the consideration that any move in that 
direction could have an impact on patient safety. But I do want 
to make sure that patients with unique needs that cannot be met 
by FDA-approved medications can get the treatment that they 
need. It is really a balancing test.
    And so, I wanted to ask you if you think there are ways 
that we can resolve these potential access problems without 
undermining the prescription requirement and exposing patients 
to unnecessary risk.
    Dr. Gottlieb. I appreciate the question, Congresswoman. To 
your point, this is one of the tensions that we are grappling 
with, because we care very much about these access issues that 
you have highlighted and need to preserve the practice of 
medicine. And we need to preserve the ability of physicians to 
get access to these drugs to use in their offices.
    We have seen an environment where we see more of the 503Bs 
doing small batches. About one-third of registered 503Bs do 
small batches. We are trying to take steps to better match 
clinicians with 503Bs that either are currently manufacturing 
drugs they might need, but also historically have manufactured 
drugs that would be needed, and are willing to run small 
batches. So, we are starting to post that information 
prospectively on our website.
    I think, as we also try to look at how we can create a more 
flexible framework for how we apply GMP standards to the 503Bs 
and see more smaller pharmacies that might want to make a 
business in doing small batches become 503B facilities, where 
they are still subject to GMP standards, I think that is going 
to also help address this.
    I made the comment earlier that the 503B sector has not 
grown as quickly as we had envisioned and had hoped at the 
time, including myself when I testified before this committee. 
But I think that it is still early days, and I still think we 
are going to see a robust industry take shape here.
    Ms. DeGette. Do you think it would be helpful to work more 
on giving timely and transparent information for providers 
about which of these facilities are making these compounded 
medications?
    Dr. Gottlieb. I absolutely do. We are doing that. We do it 
now prospectively. We are just starting to really do it, 
because we are starting to get those reports electronically. 
One of the things we are considering is, can we go back and do 
it retrospectively, because we have the histories on what the 
facilities used to produce. That could be helpful as well.
    Ms. DeGette. It would help those facilities, too.
    Dr. Gottlieb. It would help the facilities.
    We are also going to be issuing either an FR notice to 
create a docket to solicit from provider groups input, in a 
more systematic way solicit input on where they are seeing 
access issues around certain products, so that we could, then, 
see what steps we could take to try to help provide more 
efficiency to 503Bs that might want to make those products. 
Because, right now, a lot of what we know is anecdotal.
    Ms. DeGette. Right. Right.
    Dr. Gottlieb. We want to develop that information on a more 
systematic basis.
    Ms. DeGette. In a systemic way.
    Now one last thing about drug pricing. Some people say that 
compounded alternatives to expensive medicines could actually 
provide financial relief to patients. But I think there is a 
real risk, in that marketing unapproved bulk compounded drugs 
could be really risky to patients. I am concerned that some 
press reports are already saying this is going on. I just 
wondered, I don't think that, certainly, the policies that this 
committee has endorsed are meant to be using compounded drugs 
to lower prescription drug prices if it is at the expense of 
patient safety. I am wondering if you can comment very briefly 
on that.
    Dr. Gottlieb. We believe that, if there is an FDA-approved 
option available, that is always the best option for the 
patient because it is going to provide the greatest assurance 
of safety and efficacy for the patient and to the provider. And 
I also believe, as you have seen me try to demonstrate through 
the actions we have been taking, that there are a lot of 
avenues we can go down to try to address the issues of cost and 
competition in the marketplace. And we will continue to do 
that.
    Ms. DeGette. So, it is not one or the other really?
    Dr. Gottlieb. It is not one or the other.
    Ms. DeGette. I thank you.
    Thank you, Mr. Chairman. I yield back.
    Mr. Burgess. The Chair thanks the gentlelady. The 
gentlelady yields back.
    The Chair recognizes the gentleman from Illinois, Mr. 
Shimkus, 5 minutes for questions.
    Mr. Shimkus. Thank you, Mr. Chairman.
    And Scott, it is great to have you here. I appreciate the 
testimony.
    This is a tough issue we have wrestled with for a long 
time. I think my colleague, Congresswoman DeGette, just 
actually kind of wove the story and the concerns that I have, 
and when we talk to some of our folks in different 
congressional districts.
    So, the 503A and the 503B issue, for me, it always comes 
down to the small-town, rural compounder and the way these 
rules will be etched or the memorandum of understanding or the 
batch size and the mileage distance, especially when you have 
got a rural district--for me, it is 33 counties, five hours 
north and south drive, a three-hour east-to-west drive. It is a 
little different environment than a metropolitan area and a 
different area of the return on investment based upon what you 
are producing. You are not really going to manufacture for a 
large group, but in a small batch. And then, you might have 
across-state-line issues, especially in a rural area on the 
Illinois-Indiana border. I see my colleague, Mr. Griffith, 
nodding his head.
    So, can you kind of weave for the small pharmacist 
compounder, who I haven't had personally any problems as far as 
I have represented that area--he is trying to address this 
being able to provide what is being requested of him. Sometimes 
it is even these issues with the--I am not a doctor--the eye 
drop issue for the optometrist who doesn't have the shots in 
the doctor's office, although it is something they need 
immediately, in essence. And there is not a prescription 
because the person hasn't come in yet to be able to get the 
prescription. And then, you have a delay of providing the 
medicine.
    So, for that small compounder, what should he take home 
from my vague question?
    [Laughter.]
    And what assurances can you give him that we are trying to 
allow him to continue the work he has been doing?
    And I know we have got our veterinarian here, too. These 
guys also use their compounding ability in veterinarian 
medicine. So, a veterinarian would ask the compounder in rural 
America. So, he needs to be there for not just humans, but also 
for the animal health that he also is able to provide for the 
veterinarian.
    Dr. Gottlieb. I can go a lot of different ways with this 
question.
    Mr. Shimkus. Well, I went a lot of ways with the questions.
    [Laughter.]
    Dr. Gottlieb. But I will go right to where I think you are 
going, which is the question of the prescription requirement 
and whether or not that small-town pharmacist who is providing 
drugs over a large geographic area still needs to have a 
prescription in hand in order to provide a drug back and the 
difficulty of doing it over a large geographic expanse I think 
is the essence of what you are asking.
    The bottom line is that we believe that the line of 
demarcation for what constitutes the practice of pharmacy 
versus what constitutes drug manufacturing has to remain the 
prescription. The practice pharmacy, if you go and look at the 
bylaws of states and how they define a practice pharmacy, I did 
that before coming to the hearing. I spent my weekend looking 
at that. Embedded in the bylaws of state boards of pharmacies 
is the idea of the prescription and the named patient. That is 
the essence of what it means to be practicing pharmacy.
    We also understand that Congress contemplated other 
thresholds and struggled with it, and arrived back at the 
prescription being the line of demarcation, both 20 years ago 
when 503 was originally drafted, as well as when it was 
recodified in DQSA. Because other kinds of schemes that were 
contemplated, volume-based schemes, for example, didn't provide 
the kind of delineation that you could apply a regulatory 
structure to. We can't regulate against ``we'll know it when we 
see it.'' We need a clear line that we can force against and we 
can enforce against with our limited resources.
    As far as veterinary medicine is concerned, as you know, we 
recently pulled the guidance that sought to define what our 
regulation was going to look like in that realm. And we pulled 
that for a variety of reasons, but, largely, because we don't 
think we got it right. I will say we will be reissuing that 
this year. But I will say that the issues around compounding in 
the veterinary space are different than issues around 
compounding in the human space. The practice of pharmacy in the 
veterinary space is a different kind of practice of medicine 
than it is in the human space. And so, our framework will also 
look different. It will be reflective of the practice of 
veterinary medicine.
    Mr. Shimkus. All right. Thank you.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    The Chair recognizes the gentleman from Oregon, Dr. 
Schrader, 5 minutes for questions, please.
    Mr. Schrader. Well, thank you.
    And I thank my colleague for asking some good questions 
about veterinary medicine. That is near and dear to our heart.
    We use compounders a lot in our practice, I don't think 
inappropriately, but, as you alluded to, the size of the 
animal, the different metabolism of an animal, the lack of a 
particular drug that has worked historically that is affordable 
for my patients, that is a different beast to some degree. I 
appreciate the thoughtfulness that USDA under your guidance and 
FDA is actually approaching the whole veterinary guideline 
issue. So, I want to thank you for that.
    While I have had a lot of experience in using compounders 
in smaller communities to make sure my patients get the best 
medication possible, I am new to the regulatory framework with 
all this. I don't profess to be knowledgeable. So, my questions 
might be a little arcane and pretty obvious.
    But the whole 503B opens up a potential, as I think you 
have alluded to and some of the questions have alluded to, 
problem for circumventing a lot of the regulatory framework 
that our generic manufacturers, for instance, have to apply. 
What are the major differences--well, first, I will say I fully 
support the continued definition of pharmacy prescription. It 
has to have a prescription to be able to do that. I think that 
is for the safety of any patient, human or animal. That is 
critical, and I urge you to continue to use that as a very 
bright line.
    But, having said that, then what do you see as the big 
demarcation between your 503B regulatory framework versus your 
generic regulatory framework? How do you see that as different, 
and what constitutes the guidelines there?
    Dr. Gottlieb. Right. By generic, I think you mean 503A, 
traditional pharmacy compounding, 503B being the outsourcing 
facility. And the difference is the prescription, whether or 
not that the drug is being compounded on the basis of a named 
patient in response to a lawful prescription from a provider. 
That is the traditional practice of pharmacy. That is a 503A 
compounder.
    A 503B compounder is engaging in manufacturing. They are 
manufacturing either in small batches or on a larger scale, not 
in response to individual prescriptions that they have received 
from a provider, but in anticipation of orders, and they are 
doing advanced shipping. They might be doing what we all office 
stock. They might be shipping to providers to allow those 
products to be stocked inside the offices.
    That is traditional manufacturing. There is no way around 
it. Whether you do it with 10 units or you do it with 100 
units, you are engaging in manufacturing, and those 
circumstances, instead of applying the traditional regulatory 
framework where they would be subject to regulations around the 
sanitary conditions, which is what you would apply to 503A 
pharmacy, in the context of the 503B setting you are applying 
GMP standards, some form of GMP, not GMP-light, but some form 
of GMP. I don't want to call it ``GMP-light''.
    Mr. Schrader. So, similar to the generic manufacturing that 
would go on?
    Dr. Gottlieb. Subject to good manufacturing practices, I 
mean, good manufacturing practices, as I said at the outset, 
are not a fixed standard. They are risk-based. And so, they 
look different depending on the manufacturer that you are 
evaluating. But it would be some form of GMP standards that you 
would be applying. You would be doing lot release, sterility 
testing, batch testing. You would be retaining samples. You 
would provide for the compounding in a sterile environment if 
you are compounding a sterile product. So, you would be 
applying the GMP standards, traditional GMP standards.
    Mr. Schrader. Whatever level you are approaching that 
manufacturer?
    Dr. Gottlieb. There are basic principles of regulation with 
respect to the good manufacturing practices. So, when we say 
``level,'' I think that there are things you can do to make it 
less expensive if you are doing it on a smaller scale. So, for 
example, you require a lot of small batches. If you are only 
going to be making a small batch, if you are only shipping a 
small amount, you would require that facility to retain a lot 
of samples. There are ways that you can apply the GMP standards 
in a fashion that comports with the level of the volume and the 
level risk you are creating. And that is what we are seeking to 
do in the more flexible framework that we are contemplating.
    Mr. Schrader. So, I guess the last question: what do you 
see as the role with the state regulatory framework versus the 
federal regulatory framework. The interstate commerce piece 
would, obviously, be a federal purview. How do you juxtapose 
the state regulatory framework on these 503A and, more 
importantly, the 503B pharmacies?
    Dr. Gottlieb. The MOU is going to define sort of the 
interplay between the state and the federal scheme and the 
level of activity that a 503A can engage in that might cross it 
into being subject to federal oversight because it is engaging 
in interstate commerce, interstate activity. And we have talked 
about various thresholds, about how much product can cross a 
state line before a compounder should or ought to be subject to 
at least our attention, to make a decision on whether or not it 
is subject to, should be subject to FDA oversight.
    Here again, this is not going to be a fixed standard when 
we are contemplating this. It is not going to be, if you ship 
31 products, you are subject to the federal scheme, but if you 
had only shipped 30, you would be fine. We are going to try to 
take a risk-based approach here as well, and it is going to be 
based on volume, percentage of products you are shipping across 
the state line, the kinds of products you are shipping across 
the state line, the manner in which you are doing it. And so, 
we are going to have a threshold in which we want notification 
by the states, but, then, we are still going to make an 
independent decision whether or not it should be subject to a 
federal inspection because of the activity.
    And the essence is, if I could just close, the essence is 
that, if a pharmacy is subject to state regulation, but is 
shipping most of its product out of state, it can't be subject 
to state regulation anymore. Because if you are in New Jersey 
and you are subject to the New Jersey Board of Pharmacy and New 
Jersey inspectors, but most of your products are going to New 
York, the New York inspectors don't know. Then, they can't 
provide the oversight that they need to in a trace-back. So, it 
is important that the states be aware of what is going on 
within their states.
    Mr. Schrader. Very good. Thank you.
    And I yield back.
    Mr. Burgess. The Chair thanks the gentleman.
    The Chair recognizes the gentleman from New Jersey, Mr. 
Lance, 5 minutes for questions.
    Mr. Lance. Thank you very much, Mr. Chairman.
    And thank you for being here, Commissioner.
    The district I serve provides innovative medicines for 
patients across the country. Protecting these patients is, of 
course, a top priority for all of us, and so is protecting the 
FDA's gold standard. As the Drug Quality and Security Act is 
implemented, we need to ensure that we provide the incentive 
for innovator and generic manufacturers to go through the FDA 
process. To do this, we need to make sure that commercially-
available drug products cannot be copied. How is the agency 
protecting patients and the gold standard as you implement the 
Drug Quality and Security Act?
    Dr. Gottlieb. Well, Congressman, thanks for the question. I 
would like to assert that we are protecting the interest of 
patients by implementing this statute and making sure that we 
continue to move through the regulatory steps to, for example, 
finalize the 503B bulks list, finalize the guidance on sanitary 
conditions, finalize the list on bulk substances that the 503A 
facilities can compound from, make sure we get the MOU in 
place, so we can provide proper oversight of 503B and 503A 
facilities, in concert with the states, and work closely with 
our state partners. And so, we are going to continue to work 
through that.
    With respect to the first part of your question about just 
the sort of economic issues inherent in situations where a 
compounder might be copying a drug that is otherwise an FDA-
approved product, we have asserted in the copies guidance 
certain activities that we would believe fall outside the 
scheme contemplated by DQDA. We are going to reassert those in 
the guidance that we issue in March with respect to the 
criteria for what should and shouldn't be on the bulk drugs 
list. Then, it is going to be a question of taking enforcement 
action where we see companies or compounders engaging in 
activity that falls outside that scheme that we both 
articulated in our guidance as well as Congress contemplated in 
the statute. That is what we are going to be focused on doing.
    I will say, though, our enforcement activities will be, as 
they should be, guided by patient risk, first and foremost. But 
we will be baking into our protocols in terms of how we take 
enforcement action the kinds of considerations that you talked 
about, because that is what Congress has asked us to do.
    Mr. Lance. Thank you.
    I was pleased to see that the agency's 2018 Compounding 
Policy Priorities Plan--and I am interested to hear more about 
the forthcoming flexible risk-based approach to current good 
manufacturing practices. Recognizing the agency's goal to 
increase the number of 503B outsourcing facilities, recognizing 
the compliance costs for larger 503B facilities and the 
investment necessary to satisfy the statute, is the agency 
concerned that the multi-tiered 503B regulatory approach may 
affect incentives for these facilities?
    Dr. Gottlieb. Well, quite the opposite, we feel that we 
hope that by taking a tiered approach based on risk, we might 
provide the opportunity for more 503A pharmacies to step across 
the line into being 503B pharmacies and consider it worth the 
economic investment. Becoming a 503B pharmacy is not without 
some investment in cost for most 503A facilities. They don't 
have the kinds of facilities to be subject to GMP oversight. 
And so, it is going to require some investment. But we are 
hoping that we could provide a framework where more facilities 
can find it, have the ability to make the capital investments 
and raise the capital necessary to make those investments 
because they see a better opportunity on the other side of that 
in terms of trying to increase their volume and increase the 
kind of activity that they are engaged in. We think by having 
more 503A facilities converting to being 503B facilities, it is 
going to facilitate access and, also, give them the ability to 
grow.
    A 503A facility that is trying to engage in some low level 
of manufacturing, even if they can do it under the radar of 
regulators, if they grow to a certain proportion, eventually, 
they are going to pop up. And so, they are basically capped 
under this legislation. If they step across that threshold and 
become a 503B, they have much more latitude to engage in 
broader manufacturing.
    Mr. Lance. Thank you, Commissioner.
    And, Mr. Chairman, I yield back 27 seconds.
    Mr. Burgess. The Chair thanks the gentleman.
    The Chair recognizes the other gentleman from New Jersey, 
the ranking member of the full committee, Mr. Pallone, 5 
minutes for questions.
    Mr. Pallone. Thank you, Mr. Chairman.
    I wanted to ask you about this issue of distribution versus 
dispensing. Section 503A of the law prohibits a pharmacist, 
pharmacy, or healthcare provider from distributing compounded 
drug products across state lines that exceed 5 percent of the 
total prescriptions distributed or dispensed unless the product 
is compounded in a state that has entered into a memorandum of 
understanding with FDA that addresses the distribution of 
inordinate amounts of compounded drug products and provides for 
investigation by the state into complaints associated with 
compounded drug products that are distributed interstate. And 
FDA released a draft MOU in February 2015 that proposed 
defining inordinate amounts for purposes of interstate 
distribution to no greater than 30 percent of all products 
distributed or dispensed.
    So, in terms of this distribution versus dispensing, 
Commissioner, some have suggested that the MOU is only intended 
to apply to drugs that are distributed without a prescription. 
What is your view about the purpose of the MOU and the public 
health purpose it serves? Are there some drugs, such as those 
dispensed directly to patients, which could be excluded 
consistent with that purpose?
    Dr. Gottlieb. Well, in my weekend reading of pharmacy 
bylaws, the other observation that I had is that the bylaws 
make specific reference to the word ``dispense'' as part of 
their definition of what constitutes the practice of pharmacy. 
It is our view, and we feel strongly, that the practice of 
pharmacy always contemplates the dispensing of the drug. Now in 
certain circumstances the drug is going to be dispensed and, 
then, distributed across state lines, and that is where the MOU 
comes into play. The MOU contemplates drugs that are dispensed 
and shipped across state lines, and shipping is a form of 
distribution, as I think you all agree. But we think that 
dispensing is part and parcel of the activity of practicing 
pharmacy, and no compounded drug can be distributed without 
first being dispensed, because dispensing is the act of 
creating that patient-specific prescription.
    And I will just say, and to address the elephant in the 
room, because this has been contemplated as one of the beliefs 
in terms of why DQSA might have contemplated something 
different with respect to office stock than FDA's current 
interpretation of how we perceive the law to have been written, 
I don't think that redefining the practice of pharmacy, which 
involves the activity of dispensing a product to a patient, is 
a good way to try to create a framework for office stock. I am 
open to the debate about office stock and the merits of it. I 
think we have been clear from the agency's standpoint the risks 
that we feel it creates if a 503A facility is getting engaged 
in it. But I would hate to see the practice of pharmacy 
redefined as a sort of backdoor into that. I think if we are 
going to have a discussion about the merits of 503A facilities 
engaging in some level of manufacturing and shipping, we ought 
to just do that directly.
    Mr. Pallone. All right. Then, let me get to my second 
question. Recently, you announced the agency's intention to 
modify the allowable percentage of compounded drug product 
distributed into a state to effectively eliminate the 30-
percent threshold and, instead, implement certain reporting 
requirements that will be triggered at a 50-percent threshold. 
And this strikes me as a weakening of an important patient 
protection and in contrast to what you have noted in your 
testimony is the stated goal of this provision in the statute, 
which says, ``Preventing compounders reportedly operating under 
the exemptions in Section 503A from growing into conventional 
manufacturing operations making unapproved drugs and operating 
a substantial portion of their business interstate without 
adhering to current good manufacturing practice requirements 
and other provisions intended to ensure the manufacture of 
quality drugs.'' So, would you explain how increasing the 
allowable threshold for interstate distribution to 50 percent 
is consistent with the goal of the statute of preventing 
compounders from making unapproved drugs and operating a 
substantial portion of their business interstate without 
adhering to the CGMPs?
    Dr. Gottlieb. Well, I appreciate the question, Mr. 
Chairman. I don't see it as a weakening. I see it as a 
strengthening, because we are going from a hard threshold of 30 
percent to a risk-based threshold of 50 percent. It is not 50 
percent--it is not 49 percent and you are all good, and 51 
percent and you are now subject to a different scheme. There 
are going to be other tests that we apply to make assessments 
about what the appropriate scheme is for a particular facility.
    It is the case, though, that there are facilities--for 
example, a border-state pharmacy that develops TPN, total 
parenteral nutrition; a home infusion company that provides 
patient-specific, named patient products on a prescription 
basis and might ship more widely that are engaging in the 
traditional practice of pharmacy; they are doing it on the 
basis of named patients in response to an individual 
prescription, but they might be shipping more of those 
products. They might be lower-risk, too, depending on what they 
are doing.
    And so, the reality is that there are a lot of different 
kinds of pharmacies situated across the spectrum in terms of 
the activity that they are engaged in. And we don't think a 
sort of fixed standard where there is a fixed line based just 
on volume makes the most sense. We want a volume-based 
standard, but also a standard that allows us to make an 
assessment about what the kind of activity is. And it is 
another effort on our part to be risk-based. I think, 
ultimately, our enforcement is stronger when we are taking a 
risk-based approach.
    Mr. Pallone. All right. Thanks a lot.
    Thank you, Mr. Chairman.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    The Chair recognizes the gentleman from Virginia, 5 minutes 
for questions, please.
    Mr. Griffith. Thank you very much, Mr. Chairman. I 
appreciate it greatly.
    Let me get the record a little bit straight because I think 
it was confused a little bit earlier. While we had criminal 
conduct by NECC, we also had timid lawyers at the FDA. Ohio had 
warned the FDA there was a problem. Colorado had outright 
banned NECC from putting products into their state. And FDA was 
aware of it and didn't even bother to seek a warrant to go in 
and see what was going on. So, as we move forward, let's 
continue on that.
    Also, I think in the next panel there will be some question 
about the intent, and you touched on that in your testimony 
with Mr. Shimkus a little bit earlier. But I want to go back to 
when the bill passed in September of 2013. At that time, now-
Ranking Member Green said, in part, ``While I believe the FDA 
dropped the ball with regards to the NECC, with this law they 
must succeed where in the past they failed.'' And I know you 
are working hard on that.
    This bill still lacks clarity in many important areas: 
office use, how nuclear pharmacies are regulated, and 
repackaging of sterile products. I look forward to working with 
my colleagues to provide meaningful oversight of the FDA to 
make sure another NECC-type outbreak never happens again, and 
make sure they are using the type of enforcement discretion 
necessary to preserve patients' access to critical medicine.
    In that same press release--because it was a bipartisan 
effort, as you heard earlier, Mr. Green, myself, and Ms. 
DeGette worked hard on trying to get this portion of the DQSA 
right, and to the best of our ability, although we had some 
disagreements with our Senate colleagues. I said on that 
occasion that, ``The Drug Quality and Security Act leaves a 
large portion of existing law intact. It also leaves many areas 
of practice where clarification may still be needed, 
particularly as it relates to office use, repackaging, and 
nuclear pharmacies. Along with my colleagues, I will continue 
working to oversee the FDA's interpretation and implementation 
of this law.''
    And I think that is what we are doing today. Some folks 
have characterized this, because I am leading the push for 
office use, as wanting to undo everything that DQSA stood for. 
Obviously, I wouldn't have drafted it and fought hard along 
with my colleagues to get it, if that was my intent.
    But I do have questions. And one of those was raised by 
your testimony to Mr. Shimkus in answering his questions where 
you indicated that twice they had decided that you had to have 
a prescription in order to issue a drug, and that Congress had 
made that decision. But I am looking at 503A, little ``a'' to 
big ``A'', and it says, as one of the things, it says, ``or is 
by a licensed pharmacist or a licensed physician in limited 
quantities before''--before--``the receipt of a valid 
prescription order for such individual patient.''
    Obviously, the law--and that was the old law, which was not 
changed and which we were assured that the practices weren't 
going to change at the times we were negotiating this by folks 
in the Senate saying they didn't want to do this because the 
FDA wasn't going to change anything. It clearly anticipates 
that in some cases you won't have a prescription until 
afterwards. We had debated making sure that a prescription was 
written within 7 days at the time that we were negotiating it. 
But this seemed acceptable at the time, and the reason that I 
put that into my statement--and others may have put it into 
their statement--and the statement on the floor was we were 
given the assurance that office use was going to remain pretty 
much the same, and for 503A pharmacies I think that is 
important.
    So, how do you rectify that you think there needs to be a 
prescription with the actual wording of the law? There are also 
other references, future-looking references, in the next 
section.
    Dr. Gottlieb. Yes, thank you, Congressman, for the 
question. I appreciate your longstanding dedication to this 
issue and your longstanding work on it. And you and I have had 
the time to talk about this on many occasions.
    With respect to the nuclear pharmacies, I will just say we 
will be putting out a guidance that will specifically address 
radiopharmaceuticals.
    But, in respect to your specific question about the 
language you quoted, I believe that that language and we 
believe that language was contemplating anticipatory 
compounding, basically, compounding on an expectation that you 
were going to receive a certain volume of prescriptions. 
Because we know, with the 503A pharmacies--and I know you are 
very familiar with the practice of pharmacy--sometimes when you 
mix up one batch, when you are mixing up a batch, you can't 
just mix up one drug. You mix up 10 at a time or 15 at a time. 
And you can do that if there is an expectation that you know 
you get 30 prescriptions a month or 40 prescriptions a month. 
So, we allow for that.
    What we have said in guidance is that you can mix up a 
level of volume in anticipation of what you your prescriptions 
might be over the course of a 30-day period to provide that 
kind of flexibility. That is what I believe the statutory 
language that you referenced was anticipating and that we have 
allowed for.
    Mr. Griffith. And I disagree, just based on the debate that 
we had when we were doing this a number of years ago in 2013, 
because we anticipated there would be continued office use. 
That is why we were looking at putting in the 7-day 
requirement. And as Ms. DeGette said, there has got to be a 
balance. As Mr. Shimkus said, we are worried about rural areas.
    I do appreciate that you are concerned about the state 
lines because, having now been made famous by the GEICO 
commercial where the lizard jumps from Tennessee to Virginia 
and back and forth, and back and forth, that is my district. 
And so, you have got a pharmacy on either side of that state 
line. You just turn around and you cross the state line.
    The other day I was traveling in my district and I went 
from Virginia to West Virginia, to Virginia, to West Virginia, 
back to Virginia, then ended up the day going from Virginia to 
Tennessee, back into Virginia, and back into Tennessee, and 
then, back home in Virginia, just to try to talk to my 
constituents and do what I needed to do.
    So, I appreciate you paying attention to that as you look 
at the flexibility side, but I really believe that the existing 
law allows for some office use from the smaller folks. We were 
trying to get to the big guys and the larger guys because of 
the NECC problem, which was shipping into all the states, not 
just across the Tennessee line or the Virginia line.
    I yield back.
    Dr. Gottlieb. I understand and appreciate concerns, 
Congressman, the impact on small pharmacies.
    Mr. Griffith. And I yield back. Thank you, Mr. Chairman.
    Mr. Burgess. The Chair thanks the gentleman.
    And the Chair recognizes the gentleman from a similar small 
state, Maryland, for 5 minutes.
    Mr. Sarbanes. Small, but powerful, and home to the FDA.
    Welcome, Commissioner.
    People have touched on kind of the partnership, regulatory 
partnership between your agency and what happens at the state 
level. I wanted to explore that a little bit more.
    I was looking at your testimony on page 3, where you talked 
about the 500 inspections that have been conducted, 503A and B 
facilities, since the passage of the new law and the end of the 
last fiscal year; how you have observed problematic conditions 
during the vast majority of these inspections, overseeing more 
than 150 recalls of compounded drugs, issued more than 180 
warning letters. You have also worked in close coordination 
with our Federal and state partners, sending more than 70 
referral letters to state regulatory authorities for follow-up 
on certain inspectional findings.
    So, I am just curious how that is going. There must be some 
states that are better partners than others. Obviously, you 
have to rely to a certain degree on those follow-up 
inspections. And maybe without naming specific states, you 
could give me an example of a state that is engaged in this 
partnership in a very productive and efficient way, and why 
that is the case, what you would point to as indicating kind of 
a high standard in terms of the partnership, and the follow-up, 
and all the rest of it. And then, maybe give me an example, 
again without naming the state, of a place where that is not 
going so well. And what does the agency do, either because it 
is required to in some element or just because you regard it as 
your responsibility to help states to get to where they can be 
the best possible partners in this effort at oversight?
    Dr. Gottlieb. Congressman, thanks for the question. To your 
point, there is a fair degree of variability. I think it would 
be risky of me to try to characterize a good state and a not-
so-good state, because it is not something I have actually 
asked the question of my folks, and I would want to contemplate 
it in concert with them. Because the field people, the field 
team that is engaged in these efforts are going to have the 
best perspective. We could certainly get you that perspective, 
but I wouldn't want to mischaracterize the state.
    I will say, though, broadly, that what we are seeing 
directionally is that the states are starting to conform more 
to DQSA now. And so, there has been discussion, for example, of 
states' pharmacy bylaws that might allow for certain practices 
that DQSA we don't believe contemplates. We are starting to see 
more of the states conform their practices, their inspectional 
activity, as well as their laws, to be compliant with the DQSA, 
be consistent with the principles of the DQSA.
    For the states that might be moving in a different 
direction or not moving as quickly in the direction that was 
envisioned by DQSA, I think what it creates for us is more of a 
resource burden. Those are the states that we might have to put 
more resources into to make sure that we are providing the same 
level of oversight that we would be to a state that is sharing 
information with us very cooperatively and reporting to us, so 
we can target our inspections better.
    A lot of our inspections are for-cause inspections. A lot 
of them are based on information we derive from the states. If 
the states aren't reporting to us as efficiently, then we need 
to do more work to try to derive that information on our own. 
It is just a more resource-intensive process.
    Mr. Sarbanes. Is there an opportunity to provide, I don't 
know, technical assistance or other support to the states, as 
they are trying to come into compliance with this effort?
    Dr. Gottlieb. We do that. As the scheme contemplates, we 
provide a lot of resources or technical assistance within the 
context of the resources we have available to do this in terms 
of training to state inspectors, training around inspectional 
issues that they might need to be aware of as they start to 
inspect, for example, 503B facilities and do their own GMP 
inspections. We do dual inspections with the states. We invite 
the states in on our inspections, so that they can both learn 
alongside of us as well as dually inspect some of these 
facilities and share information. So, there is a lot of stuff 
that we are trying to do in concert with the states.
    As I sunk deeper into this and understanding how we were 
applying this framework when I re-arrived at FDA 10 months ago, 
there were a lot of aspects of this that looked very similar to 
FISMA, the framework envisioned in FISMA, where the regulatory 
scheme is very much dependent upon a close Federal/state 
partnership.
    Mr. Sarbanes. Thank you. I yield back.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    The Chair recognizes the gentleman from Georgia, 5 minutes 
for questions, please.
    Mr. Carter. Thank you, Mr. Chairman.
    And thank you, Dr. Gottlieb, for being here. I want to 
commend you and thank you for your adherence to safety, and I 
think it is very important.
    It has been mentioned more than once during this hearing 
that there has to be a balance between accessibility and 
safety. I think that is perhaps one of the areas that I 
struggle with. And you and I have had many conversations.
    I want to ask you, first of all, about the rulemaking 
process, because that is of great interest to me, being a 
relatively new Member of Congress, only in my second term, my 
third--I guess I am starting my fourth year now. So, I am 
getting older, but I am still learning about the rulemaking 
process.
    I noticed that, since the passage of DQSA, that you have 
used oversight guidance documents to really enforce this and to 
really enforce what you want the agency to see out there. 
Although we probably disagree, and we do disagree, you say it 
is with stakeholder input; I say it has not been with 
stakeholder input. And I am just wondering how you can justify 
that, particularly in light of the fact that just recently the 
Office of the Associate Attorney General issued a new policy to 
DOJ that guidance policies will not be converted into 
rulemaking. So, how are you justifying this, that you are going 
to use guidance policy for rulemaking here?
    Dr. Gottlieb. Thank you, Congressman.
    We have a long history of issuing non-binding guidance in 
many contexts. And our guidance practice--and this question has 
come up in other contexts well outside this context--our 
guidance practices, generally, have been used as a model for 
other agencies and for OIRA as well in terms of what we do, how 
we issue guidance, what we use guidance for under the 
Administrative Procedures Act.
    So, I feel confident that, on the whole--and we can have a 
debate around any individual guidance--but I feel confident 
that, on the whole, we have adhered to good practices in terms 
of how we promulgated guidance in multiple----
    Mr. Carter. I don't mean to interrupt, but you even 
answered Representative Upton's question about the guidance, 
that you expected it and that you were using the guidance for 
enforcement. You are, essentially, saying that this guidance is 
going to be enforced.
    Dr. Gottlieb. There is----
    Mr. Carter. Even though the DOJ has been told that, no, it 
cannot be converted into rulemaking. Quite honestly, I have not 
read this from the Associate Attorney General. Perhaps they 
said this is going to apply to the DOJ, but not to the FDA. I 
don't suspect that was the case; maybe it is.
    Dr. Gottlieb. Well, we could take enforcement action now. 
We don't need the guidance document in order to take the 
enforcement action. The guidance document is a way to provide 
public discussion around how we intend to take our enforcement 
action. So, we can both inform the public as well as learn from 
the public. The guidance document itself isn't the basis for 
the enforcement action, you are absolutely right. We have 
regulatory authority that has been given to us by Congress.
    Mr. Carter. Well, what about stakeholder input? Because 
that is something that is very concerning to me, that I don't 
feel like we have had stakeholder input. I know that you are 
coming out with a new MOU. My hope is that you are going to 
have more stakeholder input into that. The existing MOU, 
although I was not here at the time, I don't think there was 
sufficient stakeholder input into that.
    One thing, in particular, about this is the difference 
between dispensing and distributing. As you know, the DEA has 
said that distributing is going to be overseen by the FDA, but 
the dispensing is going to be overseen by the state boards of 
pharmacies. Yet, you seem to want to oversee dispensing as well 
through the FDA.
    Dr. Gottlieb. I am not familiar with the particular 
definition of dispensing and distributing, probably under the 
Controlled Substances Act, that you have derived from--I don't 
know, is it a regulation or a guidance document? So, I can't 
speak to how the DEA might have defined something in a certain 
context, again under the Controlled Substances Act, which is my 
presumption.
    We believe that, under this law and under the practice of 
pharmacy, with products that we regulate, and outside of the 
context of controlled substances, the practice of pharmacy 
involves the dispensing of a product, just like the practice of 
pharmacy involves a patient----
    Mr. Carter. But why is it that the FDA thinks that they 
have to intercede the state boards of pharmacy? That has always 
been something that the state boards of pharmacies----
    Dr. Gottlieb. We need to work with them.
    Mr. Carter. OK. I have got just a few seconds left. Now I 
want to ask you about something that has been brought up by Ms. 
DeGette, by Mr. Griffith, and that is office use. And that is 
something that I think you have absolutely got wrong here.
    But I want to ask you just from a perspective of a Member 
of Congress. It is my understanding that not once, not twice, 
but three times, through appropriations language, that the FDA 
has been instructed to revisit this and to look at this. In 
fact, in 2016, it said, ``The committee understands the intent 
of the DQSA was not to prohibit compounding pharmacies from 
operation under existing 503A exemptions. Therefore, the 
committee directs the FDA to issue a guidance document on how 
compounding pharmacists can continue to engage in office-use 
compounding.''
    Why do you ignore these? Why have you not ignored it once, 
not twice, but three times? I don't get it.
    Dr. Gottlieb. Congressman, those appropriation riders I 
believe preceded my arrival at FDA. I would be happy to work 
with this committee, or anyone in Congress, to contemplate if 
they want to have a discussion around the statute and what we 
can do to continue to improve this on this legislation.
    But we have to keep patients in mind and make sure patient 
safety drives the decision we make. And remember why we are 
here. We are here because pharmacies were engaging in 
manufacturing without any standards in place.
    Mr. Carter. Dr. Gottlieb, I could not agree with you more. 
I commend you on your dedication to safety. Again, we get back 
to the balance between access and safety. And that is just you 
and I live in different worlds. You are in a different world 
than what I previously was in my career in pharmacy, and I saw 
firsthand the access issue and how people struggled with it. 
That is just a difference that we have and that I hope that you 
will take into consideration in the future.
    Thank you very much.
    Dr. Gottlieb. Thank you, Congressman.
    Mr. Burgess. The gentleman yields back.
    So, Dr. Gottlieb, once again, I think we have gotten 
everyone on the committee. I will just ask, Mr. Green, do you 
have a follow-up question before we leave?
    Mr. Green. No. Oh, I guess we do, Mr. Chairman.
    [Laughter.]
    Mr. Burgess. I could intuit that.
    Mr. Green. OK. Commissioner, one of the most important ways 
FDA is conducting oversight and ensuring compliance with the 
DQSA has been through inspections. Since the enactment of the 
Drug Quality and Security Act, FDA has conducted nearly 500 
inspections, issued more than 180 warning letters identifying 
significant violations of compounding pharmacies, issued more 
than 70 letters referring to inspectional findings to state 
regulatory bodies, and overseen more than 120 recalls of 
compounded products.
    Commissioner Gottlieb, as I noted, FDA has conducted 
hundreds of inspections in compounding pharmacies and 
identified numerous violations. Will you describe briefly for 
us some of the violations and conditions FDA found when they 
were inspecting both 503A compounding pharmacies or 503B 
outsourcing facilities?
    Dr. Gottlieb. I brought some slides with me, if the 
chairman would let me use them, of some of the things that we 
found. So, we can close on this, if that is OK. I don't know if 
we have them teed up.
    Thank you, Mr. Chairman.
    This is visible microbial contamination on a ceiling tile 
in a clean room.
    If we go to the next slide, this is a HEPA filter located 
immediately above an ISO5 workbench that was observed to have a 
stained surface. The stain was due to a drug product which had 
exploded due to excessive pressure when forcing non-sterile 
product through a sterilizing filter, a device used to force 
the product sterilizing, in other words, a stainless steel 
caulking gun that was not sterilized.
    Next slide. This is a sleeve used in the aseptic glovebox 
for aseptic manipulation. You can see it is damaged where it is 
circled.
    Next slide. This is a toaster oven that was used to dry 
heat sterilize glassware. The oven wasn't capable, as we can 
probably presume, of reaching high enough temperature to be 
effective for that purpose.
    Next slide. This is a ceiling above the doorway to a clean 
room with exposed insulation. This was supposed to be a clean 
room that would store products manufactured.
    Next slide is a kitchen dishwasher that was actually being 
supplied with tap water and home detergent and used to clean 
equipment, equipment and the utensils that come in contact with 
products that were intended to be sterile.
    And they jumped my bug. This was a bug.
    But, we also saw things like coffee filters being used to 
filter particulate matters. We find things that are deeply 
concerning. And these are sterile, these are facilities that 
are manufacturing sterile products, or at least intended to be 
sterile products.
    I appreciate the question.
    Mr. Green. Thank you.
    Mr. Burgess. The Chair observes that debate on the floor 
has proceeded to the point where Mr. McGovern is making some 
fairly significant gestures, which usually means he is 
concluding and we will be voting shortly. So, I will advise the 
committee that we will recess upon the votes that are called on 
the floor.
    But we thought Ms. McMorris Rodgers was coming back, and 
she is. So, I will recognize her.
    Mrs. McMorris Rodgers. Thank you, Mr. Chairman.
    Mr. Burgess. But, again, I observe that the vote on the 
floor is probably very close. Mr. McGovern is making smaller 
and smaller circles with his hands, and that usually means we 
are getting there.
    [Laughter.]
    Mrs. McMorris Rodgers. OK. Very good. OK.
    Well, Commissioner, thanks for being here.
    I wanted to ask about the 503As and the 503Bs, and just 
what the intent is moving forward as far as preserving them 
separately, or what your thoughts are.
    Dr. Gottlieb. Well, thank you, Congresswoman, for the 
question. On the 503A, are you talking about the bulks list or 
just the different facilities?
    Mrs. McMorris Rodgers. Well, I understand that you have 
issued some guidelines related to 503As, 503Bs, and I wanted 
just to understand better what you think the future is for the 
503As.
    Dr. Gottlieb. Well, the general question with respect to 
the 503As is we believe that the 503As, which is a traditional 
practice of pharmacy, should continue to flourish. We believe 
it provides an important product for patients, the practice of 
pharmacy being able to individualize products on the basis of a 
prescription for an individual patient.
    On the 503Bs, we do hope, and we always envisioned, that 
there would be more facilities converting into being 
outsourcing facilities. We also believe that more 503A 
facilities would opt to become 503B facilities. Now, in full 
disclosure, we have not seen the industry grow up the way we 
had hoped. We still believe it is early. And we intend to try 
to promulgate a set of policies that we believe that will, 
hopefully, provide a flexible regulatory framework based on 
risk that is going to allow more pharmacies to contemplate 
becoming 503B facilities. Because there is an argument to be 
made that, when a pharmacy can become a 503B facility and 
engage in larger-scale manufacturing, under GMP compliance 
standards, we are able to apply a level of oversight that 
ensures the sterility of the products that are being 
manufactured. That could, hopefully, provide for more patient 
access.
    But, with respect to the 503A facilities that were 
contemplated in the statute, and always enshrined in statute, 
that is the traditional practice of pharmacy that we believe 
should be preserved and protected, and provides an important 
opportunity for patients to get products that are tailored to 
their unique clinical needs.
    Mrs. McMorris Rodgers. So, you anticipate that they will be 
preserved as you move forward, the 503A----
    Dr. Gottlieb. Well, they are. They are being preserved. The 
question becomes the scope of the activity and whether or not 
503A facilities can and should be engaging in larger-scale 
manufacturing, and manufacturing and distributing products. And 
we believe that DQSA contemplated a scheme where that kind of 
activity would move into the 503B facilities that would be 
subject to GMP standards, if you were engaging in manufacturing 
and wider-spread distribution.
    That is what brought us here. It was the fact of pharmacies 
like NECC engaging in manufacturing under the guise of a 
pharmacy license, not subject to standards that ensure the 
sterility of those products, that created the risks that 
brought Congress to contemplate this new framework.
    Mrs. McMorris Rodgers. OK. Well, I look forward to talking 
further about this with you.
    Dr. Gottlieb. Thank you.
    Mr. Griffith. Will the gentlelady yield?
    Mrs. McMorris Rodgers. Yes. Yes, I would be happy to yield.
    Mr. Griffith. And I would just ask, in relationship to 
503A, because we were talking about it earlier, if that didn't 
contemplate office use, then why has FDA allowed it up until 
this point in time? Because that is existing law and was 
existing law before DQSA, and it was allowed.
    Dr. Gottlieb. Yes, it is a good question, Congressman. And 
I was at FDA over part of the time that we struggled with the 
503A statute. As you know, after the Western States case 
vacated certain aspects of that law, FDA was on shaky legal 
ground with respect to trying to contain and implement that 
statute----
    Mr. Griffith. We know.
    Dr. Gottlieb [continuing]. With the division in it.
    Mr. Griffith. I know, and, yes, that was, again, timid 
lawyering, because that just dealt with advertising. It didn't 
have anything to do with anything else, and it was not ruled, 
the question of severability was not ruled on by the Supreme 
Court.
    Dr. Gottlieb. Right. I think what the agency would have 
said at the time was that it had a difficult time bringing 
cases under that statute, and we also at the time faced a lot 
of pressure from Congress on the implementation of 503A. I 
think DQSA was not only a clarification of the statute and 
removed the offending provision, but was a clear declaration 
from Congress that you wanted the agency to be vigilant with 
respect to these----
    Mr. Griffith. No question about being vigilant. Just we 
didn't anticipate eliminating something that had been in 
practice under the existing law that we left as the existing 
law.
    But, that being said, also, you showed the pictures of 
things you found as problems in compounding pharmacies, but you 
also found problems, which is why you do your job, in large 
manufacturers as well from time to time. Isn't that correct?
    Dr. Gottlieb. Absolutely right.
    Mr. Griffith. Thank you very much. I yield back.
    Mr. Burgess. The gentleman yields back.
    The Chair recognizes the gentleman from Texas for a 
unanimous consent request.
    Mr. Green. Mr. Chairman, I would also like to ask the 
Commissioner to submit those slides for the record.
    Mr. Burgess. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Burgess. I do have one follow-up question that I feel 
compelled to ask. Because we are going to hear from a patient 
in the next panel, and Mr. Guthrie referenced--I think it was 
Mr. Whitfield's constituent in several Congresses ago who came 
and talked to us about losing a spouse after the Exserohilum 
infection that they acquired.
    Does the agency have an opinion on when it is the duty of a 
physician or a surgery center or a hospital to inform a patient 
that they are receiving a medication from a compounding 
pharmacy as opposed to one of the other pharmacies?
    Dr. Gottlieb. I don't have a view on that, Congressman. I 
have seen survey data with respect to that, I think including 
data that was developed by Pew. So, I know you have a witness 
who can speak to that, the development of that data, on the 
next panel.
    As you know, there are labeling requirements for the 
products that are produced by the 503B facilities that provide 
warning information and certain disclosures, but not 
necessarily that it was a compounded product.
    Mr. Burgess. It doesn't escape me that the witness we had 
several Congresses ago, and likely the one we are going to hear 
from today, may very well tell us that they never had any idea 
what a compounding pharmacy was; they never heard of it before. 
And now, their lives have been seriously affected by----
    Dr. Gottlieb. Well, I would say that, here again, I think 
this gets to the question of the prescription as a line of 
demarcation. Because if the prescription is the line of 
demarcation, if you are going into a 503A facility and getting 
a compounded product, you know that. If you are going into a 
doctor's office and you are getting a product from that 
doctor's office, and that was produced by a compounding 
pharmacy, not subject to sterility standards, you don't know 
that. That is why it is important, we believe, to have a 
mechanism in place to make sure that, when those products are 
being provided in that sort of de-identified way, because you 
no longer have that relationship to the pharmacist and 
understand where and how that product was manufactured, that 
there are standards applied for sterility to how that product 
was developed.
    Mr. Burgess. I also appreciate your comments that this is 
all about patient safety, and that is why we all want to get it 
right. We may not agree on everything on the dais here, one 
side or the other, but we do want to get it right. And we 
appreciate your efforts in trying to help us get that right.
    That will conclude the testimony from the first panel.
    Again, we are very close to a series of votes on the floor. 
So, I am going to ask that we actually not take a break between 
panels. We will let Dr. Gottlieb gather his papers up and 
leave, and just take a second to put the nameplates out. But we 
probably better proceed directly into the second panel.
    I call the subcommittee back to order.
    Once again, as we transition to our second panel of 
witnesses, I do want to thank all of our witnesses for being 
here and taking time to testify before the subcommittee. Each 
witness will have the opportunity to give an opening statement, 
followed by questions from members.
    Again, I will advise that we will recess when votes are 
called on the floor.
    But today we are going to hear from Dr. George Williams, 
President-Elect of the American Academy of Ophthalmology; Dr. 
Bruce Brod, the Chairman of the Congressional Policy Committee 
for the American Academy of Dermatologists; Shawn Hodges, Vice 
President, International Academy of Compounding Pharmacists; 
Jacob Olson, the President and CEO of Skywalk Pharmacy, on 
behalf of the National Community Pharmacists Association; Jenn 
Adams, Senior Vice President, Clinical Product Solutions, 
PharMEDium Services; Molly Ventrelli, Vice President, 
Regulatory Affairs, Fresenius Kabi; Elizabeth Jungman, Director 
of Public Health of the Pew Charitable Trusts, and Nancy 
Dargan, a former patient of the New England Compounding Center.
    We appreciate all of you being here today.
    Dr. Williams, you are now recognized for 5 minutes for a 
summary of your opening statement.

   STATEMENTS OF GEORGE WILLIAMS, PRESIDENT-ELECT, AMERICAN 
 ACADEMY OF OPHTHALMOLOGY; BRUCE BROD, CHAIRMAN, CONGRESSIONAL 
  POLICY COMMITTEE, AMERICAN ACADEMY OF DERMATOLOGISTS; SHAWN 
 HODGES, VICE PRESIDENT, INTERNATIONAL ACADEMY OF COMPOUNDING 
PHARMACISTS; JACOB OLSON, PRESIDENT AND CEO, SKYWALK PHARMACY, 
 ON BEHALF OF THE NATIONAL COMMUNITY PHARMACISTS ASSOCIATION; 
JENN ADAMS, SENIOR VICE PRESIDENT, CLINICAL PRODUCT SOLUTIONS, 
     PHARMEDIUM SERVICES; MOLLY VENTRELLI, VICE PRESIDENT, 
REGULATORY AFFAIRS, FRESENIUS KABI; ELIZABETH JUNGMAN, DIRECTOR 
OF PUBLIC HEALTH, THE PEW CHARITABLE TRUSTS; AND NANCY DARGAN, 
      FORMER PATIENT OF THE NEW ENGLAND COMPOUNDING CENTER

                  STATEMENT OF GEORGE WILLIAMS

    Dr. Williams. Chairman Burgess, Ranking Member Green, and 
members of----
    Mr. Burgess. And do be sure your microphone is on and pull 
it close.
    Dr. Williams. Is it working?
    Chairman Burgess, Ranking Member Green, and members of the 
committee, I am honored to be testifying to you on behalf of 
the American Academy of Ophthalmology on a topic critical to 
the practice of ophthalmology.
    My name is George Williams. I am a practicing retina 
specialist from Michigan. I am also the Immediate Past 
Secretary of the American Academy of Ophthalmology; Secretary 
of Federal Affairs, and current President-Elect for the 
Academy.
    As the world's largest association of eye physicians and 
surgeons, the Academy seeks to protect sight and empower lives 
by setting standards for ophthalmic education, advocating for 
our patients and the public.
    Access to safe and effective compounded repackaged drugs is 
vitally important to the practice of ophthalmology. This is due 
in large part to the uniqueness of our specialty, as we utilize 
drugs in dosage forms that differ from other areas of medicine. 
Effective treatment often requires that drugs be compounded or 
repackaged in concentrations or doses that are tailored to a 
patient's specific needs and unusual route of administration to 
the eye. These drugs are used in the successful treatment of 
several ophthalmological treatments, including diseases that 
threaten sight such as age-related macular degeneration.
    Ophthalmology's treatment of patients facing sight-
threatening diseases such as AMD requires access to drugs known 
as vascular endothelial growth factor inhibitors, or VEGF 
inhibitors. These include the FDA-approved anti-VEGF treatments 
ranibizumab and aflibercept, as well as repackaged bevacizumab, 
or Avastin. The Academy has long advocated for access to all 
three treatments, as individual patients may respond 
differently and have better outcomes with one treatment versus 
another.
    Since the passage of the DQSA, the Academy's advocacy 
efforts have included focus on protecting access to repackaged 
Avastin. The Academy is aware of adverse event clusters 
associated with intravitreal injections of repackaged 
bevacizumab, including events in Georgia and Florida. Events 
like these, along with the passage of the DQSA, have led to the 
necessary changes at compounding pharmacies and improvements in 
the safety of this treatment.
    Because of our efforts since 2013 to track outcomes of 
patients who receive anti-VEGF therapies, we have been able to 
gather data on effectiveness and safety of these treatments. 
The American Academy of Ophthalmology utilized our IRIS 
registry, which is the nation's largest comprehensive eye 
disease clinical registry, to track adverse events associated 
with the use of these products from January of 2013 to June of 
2016. These data clearly showed no statistically significant 
difference in adverse events among different anti-VEGF agents, 
including repackaged Avastin.
    Today repackaged Avastin remains a safe and effective 
treatment option for patients facing sight-threatening disease, 
and Academy efforts to protect access are ongoing. The new 
guidance from FDA, which represented a step in the right 
direction, was recently finalized by the agency. The Academy 
will continue to engage with the agency, Congress, and 
compounding facilities to ensure patient access to repackaged 
bevacizumab.
    The Academy is also concerned about continued access to 
other non-biologic compounds or drugs for office use. The FDA 
has issued final guidance on office use that we believe 
threatens access to compounded drugs for such use, requiring 
patient-specific prescriptions before a compounded drug can be 
distributed by a traditional compounding pharmacy. We are 
concerned that policy outlined in the final guidance forces 
practitioners to rely solely on outsourcing facilities to meet 
all of their needs for office-use drugs.
    I would like to share a few examples of how implementation 
of the DQSA is having some unintended consequences, is 
impacting access to compounded and repackaged drugs. This is 
why the Academy is supporting policy that ensures access to 
drugs for office space use, such H.R. 2871, the Preserving 
Patient Access to Compounded Medications Act, introduced by 
Congressman Morgan Griffith.
    I would like to discuss a patient from my state of 
Michigan. She is a 31-year-old lady who wears soft contact 
lenses and developed an infection in her eye. She was 
eventually determined to have a serious infection known as 
acanthamoeba keratitis. The standard treatment for this is the 
use of a drug called polyhexylmethyl biguanide. Essentially, 
this is pool cleaner. This was prescribed, but, unfortunately, 
it was not available in the state of Michigan. As a result, the 
patient's ophthalmologist in Michigan was forced to contact 
doctors at the University of Illinois-Chicago and to obtain the 
drug from Chicago. However, Chicago was unable to provide the 
drug in Michigan, and the patient, suffering from severe eye 
pain, was forced to drive 225 miles from Michigan to Chicago in 
order to obtain this therapy. Fortunately, she responded well. 
But this is an example of the type of problems we have when 
patients cannot access immediately important therapies.
    The Academy has other examples of this involving the use of 
autologous serum drops that are given topically and have been 
used for more than three decades. These drugs are critical to 
the management of severe dry eye. However, due to compounding 
regulations, many compounding facilities have stopped producing 
these drops.
    In closing, ophthalmology strongly believes that compounded 
drugs must be produced safely and be subject to critically 
important testing. We do believe that regulatory policy in this 
arena can become restrictive and, in turn, negatively impact 
physicians' ability to properly and effectively treatment 
patients. It is important that, as implementation efforts move 
forward, the FDA strives to find a more balanced approach. We 
believe that increased direct engagement with the physician 
community is a strong path forward, and we look forward to 
future opportunities with FDA, Congress, and other stakeholders 
on these important issues.
    Thank you.
    [The prepared statement of Dr. Williams follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
    
    Mr. Burgess. Thank you, Dr. Williams.
    Dr. Brod, 5 minutes for an opening statement, please.

                    STATEMENT OF BRUCE BROD

    Dr. Brod. Thank you, Chairman Burgess, Ranking Member 
Green, and members of the Health Subcommittee.
    I am Dr. Bruce Brod. I am pleased to share with you my 
perspective as a dermatologist, a view that is shared by the 
American Academy of Dermatology Association.
    Dermatologists rely heavily on compounded medications that 
are medically necessary and life-changing. We safely and 
effectively prepare and administer low-risk topical and 
intralesional compounded medications to a wide range of 
patients, including individuals presenting with special and 
emergent needs and persons suffering from rare diseases, 
including children.
    Current policy adversely affects the practice of medicine 
in two significant ways, the first being with respect to 
maintaining a small supply of office-use compounded medications 
for administration to patients in our offices. Dermatologists 
have historically obtained compounded medications from 503A 
compounding pharmacies for immediate use in the office without 
the need for a patient-specific prescription. However, current 
policy now restricts this. While we understand the FDA intended 
503B outsourcing facilities to be a meaningful resource for 
providing physicians with office-use stock, not all office-use 
compounded medications used by dermatologists are produced by 
503Bs, including non-sterile topicals as well as sterile 
intralesional drugs used for injection in the skin.
    The FDA's website reflects a partial list of drugs that 
registered outsourcing facilities have reported producing, 
starting December 2016, but ending May 2017. So, the list is 
retrospective and it is incomplete, and it doesn't indicate if 
these drugs will be produced in the future. Furthermore, we 
have no indication that 503Bs will provide flexibility in the 
various concentrations that we use in our offices.
    The FDA lists only the facilities that are registered. Yet, 
it doesn't contain any contact information, real-time product 
availability information, or price listing. So, physician 
practices literally must go on a scavenger hunt for these 
needed compounds. In addition, dermatologists have reported 
that the outsourcing facilities have quoted prices that are 
cost-prohibitive.
    If a compounded drug is not available from an outsourcing 
facility, a patient now requires, first, a trip to the 
physician office for evaluation and diagnosis, then a trip to 
the pharmacy to obtain the prescription, and then, thirdly, a 
followup visit back to the physician to finally have the 
treatment administered. Those two additional steps impose new 
burdens on the patient, delayed treatment, and create 
inefficiencies in our practices.
    When compounded medications are handled outside of a 
provider's control, there are also major safety concerns 
regarding proper storage, handling, and application. When the 
dermatologist cannot be sure how it has been stored between 
patient pickup at the pharmacy and administration in the 
office, it calls into question the integrity of the medication.
    An additional safety concern is the risk that patients may 
be tempted to self-administer the drugs prior to returning to 
the physician's office. Many of the powerful compounds in 
dermatology are used to destroy unwanted malignant and benign 
skin lesions. And so, if they are spilled on the skin by 
patients, they will cause scarring and disfigurement.
    The second way current policy adversely affects the 
practice of medicine pertains to dermatologists' preparation of 
low-risk sterile and non-sterile medications in the office 
setting. Because of the FDA's broad definition of compounding, 
many simple in-office preparations are considered compounding. 
Buffering lidocaine, for example, is a widely-used local 
anesthetic in dermatologic procedures. Without our ability to 
buffer lidocaine with sterile sodium bicarbonate, patients, 
including children, will endure painful injections of 
lidocaine. Using the buffered lidocaine allows us to perform 
very extensive skin cancer surgeries in an outpatient office 
setting without the risks and costs of sedation.
    Because the FDA considers reconstituting certain FDA-
approved neurotoxins with sterile saline to be compounding, the 
FDA's proposed guidelines imply that physician offices are 
compounding facilities, subject to the same equipment and 
process requirements as high-volume compounders. Many of those 
requirements are simply unworkable for dermatology offices, 
both structurally and financially.
    Accordingly, we are encouraged that the FDA mentions 
routine clinical practice and negligible patient risk in its 
2018 Compounding Policy Priorities Plan, which states that 
providers would not be subject to the same compliance policy in 
certain cases. The manner in which we routinely buffer and 
dilute our injectable medications in dermatology is really part 
of our normal practice of medicine.
    While we greatly appreciate the FDA and U.S. Pharmacopeia 
are working with medical specialties to explore an urgent-use 
exemption, we have real concerns that an exemption based on a 
restrictive timeframe will negatively affect patient access. 
The well-being of our patients is our primary concern and 
responsibility. On behalf of the American Academy of 
Dermatology Association, I want to thank you for holding this 
hearing, and I am happy to address any questions.
    [The prepared statement of Dr. Brod follows:]
    
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    Mr. Burgess. Thank you, Dr. Brod.
    Mr. Hodges, you are recognized for 5 minutes, please.

                   STATEMENT OF SHAWN HODGES

    Mr. Hodges. Yes, sir. Yes, sir. Good afternoon, committee 
members.
    Mr. Chairman and members of the subcommittee, my name is 
Shawn Hodges, a pharmacist and owner of Innovation Compounding, 
a compounding-only pharmacy located in Kennesaw, Georgia, just 
outside of Atlanta. I also serve as the Vice President of the 
International Academy of Compounding Pharmacists, IACP, an 
organization that represents more than 4,000 pharmacists, 
technicians, students, and members of the compounding community 
who focus on the specialty of pharmacy compounding. I would 
like to express my gratitude and appreciate to the Health 
Subcommittee for taking the time to understand compounding 
pharmacy and patient access issues from a pharmacist's 
perspective with the implementation of DQSA.
    In 2012, a pharmacy owner who lost sight of his moral 
compass and violated his oath as a practicing pharmacist 
violated both state and Federal laws and regulations related to 
quality and safety. As a result, more than 60 lives were lost 
and hundreds more fell ill, some to this day, nearly 5 1A\1/2\ 
years later. As compounders, our top priority is adhering to 
the highest-quality compounding standards to prevent something 
like this from happening again.
    Since NECC, all regulatory bodies have made a concerted 
effort to improve the practice of pharmacy. In November of 
2013, the DQSA was signed into law, somewhat clarifying the 
FDA's joint authority with the state boards of pharmacy, to 
monitor the quality of pharmacy compounding. State boards of 
pharmacy also updated pharmacy regulations and hired additional 
state inspectors to monitor and inspect compounding pharmacies. 
USP, the organization that sets the standards for governing 
compounding pharmacies, is revising its standards to continue 
to ensure best practices of pharmacy compounding, which can 
reduce the risk of harm to patients and compounding pharmacy 
employees.
    As DQSA is well into its fourth year, I would also like to 
share with the committee what the professional compounding 
pharmacy has experienced and provide suggestions on how all 
pharmacies, state boards, and the FDA can actually strengthen 
DQSA while protecting access to lifesaving compounded 
preparations. As I rely the suggestions of IACP and other key 
pharmacy stakeholders, please note that our overall goal is to 
encourage an open, transparent dialog with all stakeholders, 
public and private. We strive to work closely with FDA in 
developing an appropriate balance between regulating quality 
and safety without eliminating patient access.
    Pharmacies which are compliant and meet USP guidelines and 
state board of pharmacy rules fear that FDA overreach will 
impact patient care. This fear has been substantiated by 
actions of FDA investigators. My pharmacy team experienced this 
firsthand in an FDA inspection that lasted for 11 days over a 
period of 4 months.
    It is important to acknowledge that the FDA investigations 
were fulfilling their assigned duties and expressed a keen 
interest in the quality of our preparations. For that, I had 
the utmost respect for them. However, many requests about our 
pharmacy had little to do with the quality of our compounded 
preparations, but were, rather, in how we operated our pharmacy 
practice that is regulated by the boards of pharmacy. Luckily, 
our pharmacy team employed attorneys who are knowledgeable of 
both state and Federal pharmacy laws and regulations to advise 
FDA that they were inspecting outside the scope given to them 
under the law. Many of our fellow compounding pharmacists have 
had similar experiences.
    I would also like to share IACP's concerns as it relates to 
the memorandum of understanding between FDA and the states, 
which could limit patient access for preparations that are only 
available across state lines. Last week we were encouraged by 
Commissioner Gottlieb's 2108 Compounding Policy Priorities Plan 
that states he would rescind the current draft MOU and prepare 
a new draft for public comment. However, we still remain 
concerned that the FDA proposes to define distributing and 
dispensing as one and the same. As noted in all other Federal 
and state regulations, these are two distinct activities. If 
this is not corrected, the impact on patient access to 
medications will be detrimental, particularly for patients near 
state borders who rely on compounded medications from 
neighboring states.
    Another of our primary considerations for review is the 
role of office-use compounding. I regularly hear from 
prescribers who need compounded medications for office use that 
they cannot obtain from outsourcing facilities in small dosages 
necessary to expeditiously meet patients' needs. The 
fundamental concept of office use from 503A pharmacies offers 
solutions to prescribers who are faced with unique challenges, 
whether a dentist needs a fast-acting, liquid anti-anxiety drug 
on hand in case an autistic child may have a panic attack or a 
hospice nurse that suddenly needs a compounded nausea 
medication because she has terminally-ill patient who is not 
responding to a manufactured product. The purpose of office use 
is to support prescribers who otherwise do not have access to a 
GMP product.
    In closing, we at IACP want to be clear that our goal isn't 
to interfere with FDA's inspections on quality, but to ensure 
that FDA investigators who inspect compounding pharmacies are 
aware of and spec within the boundaries of FDCA. They also must 
have a working knowledge of USP standards and relevant state 
regulations. Likewise, we don't seek to weaken the DQSA in a 
way that will allow pharmacies to operate as drug 
manufacturers. Our goal is to have an open and consistent 
dialog with Congress and the FDA to establish policies that 
more effectively balance patient safety with patient access, 
because patient access is a patient safety issue.
    We thank you for the opportunity to appear here today and 
provide our input, and we do look forward to continuing to work 
with you on these common goals.
    [The prepared statement of Mr. Hodges follows:]
    
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    Mr. Burgess. Thank you, Mr. Hodges.
    Mr. Olson, you are recognized for 5 minutes. And because a 
vote has been called, we will take your testimony, and then, we 
will have to recess until after the votes. So, you may proceed.

                    STATEMENT OF JACOB OLSON

    Mr. Olson. Thank you. Thank you, Chairman Burgess, Ranking 
Member Green, and members of the subcommittee. Thank you for 
conducting this hearing on compounding.
    My name is Jake Olson, and I am the pharmacist and owner of 
Skywalk Pharmacy. We have four locations in the greater 
Milwaukee area, serving patients of Children's Hospital of 
Wisconsin and clinics. I am testifying on behalf of the 
National Community Pharmacists Association. NCPA represents 
America's community pharmacists, including the owners of more 
than 22,000 independent community pharmacies that dispense 
nearly half of the nation's prescriptions.
    In 2003, I had the unique opportunity to open Skywalk 
Pharmacy as an independently-owned community pharmacy which 
would serve as the outpatient pharmacy for the Children's 
Hospital of Wisconsin, the first of its kind in the United 
States. My pharmacies specialize in treating pediatric patients 
with routine ear infections to cystic fibrosis, cancer, and 
organ transplants. I compound only non-sterile preparations and 
I am compliant with USP 795 standards. I am licensed only in 
Wisconsin. I do not ship compounded medications across state 
lines, and compounding comprises 20 percent of my business.
    Many of my pediatric patients have health conditions that 
require medications that have not undergone FDA approval. In 
many cases drug manufacturers do not produce a commercially-
available product in the necessary dosage form or strength for 
these patients' needs. Physicians call on me to help under 
these circumstances when compounding is the only option for 
their patients.
    I am here today as a healthcare provider and small business 
owner to present some of my experiences and those of my fellow 
independent pharmacists regarding the FDA's implementation of 
the Compounding Quality Act.
    First, it is imperative the state boards of pharmacy retain 
oversight of pharmacy compounding. I am not eligible to 
register as an outsourcing facility, nor would it make sense 
for me to do so. The dispensing of custom-made medications 
should continue to be regulated by the boards of pharmacy, as 
all other medical license profession practices are.
    Second, physician office-use compounding needs are not 
being met. We used to provide compounds for dentists to treat 
pediatric patients who would present with urgent issues. 
However, we stopped doing this in 2013 due to the uncertainty 
caused by DQSA and conflicting Wisconsin state law. Dentists 
still request this compounded medication to be on hand in the 
event that a patient needs this treatment. Because I am no 
longer providing dentists with this office-use compound, the 
dentist now has to close up the tooth, have the patient leave, 
come down to my pharmacy, pick up a prescription, and then 
return to the dentist. This cannot happen in the same day. So, 
the child will continue with an infected tooth until the 
dentist can reschedule an appointment. Most of these patients 
are innercity children with Medicaid. Transportation is a huge 
issue, and sometimes it will take a week or longer to get them 
to come back. All the while, the child is suffering.
    Third, not all office-use compounding needs can be met by 
outsourcing facilities. 503B outsourcing facilities provide an 
important function in meeting the needs of healthcare providers 
and patients. However, outsourcing facilities are not able to 
meet the entire office-use market, nor are they able to replace 
the role of the traditional compounding pharmacies.
    Because of the requirements placed on outsourcing 
facilities and the costs of complying with CGMP, they are not 
able to compound in small batches; thus, limiting the role they 
can play in meeting the immediate patient needs for compounds. 
By prohibiting 503A pharmacies to compound for office use, the 
FDA is severely limiting access.
    Fourth, FDA needs to end inspection reporting discrepancies 
between manufacturers and compounding pharmacies. I often hear 
from my fellow compounders who have been inspected by the FDA 
about the 483 reports that may be issued post-inspection and 
posted publicly, like they were today, on FDA's website. I 
don't understand why these same reports are not also publicly 
posted for FDA-registered facilities. While FDA publicizes Form 
483s and photographs from compounding pharmacy inspections, 
there is evidence of several of the same observations from CGMP 
manufacturers with no corresponding publicity. This treatment 
suggests there is intent by the FDA to sway the public and 
undermine the confidence that parents have in my ability to 
take care of their child's medications.
    Fifth, the FDA must make changes to the Pharmacy 
Compounding Advisory Committee and related activities. I am 
very concerned that not one of the voting members of the 
committee compounds for human use on a daily basis, considering 
the committee is making recommendations that can vastly impact 
the practice of compounding. The previous FDA PCAC had at least 
three pharmacists with current experience and expertise in 
compounding. The FDA should select, at minimum, one practicing 
human compounder on the committee as a voting member.
    Lastly, it is very confusing for me, as a compounder, to 
understand what I can or cannot compound with today because of 
some of the conflicting information.
    In summary, NCPA is committed to working with members of 
the Health Subcommittee, the FDA, and other stakeholders 
regarding these important matters for a balanced approach to 
ensuring patient access to safe and effective compounded 
medications. Thank you.
    [The prepared statement of Mr. Olson follows:]
    
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    Mr. Burgess. Thank you, Mr. Olson.
    And I apologize, we were only able to get through half the 
panel. We will get to the rest of you immediately after this 
series of votes. It will probably take us 30 minutes to 
complete that task.
    So, the committee stands in recess until immediately after 
the votes.
    [Recess.]
    Mr. Burgess. I think to be respectful of everyone's time, I 
am going to call the subcommittee back to order. We are 
expecting other members to show up almost immediately.
    But as we recessed for votes, we were about to hear from 
Jenn Adams, the Senior Vice President, Clinical Products 
Solutions from PharMEDium Services. So, Ms. Adams, you are 
recognized for 5 minutes.

                    STATEMENT OF JENN ADAMS

    Ms. Adams. Thank you. Chairman Burgess, Ranking Member 
Green, and members of the subcommittee, thank you for the 
opportunity to participate in today's hearing.
    My name is Jenn Adams, and I am the President of PharMEDium 
Services. On behalf of PharMEDium, I want to thank you for 
holding this hearing on the implementation of the Compounding 
Quality Act, which Congress enacted as a part of the Drug 
Quality and Security Act of 2013.
    PharMEDium, which is a subsidiary of AmerisourceBergen, 
operates four 503B registered outsourcing facilities. I want to 
briefly describe, as we begin, what PharMEDium does, as our 
business models tracks exactly what Congress codified in the 
Compounding Quality Act. Our four facilities prepare ready-to-
administer compounded sterile drugs for hospitals, so that they 
don't have to prepare these medications at a patient's bedside 
under conditions that could introduce more risks of 
contamination.
    Many sterile drugs, such as injectables, in their FDA-
approved form are not manufactured in ready-to-use doses. 
Therefore, the drugs have to be prepared by diluting or 
admixing the FDA-approved drug with diluents or other 
components to achieve the appropriate dose for patient care. We 
prepare these sterile drugs into customized preparations, as 
ordered by our hospital customers. And this is the primary need 
that outsourcing facilities fulfill. And PharMEDium exclusively 
compounds using only FDA-approved sterile drugs obtained from 
registered drug manufacturers. This practice fills a very 
different role than that of traditional pharmacy compounding, 
which involves filling an individual patient prescription as 
required by law.
    Based on our experience in serving the needs of hospitals 
and healthcare systems, outsourcing facilities anticipate the 
need for drug preparations. We compound those preparations on 
behalf of our customers, and then, our customers dispense the 
medications to their patients. The types of drug preparations 
that are compounded are, by definition, not available from 
manufacturers; therefore, requiring these more custom 
formulations to meet the clinical needs of patients.
    Both of these distinct types of compounding, by outsourcing 
facilities and also by traditional pharmacies, we believe are 
critical in ensuring that patients have access to safe 
compounded medications when needed.
    PharMEDium was, and remains, an active supporter of DQSA 
because we felt strongly that more oversight of our industry 
was needed. The premise of the DQSA is that outsourcing 
facilities are subject to FDA oversight and more stringent 
quality requirements. And as our industry shifts more toward 
manufacturing quality standards, significant investment has 
been and is required in our facilities, personnel, and 
equipment to comply with these heightened standards. At 
PharMEDium our investment has, indeed, been quite significant, 
and the enhancements we have made have been challenging to 
implement, but we are confident that these improvements are in 
the best interest of patients and we are committed to 
continuing on this path in cooperation with the FDA.
    Unfortunately, the successful implementation of Section 
503B is under a separate threat; namely, from the misuse of 
bulk drug substances. I mentioned earlier that PharMEDium only 
compounds from FDA-approved drugs, as opposed to starting from 
bulk drug substances, which are sometimes referred to as bulk 
active pharmaceutical ingredients, or API powders.
    There are, indeed, circumstances in which it is sometimes 
necessary to compound from bulk drug substances, such as when 
an individual patient requires a dose that cannot be achieved 
when using the FDA-approved manufactured drug as a starting 
point. But using bulk powders and outsourcing facilities should 
be the rare exception versus the rule, as it requires using a 
version of the drug that has not gone through the FDA approval 
and, therefore, has not benefitted from all of the safeguards 
that are inherent to FDA's drug approval process, which are 
designed to mitigate the risks of contamination.
    As a result, under the law, bulk powders are only to be 
used when clinically necessary and not simply substituted for 
the FDA-approved version of the drug. Nevertheless, right now 
we are witnessing rampant compounding from bulk drug substances 
in the marketplace, usually lacking any clinical justification, 
even for sterile drugs. This is particularly concerning because 
using bulk drug substances is much less expensive for the 
compounder; therefore, undercutting demand for the actual 
approved drugs and creating a loophole for compounders to 
circumvent the drug approval process.
    In light of these and other risks, we remain concerned 
about the rapid uptake of bulk drug substance powders in place 
of FDA-approved drugs. As we have learned from history, which 
demonstrated the tragic impact of poor compounding practice, 
FDA should make every effort to implement the DQSA in a manner 
that preserves patient access to important compounded 
medications and that eliminates opportunities to perform an 
end-run around clear restrictions of the law.
    While we commend FDA's overall efforts to implement DQSA, 
the agency has not tamped down on this rapidly growing abuse of 
bulks. Its release of an overly broad interim list of 
permissible drug bulk substances and its final guidance on what 
amounts to impermissible copies of approved drugs fail to call 
out these practices and will not curb these abuses. We 
appreciate, however, that FDA announced that it would be 
releasing a separate draft guidance in March clarifying that 
bulk drug substances may only be used for compounding when 
there is a clinical need to compound drugs using these 
substances. FDA conformed that this restriction protects 
patient health and the drug approval process, for example, by 
helping to ensure that outsourcing facilities do not compound 
using a bulk drug substance when an FDA-approved version can be 
used to meet patient medical needs.
    While this acknowledgment is important, it is even more 
important that FDA follow this statement up with the promised 
guidance as soon as possible, revise the guidance on copies, 
communicate this message to providers who may not be aware of 
the undisclosed use of bulks, and to rigorously enforce these 
restrictions. In order to ensure that patients have a reliable 
and safe source of sterile compounded preparations, it is also 
important that FDA continue to move forward as quickly as 
possible in finalizing other 503B policies that will provide 
certainty and clarity to the outsourcing industry providers and 
patients. In particular, the lack of final GMP standards for 
outsourcing facilities has exacerbated ongoing confusion among 
state regulators, many of whom continue to impose expectations 
that differ from that of FDA's.
    Key congressional proponents champion the DQSA as 
clarifying the role of the states in regulating traditional 
compounding, and outsourcing to be regulated at the federal 
level. That vision has not yet been fully realized.
    Again, thank you for the opportunity to contribute to this 
important dialog. I appreciate it, and I look forward to your 
questions.
    [The prepared statement of Ms. Adams follows:]
    
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    Mr. Burgess. Thank you, Ms. Adams.
    Ms. Ventrelli, you are recognized for 5 minutes, please.

                  STATEMENT OF MOLLY VENTRELLI

    Ms. Ventrelli. Thank you. Chairman Burgess, Ranking Member 
Green, and members of the subcommittee, thank you for the 
invitation to testify today.
    My name is Molly Ventrelli, and I am Vice President of 
Regulatory Affairs for Fresenius Kabi USA. Fresenius Kabi is a 
global healthcare company specializing in lifesaving medicines 
and technologies for infusion, transfusion, and clinical 
nutrition. We manufacture most of these medicines in Illinois, 
New York, and North Carolina, and we employ more than 3,000 
people in the U.S. Additionally, Fresenius Kabi operates 18 
compounding centers around the world, and we are in the process 
of launching our first U.S.-based 503B compounding center in a 
suburb of Boston.
    We commend FDA's implementation of the DQSA, and we believe 
that FDA must continue to enforce the strong protections of the 
DQSA against illegal or improper compounding activity. Patient 
safety requires strict FDA oversight on outsourcing facility 
compounding by pharmacies that do not comply with FDA 
regulations and do not meet the highest standards for quality 
and CGMP.
    Drug compounding plays an important role in the delivery of 
health care by allowing a pharmacist, by a patient-specific 
prescription, to tailor a therapy for an individual's unique 
needs. But it is critical to ensure the safety of patients 
receiving these compounded medications. Congress recognized 
this in drafting the DQSA and established the two regulatory 
structures, both 503A and 503B. Pharmacies that operate under 
503A are those that compound according to specific 
prescriptions unique to a patient under state board of pharmacy 
oversight. They do not compound large quantities in advance of 
a patient prescription.
    However, Congress also recognized that some hospitals and 
healthcare providers may need supplies of medications not made 
by pharmaceutical manufacturers or not made in a specific 
dosage form, combination, or strength that is medically 
required for patients. These products, which need to be on 
hand, represent unique safety concerns, as they are typically 
made in larger volumes. So, if they become contaminated or are 
produced incorrectly, more patients are exposed to harm. 
Congress required that these 503B facilities adhere to CGMP, 
rigorous requirements enforced by the FDA, with a full set of 
quality standards for the manufacturing, processing, packing, 
release, testing, and storage of pharmaceutical products.
    It is important to note that 503B outsourcing facility 
compounders may not make a drug that is essentially a copy of 
an approved medicine except under certain highly limited 
circumstances like drug shortages. One key reason Congress 
included this was to preserve incentives for traditional 
manufacturers to continue to pursue FDA approval through the 
current NDA and ANDA review process. This protects patient 
safety and should be upheld.
    We support the FDA's efforts to ensure patient safety by 
timely inspecting 503B compounders and issuing compliance 
guidance. Fresenius Kabi is currently addressing this now at 
our site in Massachusetts.
    We also commend the FDA for its continued risk-based 
inspections of unregistered compounding pharmacies. FDA's 
enforcement of 503A is also important to ensure that facilities 
that are essentially acting as outsourcers by selling 
significant amounts of commercially unavailable compounded 
sterile drugs in the absence of patient prescriptions should 
register as 503B outsourcers. In the interest of public health, 
the safety and manufacturing standards of compounders should be 
held to rigorous standards to ensure patient safety.
    Additionally, to uphold patient safety, Congress sought to 
ensure that FDA-approved drugs would be used as source material 
by compounders whenever possible. Under the DQSA, compounders 
should not use bulk active pharmaceutical ingredients as an 
alternative to compounding from an FDA-approved medicine unless 
doing so would produce a clinical difference for an identified 
patient. Fresenius Kabi believes that there could be instances 
where several 503B outsourcing compounders are doing exactly 
this in contravention of federal law. It is our strong 
recommendation that the committee support FDA's rigorous 
oversight of pharmaceutical compounding.
    Thank you for holding today's hearing, and I welcome any 
questions you may have. Thank you.
    [The prepared statement of Ms. Ventrelli follows:]
    
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    Mr. Burgess. Thank you, Ms. Ventrelli.
    Ms. Jungman, you are recognized for 5 minutes, please.

                 STATEMENT OF ELIZABETH JUNGMAN

    Ms. Jungman. Good afternoon. I am Elizabeth Jungman, 
Director of Public Health Programs at the Pew Charitable 
Trusts. We are an independent, nonpartisan research and public 
policy organization with a longstanding focus on drug quality, 
including compounding. I want to thank you for holding this 
important hearing.
    This committee has a long history of working to protect 
Americans from the risk of substandard compounded drugs. Five 
years ago, even before we knew the full scope of the fungal 
meningitis outbreak, your oversight team investigated how the 
crisis began, and you worked with the Senate and across party 
lines to pass the DQSA. This legislation is making a 
difference.
    Today I will stress the importance of preserving it. 
Efforts to weaken the DQSA pose very real risks for patient 
safety. I will also share some new findings showing that DQSA 
is spurring better compounding oversight in the states.
    I was privileged to be among the Senate committee staff 
that helped develop the DQSA. We knew then the provisions would 
be met with resistance, but each round of negotiations started 
with a new count of illnesses and deaths, and it was a powerful 
motivator to push past that controversy and get the job done.
    The meningitis outbreak is, of course, not the only case of 
harm. As we have heard today, just last year 43 people in Texas 
had contaminated antibiotics injected into their eyes and 
several suffered vision loss. Also, last year 41 patients 
received contaminated injections in a New Jersey clinic. They 
developed joint infections caused by microorganisms that should 
only be found in human mouths.
    Americans expect their government to play a major role in 
making food and drugs safe. Eighty-seven percent of Americans 
think that, according to a Pew Research Center survey.
    FDA evaluates the safety and effectiveness for most drugs 
and sets manufacturing quality standards, but compounded drugs 
are not subject to those protections, and, thus, should only be 
used when commercial alternatives won't work. There is a big 
difference between drugs prepared for a single patient who will 
use it immediately and drugs prepared in bulk quantities for 
use at some undetermined future date.
    Compounding for a single patient is a traditional part of 
pharmacy practice. The risks of dangerous contamination are 
relatively low and the impact for errors is contained. States 
oversee patient-specific compounding and mandate quality 
standards.
    But, if compounded drugs are going to be kept onhand, so-
called office stock, the risks are greater. They are often 
stored for some period of time, increasing the chance that 
contaminates like bacteria and fungus can grow. And since they 
are not tailored to specific patients, they products are 
frequently produced in bulk, multiplying the consequences of 
any error.
    That is why Congress created outsourcing facilities. In 
exchange for meeting appropriate manufacturing standards, 
outsourcing facilities can compound drugs without 
prescriptions. Congress has decided twice, first 20 years ago 
and again in 2013, that traditional compounding should require 
a patient-specific prescription. If compounders want to sell 
stock supplies, they must invest in the equipment, training, 
and specialized personnel necessary to mitigate the risk. That 
dividing line between stock supply and individual prescription 
creates accountability.
    This committee's investigation demonstrated the importance 
of clear and enforceable lines, so that facilities and their 
regulators know who is responsible for oversight and what rules 
apply. The prescription requirement is very clear. Either a 
patient's name is on the product or it is not.
    While FDA regulates outsourcing facilities, states are 
still the primary regulator of traditional pharmacies, and they 
play an important role in ensuring the safety of compounded 
drugs. In 2014, Pew convened an advisory committee of pharmacy 
regulators, state pharmacy regulators, and other compounding 
experts to identify best practices for states. Next month, Pew, 
together with the National Association of Boards of Pharmacy, 
will release a 50-state assessment.
    I am happy to say that most states now conform to best 
practices in two key areas. First, states are widely adopting 
quality standards that have been established by the USP, the 
United States Pharmacopeia. And second, states are aligning 
with Federal law on the prescription requirement.
    However, there is more work to be done. Ideally, states 
should inspect compounding pharmacies every year, but our study 
showed that we haven't met this mark. That is why state and 
Federal regulators must prioritize the most risky operations.
    To wrap up, since the DQSA became law, states have made 
important changes, and other stakeholders like outsourcing 
facilities have made significant investments, too. To avoid 
undermining that progress, Congress and the FDA must continue 
to protect, implement, and enforce the DQSA.
    Five years ago, this committee acted boldly to draw clear 
lines that protect patients from another tragedy. This hearing 
reminds us of why we need that law and what could happen if it 
is weakened.
    I welcome any questions.
    [The prepared statement of Ms. Jungman follows:]
    
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    Mr. Burgess. Thank you, Ms. Jungman.
    Ms. Dargan, you are recognized for 5 minutes, please.

                   STATEMENT OF NANCY DARGAN

    Ms. Dargan. Thank you. Good afternoon, and thank you for 
the opportunity to be here today.
    My name is Nancy Dargan and I live in Brighton, Michigan. I 
am going to tell you how a contaminated compounded medication 
permanently harmed my health, putting a premature end to my 
career and ruining my family's finances and plans for our 
future.
    To begin my story, I have to travel back to early 2012. I 
was experiencing pain from arthritis in my back and hip, and my 
primary physician referred me to a pain clinic for periodic 
injections of a steroid called methylprednisolone, which is a 
compounded product.
    The shots gave me some relief and I continued my busy 
career, my life as a grant writer, a business consultant. And 
everything changed that August. I had driven from my home in 
Michigan to West Virginia to meet with a new client and help 
them set up a nonprofit organization. During my stay I began to 
feel sick, but I didn't think very much of it at first. But the 
symptoms steadily worsened and I realized I had to cut my trip 
short.
    As I drove home, an excruciating burning sensation 
developed in my right hip spreading down to my knee. The pain 
became so unbearable that I had to use my left foot for gas and 
brakes. I arrived in Michigan completely unable to bear weight 
on my leg, and my husband took me immediately to the hospital 
to figure out what was going on.
    The doctors ordered x-rays, a spinal tap, a biopsy, and 
several other tests and expressed that my condition was 
something they had not seen before. They worked to treat my 
pain, but, initially, had no clear diagnosis. So, they sent me 
home.
    It was there that I got a call from the pain clinic that 
had administered my steroid injections. They said I potentially 
received contaminated drugs and should go to the emergency room 
immediately.
    By this time, the hospital staff were realizing that my 
case was not an isolated incident. Other patients were showing 
up at the hospital with infections and pains similar to mine, 
and like several of them, I was ultimately diagnosed with a 
fungal infection.
    I underwent surgery and spent 2 weeks in the hospital. I 
was placed on a maximum dose of a drug called Voriconazole, a 
very powerful antifungal medicine with severe side effects that 
seemed nearly as bad as death itself. I took it four times a 
day for 14 months, even waking in the middle of the night for 
doses.
    After I was discharged, my husband Mike became my 
caretaker, at great personal expense to him, both mentally and 
physically. His job was one of the worst a care partner can 
experience, dealing with the unknown effects of a major medical 
event. I can't tell you how many times Mike would come into the 
room and I would be carrying on a conversation with my 
daughter, who had died in 1979. That was the result of 
hallucinations caused by the antifungal medication. I would 
call out for our pet, and I would get frustrated because he 
wouldn't respond, and we had had him put down the year before 
due to cancer.
    Through all this nightmare, Mike made sure that I made it 
to every doctor's appointment, even often three or four per 
week, on top of other tests, including blood draws every 
Friday. If something needed to be done, including our household 
chores, he did it. If something needed to be done around the 
house, he never left my side unless I was napping and he could 
get errands run. He was not only my caregiver, but my constant 
advocate.
    Of course, all of this has had a devastating impact on our 
lives and plans for the future. Financially, we have lost 
everything to this event. The hospital and doctor bills were 
astronomical. I lost my ability to maintain self-employment 
and, regrettably, had to close my business and refer my clients 
to others.
    We had partial ownership in a cabin left to my husband and 
his sister by his father, but had to sell our interest in this 
treasured family property which we enjoyed so much and which 
had such wonderful memories for my husband. I saw the grief in 
Mike's eyes every time we had to sell something he loved. The 
financial toll has threatened our retirement and our 
independence as we grow older together.
    Today, 5 years after this tragedy began, I still have 
recurring symptoms and numerous side effects. I walk with a 
limp and cannot get an orthopedic surgeon to consider replacing 
my right hip because there are still fungal pockets on my 
bones. My pain levels are always elevated. My disease and 
treatment have made me vulnerable to opportunistic infections 
that have attacked my kidneys and my sinuses, and I still 
continue to suffer from short-term memory loss, and it is 
getting worse every year.
    Before this happened to me, I had never heard of drug 
compounding, and I never would have imagined coming to 
Washington to speak about it. But I feel obligated to do so. 
Sadly, there are many others who have endured as much suffering 
and more. I weep for the 60-plus families who lost their loved 
ones to this deadly and preventable outbreak and for the 
hundreds of patients who live every day with the lasting 
consequences of illnesses caused by contaminated compounded 
drugs. Many of these people are friends and neighbors who live 
in our community, and I am here to speak up for them, too. I 
don't want another soul to experience what we have.
    As a result of contaminated drugs and a failure to oversee 
them, I am now a person who will spend the rest of my days 
dealing with a complex illness. It wasn't easy for Mike and I 
to get here today. We hope that by sharing our story we can 
help prevent this from happening to someone else or anyone 
else.
    Thank you for allowing me to take some of your time, and I 
welcome any questions you might have.
    [The prepared statement of Ms. Dargan follows:]
    
    
    Mr. Burgess. Thank you, Ms. Dargan. We appreciate your 
testimony, and appreciate all of you for spending so much time 
with us today.
    I am going to yield to Mr. Griffith 5 minutes for 
questions, since he was the Representative who was instrumental 
in moving this legislation along several years ago. So, Morgan, 
you are recognized for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman. I appreciate it very 
much, and appreciate all of you being here.
    I think sometimes we are talking at cross-purposes because 
I don't think any of us want to see somebody like NECC coming 
back, because they were operating in a couple of dozen states, 
if I remember correctly, in my state and your state, Ms. 
Dargan----
    Ms. Dargan. California.
    Mr. Griffith [continuing]. And California. They have been 
kicked out of Colorado. They were national manufacturers who 
were lying about what they were doing. They weren't your 
traditional small pharmacy that was doing even small batches.
    And so, what we have to do, as Ms. DeGette says, we have to 
try to find that balance, because we have situations that, in 
all fairness, I wasn't aware that one of the solutions to 
resolve the problem was that we were going to have folks going 
and picking up drugs. I forget who it was. I think a couple 
folks were talking about the dentist. Mr. Olson? And I think 
somebody, maybe Dr. Brod mentioned it, too, that they are 
having the patients have to go to pick up the drug from the 
pharmacist because of the new interpretation on 503A. I think 
we all think 503B and the new stuff is good stuff. It is a 
question of that balance.
    And so, if you could, first, Mr. Olson, and then, Dr. Brod, 
just tell me quickly about you and your testimony, but what 
other situations besides the dentist who has to send somebody 
in and, then, a child has to go through or an adult has to go 
through pain for a day or two, until the dentist can get them 
back in?
    Mr. Olson. Thank you for the question, Congressman.
    The dentist is the most critical one to my office. We have 
other dental products that we had provided in the past. But I 
think the other situation that we have is we are having to 
teach parents to do this themselves at home, instead of me 
providing it now. So, it is not necessarily an office-use 
situation, but because I am not able to compound it--for 
example, insulin dilutions, we are having to teach parents to 
dilute their own insulin at home. We are having to teach 
patients to draw up their own medications at home because we 
are not allowed to perform that in our pharmacy. And we are 
just unsure, if we do that, whether we will be violating 
anything.
    Mr. Griffith. Dr. Brod, you had some other examples?
    Dr. Brod. Yes, several instances. So, we use cantharidin 
quite a bit. It is not commercially available. So, we are 
relying upon getting it from a compounding pharmacy. It is used 
to treat predominantly children and, also, genital warts, too.
    So, you can envision a situation where a child comes in. 
They are a little scared to begin with. We recommend 
cantharidin. It is painless. Other treatments that we have, 
such as freezing or burning, to get rid of warts and molluscum, 
common skin infections, are very painful and intimidating.
    The parent took off of work. The child is out of school. We 
say, ``You need a patient-specific prescription.'' The 503Bs, 
these are small batches, so we are having trouble getting them 
at any reasonable cost. So, the parent, then, has to go to the 
pharmacy, schedule another appointment back into the office.
    The other problem, too, is we treat a lot of genital warts 
which carry oncogenic viruses. Patients with that don't want to 
come in in the first place. A lot of the other treatment 
alternatives, especially in patients with skin of color, can 
cause dyspigmentation and scarring. Things like cantharidin or 
podophyllin are really good options. And diminishing access 
creating inefficiencies I think is actually a public health 
issue.
    Mr. Griffith. Do you find that some people, when they find 
out they have got to go to the pharmacist and, then, make 
another appointment, that they just don't do the treatment at 
all?
    Dr. Brod. Yes. Sometimes they don't do the treatment at 
all; they don't come for follow-up visits, yes.
    Mr. Griffith. Does anybody disagree that we all think that 
the 503B program as it was originally intended for those medium 
to larger folks is a good thing? Anybody disagree with that?
    [No response.]
    So, we have got to find that balance. Dr. Williams, do you 
have examples of where that balance is askew right now?
    Dr. Williams. I do, I believe. One of the most devastating 
conditions that can occur in your eye is an acute bacterial 
infection. This can either be on the surface of the eye, as I 
discussed with that patient with a corneal problem, or in the--
--
    Mr. Griffith. I am running out of time. So, if I could get 
you to cut to the chase?
    Dr. Williams. The answer to your question is, yes, we need 
office-based access to specific antibiotics that are not 
available through the 503B mechanism.
    Mr. Griffith. And you don't need a big batch? You just need 
a couple of small batches, isn't that correct, from time to 
time?
    Dr. Williams. I just need enough to have on the shelf, so 
when that one patient a week comes in, I can take care of him.
    Mr. Griffith. And I worry about my rural areas and my folks 
who have a problem, suddenly an emergency late at night or on 
the weekend, and there is no compounding pharmacy readily 
available in that small, rural community. Is that a concern for 
your doctors as well?
    Dr. Williams. Absolutely. That is one of the most common 
scenarios that we hear.
    Mr. Griffith. That is what I am hearing, too.
    I appreciate all your testimony. I think everybody had some 
valid points. I figure we have got to figure out a way. Our job 
is to help work with the FDA and find that proper balance.
    And with that, Mr. Chairman, I yield back.
    Mr. Burgess. Thank you, Mr. Griffith.
    I am going to proceed with my 5 minutes for questions. Mr. 
Green, I will come to him next. I was going to give him time to 
collect his thoughts since he just rushed in here.
    Dr. Williams, several references have been made to an 
ophthalmic preparation that was injected after cataract 
surgery. Now a patient comes in for cataract surgery in an 
outpatient facility. They are coming in with the expectation 
that they are either going to need drops or injection after the 
surgery, is that correct?
    Dr. Williams. That is correct.
    Mr. Burgess. So, in that instance, could they not come in 
with the prescription already in hand or having picked it up 
themselves at a pharmacy? What would prevent that from being 
the way this would be administered?
    Dr. Williams. So, for an elective procedure such as 
cataract surgery, that would be a possibility. The drug that 
the specific episode, it is still not exactly clear what 
happened. It does not appear to be a contamination in the sense 
of a microbial or infectious cause. It seems to be that there 
was a toxicity involved when the two drugs were mixed. And so, 
it is still not entirely clear exactly what happened. But, even 
if those patients had had a prescription and brought that in, 
it probably would not have changed the outcome in this 
particular case.
    Mr. Burgess. Correct. The compounds would have been the 
same and the doses and the route of administration would have 
been the same, and the outcome you would predict would be the 
same. So, I think that is a point well-taken. Just having a 
prescription does not necessarily protect you in all instances 
from an untoward event.
    In the case of the methylprednisolone acetate--and I do 
remember that so vividly from our hearings a couple of years 
ago--so, here you have got a compound that has to be 
preservative-free because it is going into the epidural space 
and you don't want to damage a nerve with a preservative. And, 
of course, being a steroid, it reduces the body's ability to 
fight infection. So, it is like everything culminated in these 
cases to really create literally one of the worst things that I 
can recall having ever seen.
    In addition to all the sympathy I have for everyone else, 
the sympathy for the emergency room doctors--I know we had a 
patient here in the previous hearing, and it was so difficult 
for the attending physicians in the emergency room to really 
get a grasp of what was going on, similar to other events that 
have happened in this country. When there was anthrax in the 
post office here in suburban Washington, the same thing, the 
emergency room doctors, seeing those patients out of context, 
it made it very, very difficult for them.
    Ms. Adams, you referenced the bulk active pharmaceutical 
ingredients. Can you give us an idea of which bulk 
pharmaceutical ingredients you are talking about?
    Ms. Adams. Yes, I can. Thank you.
    So, when we look at the list, as an example, of the 200 
permissible substances in Category I for bulk compounding right 
now, as we cross-reference that list, we feel that almost half 
of them have an FDA-approved vial that could be used rather 
than bulk substances. So, it is a long list that we think needs 
much revision.
    Mr. Burgess. OK.
    Ms. Adams. And I think important to note, revising the list 
is something that for sure needs to happen. But, in addition to 
that--that is not a holistic approach--we also think that, 
really, to address the issue beyond just that list of 200 
substances, essentially copy needs to be revised to 
differentiate between compounding that starts from FDA-approved 
vials and compounding that starts from bulk substances.
    Mr. Burgess. And are you assisting the agency in revising 
that list?
    Ms. Adams. We are. We have got a good dialog going with the 
agency. We have got an opinion, which we have documented for 
them, and we are happy to continue to serve as a resource in 
that regard.
    Mr. Burgess. Very well.
    Mr. Olson, again, thank you for being here for the people 
that you represent. Let me just ask you, on the FDA's draft 
memorandum of understanding, they decided to rescind the 
original draft and they are going through significant 
revisions. States are going to be required at some point, 
though, to sign onto this memorandum of understanding, is that 
correct?
    Mr. Olson. Yes, Congressman, that is my understanding.
    Mr. Burgess. And what will be the consequences if a state 
decided we are not going to sign onto that memorandum of 
understanding? How would that leave you?
    Mr. Olson. It would leave us very conflicted as to what we 
are supposed to do. Because if we abide by our state laws, that 
is what we should be abiding by. But in my situation I am only 
licensed in Wisconsin, so I wouldn't have to worry about the 
situation specifically. But I would think it would put 
pharmacies in bordering towns or bordering areas in a 
precarious position to figure out, well, wait, if the state I 
am in signed it, but the state I am shipping into didn't, then 
where does that leave me, or vice versa. Even though, to be 
fair, most of the time if you are shipping into another state, 
you have to be licensed in that other state as well. So, there 
is a state license that you would have in both states. It would 
just be the conflicting memorandum of understanding about 
whether you can ship and how much you can ship into that state.
    Mr. Burgess. Thank you.
    And, Dr. Brod, just as an observation, years ago I remember 
discovering that a little bit of bicarbonate in a vial of 
lidocaine could make a tremendous difference as to what your 
patients thought about you. And I didn't realize I was 
compounding when I was doing that. I just thought I was being a 
nice guy. But in your testimony you reference that as an 
episode of compounding, is that correct?
    Dr. Brod. A tremendous difference. And in speaking with 
colleagues who haven't been able to buffer in the office, they 
say that the patients note a distinctive difference. We are 
very reliant on it. We perform extensive surgeries, but we do 
it in the outpatient setting, Mohs surgery with reconstruction. 
Having the bicarb to buffer the lidocaine, so that injections 
in multiple areas of the face are tolerable, it really allows 
us to do surgery outpatient instead of going into a surgical 
facility with sedation and those types of things. So, it is a 
world of difference and our patients really appreciate it very 
much.
     Mr. Burgess. Before I yield to Mr. Green, let me just echo 
the comments of Mr. Griffith again. We appreciate so much you 
all being here. We recognize that there are some issues that we 
are going to have to work through, and we appreciate your help 
in getting there.
    Mr. Green, you are recognized for 5 minutes, please.
    Mr. Green. Thank you, Mr. Chairman.
    I apologize to the panel about being late, but I had a 
medical that I couldn't do. I couldn't have any of my great 
staff deal with that.
    But I want to thank you for being here. And you know that 
Congressman Griffith and Congressman DeGette and the chairman, 
we want to fix it because we want to make sure the system 
works. And that is what we did after the tragedies in 
Massachusetts with 65 people dying. But we appreciate you all 
being here and giving your stands on it, so we can actually 
work through and see what the solutions will be.
    Ms. Jungman, I know the Pew Charitable Trust has done a lot 
of research on compounded drugs and was actively engaged in 
this issue before the DQSA was signed into law and since. I 
think it would be helpful to take a step back and get an 
understanding of why this law was necessary and how we can 
support its implementation in a manner that strikes the right 
balance between access and safety.
    Ms. Jungman. I would be delighted to answer that question, 
and thank you.
    So, as you know, the history of compounding has a long and 
complicated legal history, right? It has been a part of 
traditional pharmacy practice for as long as pharmacy has 
existed. But over time businesses grew up; they were 
compounding at a larger scale. And Congress first tried to 
tackle that in the nineties, met some legal challenges that Dr. 
Gottlieb referred to. And NECC I think really brought to the 
forefront of everyone's mind the scale of the patient risk that 
was there.
    We have done a lot of work trying to capture the adverse 
events that have happened in all sorts of facilities from 
compounding pharmacies, but there is really not a comprehensive 
way to know what the risks, what the scale of the impact is.
    And so, what the DQSA does is draw really clear lines that 
are designed to ensure that patients have access to the highest 
quality product that meets their clinical need. So, if you can 
use an FDA-approved product, that is great. If you can't use an 
FDA-approved product, then you want a product that is made 
under appropriate quality standards. And so, there is a balance 
there that is about both ensuring that the quality standards 
are appropriate, but that the lines are really clear, so that 
everyone knows which side of the line they have to be on.
    Mr. Green. I was a state legislator in Texas and we worked 
with our pharmacy board and trusted them. I know, typically, we 
have these national legislative groups that have standard 
pieces of legislation from state to state. So, we do have some 
kind of commonality between Texas and Louisiana, or whatever. 
But is there anything like that, so we wouldn't have such 50 
different? Is there any agency that does that, and say, ``This 
is the standard way you pharmacy boards deal with it.''?
    Ms. Jungman. The National Association of Boards of Pharmacy 
does have a model law that does talk about some of these 
issues. There is, of course, still state variation. But the 
research that we will publish in about 2 weeks, not quite in 
time for this hearing, will show that states are really 
beginning to align with, really kind of come into compliance 
with each other and in line with DQSA.
    Mr. Green. What is the history of responsibility between 
the state boards of pharmacy and the FDA? And how did DQSA 
change that defining line?
    Ms. Jungman. At the time that the NECC outbreak happened 
there was a lot of confusion. And I think we saw that in the 
hearings that happened at that time, where there was a lack of 
clarity about who was supposed to be taking charge of these 
institutions. And so, the DQSA really stressed accountability 
and clear lines for that reason. So, it was, of course, about 
improving the safety of the products, but it was also about 
making sure that everyone knew who was, to use the phrase that 
kept being used at the time, ``on the flagpole''. Which 
regulatory agency was in charge of any type of activity?
    And so, the Congress at the time--and you gentlemen know 
this better than anyone--considered a lot of different ways of 
drawing those lines. Could you do it based on volume? Could you 
do it based on geographic reach? But, ultimately, the 
prescription requirement was the line that was clear and 
enforceable, and that was considered to be really important for 
ensuring that the right quality standards were applied.
    Mr. Green. When we had the hearings earlier on the tragedy 
in Massachusetts, I remember we had FDA and the Massachusetts 
Pharmaceutical Board, and they looked at each other. Here we 
were sitting up here and saying, somebody has got to be minding 
the store, and that is what we are looking for.
    States are critical partners in the effort to ensure 
patient access to safe compounded drugs. And I understand Pew 
will soon release a report with our National Association of 
Boards of Pharmacy which assesses best practices that are more 
achievable by the states. Hopefully, we can have that 
coordination. Again, we just want somebody to make sure, 
whether it is the state level or across border lines, the FDA, 
somebody needs to be minding the store to make sure we don't 
have an incident like we did in Massachusetts, well, literally 
countrywide, but it originated there.
    Thank you.
    Ms. Jungman. Thank you.
    Mr. Guthrie [presiding]. Thank you.
    And I will now recognize myself for 5 minutes for 
questions.
    Dr. Williams, your testimony has been about the critical 
need for office use of compounded drugs. How do we ensure 
office use is allowed while protecting patient safety?
    Dr. Williams. Well, I think that is the critical issue we 
have been discussing all day. We do not think that the patient-
specific prescription contributes to safety in any way. It 
would allow us to track the use of drugs perhaps. But, for the 
incidents where timely treatment is critical--and as I 
mentioned earlier, infections of the eye, even a delay of an 
hour or two will have adverse effects. So, we need to be able 
to have these drugs available in office. We can just pull them 
off the shelf. And it is just absolutely critical.
    I alluded earlier to the pool cleaner for this type of 
infection. And it sounds crazy that we would use a pool cleaner 
for an infection in the eye, but I can assure you, if you had 
that infection, you would want immediate access to that 
treatment.
    Mr. Guthrie. Thank you very much.
    Ms. Adams, some compounded drugs for ophthalmology are 
being done only be a single facility. Do you why this is and 
was this the case before DQSA?
    Ms. Adams. Thank you.
    I don't have specific knowledge of where ophthalmology 
drugs are compounded and in what scale. PharMEDium is strictly 
sterile-to-sterile compounding in our 503B facilities. And as 
we stand right now, we do not serve the ophthalmology patient 
population. So, I don't have specific knowledge of that.
    Mr. Guthrie. Would you know anything about that, Dr. 
Williams? Is it done by a single facility and why is that the 
case? Was it the case before DQSA?
    Dr. Williams. So, before the DQSA, it was done by a single 
facility, so-called traditional or 503As. There are many 
ophthalmic drugs that are available through 503Bs, and we 
encourage our members to use those. It is these relatively rare 
conditions, but, yet, very potentially catastrophic, where we 
need immediate access. And simply writing a prescription and, 
then, having the patient have to go get it, if, in fact, they 
can get it--these are drugs that are not typically manufactured 
or compounded at a high rate. So, for a rural population, it 
could be literally hundreds of miles, as I stated in my 
statement.
    Mr. Guthrie. Yes, absolutely. Thank you very much.
    I am going to yield the time, my remaining time, to Mr. 
Griffith of Virginia.
    Mr. Griffith. Mr. Hodges, I am going to ask you a question. 
It is getting down a little deeper in the weeds, and we still 
want to reach a balance. But the committee has heard, much to 
their chagrin, all about my family's allergy issues. And some 
pharmacies specialize in serving patients with specific needs, 
such as a drug without a particular dye or ingredient for those 
patients who do have allergies to those particulars. And they 
do it because they specialize. They do it in multiple states.
    If the shipment of a patient-specific compounded 
prescription is limited by the memorandum of understanding, 
will patients be able to get all of these medications from 
local pharmacies?
    Mr. Hodges. Thank you, sir.
    Simply put, no, they will not. Not all pharmacies make all 
products for every type of patient population. So, for 
instance, we engage in allergy immunotherapy. There are only a 
handful of pharmacies in the country that offer that. And so, 
it is particularly a concern for us that we cannot meet these 
patients' needs because we are not able to provide it, in fear 
of the MOU, if it is implemented.
    And so, what we want to do is work closely with the FDA. We 
have some ideas about what we can do to ensure the quality and 
access. We have ideas. But we are looking for a sit-down with 
the Commissioner. We have requested this year and years prior 
we have sent letters, and we are not getting a response. And 
so, what we would like to do is ask that the Commissioner have 
a sit-down with us. We have some ideas on what we can do.
    But, to answer your question, it would be a problem if the 
MOU went into effect, especially for patients that live across 
state borders.
    Mr. Griffith. All right. I appreciate that.
    I will tell you that Commissioner Gottlieb, of all the 
folks that we have dealt with at that level, is probably the 
most responsive that the committee has found. And so, we will 
work towards that. But he is very responsive, tries to listen, 
tries to pay attention. And so, it is a good working 
relationship. Hopefully, together we can find a balance to the 
issues that have been raised by today's hearing.
    I appreciate all of you very much.
    And I yield back, Mr. Chairman.
    Mr. Guthrie. Thank you. The gentleman yields back, and I 
yield back my time.
    Seeing that there are no further members wishing to ask 
questions, I would like to thank all of our witnesses for being 
here today.
    I would like to submit the statements from the following 
for the record: American Society of Health-System Pharmacists; 
American College of Mohs Surgery; Avella; Outsourcing 
Facilities Association; American Society of Cataract and 
Refractive Surgery; National Association of Chain Drug Stores; 
American Pharmacists Association; a joint statement from the 
American Academy of Allergy, Asthma & Immunology and the 
American College of Allergy, Asthma and Immunology.
    [The information appears at the conclusion of the 
hearing.:]
    Mr. Guthrie. Pursuant to committee rules, I remind members 
they have 10 days to submit additional questions for the 
record, and I ask that the witnesses submit their response 
within 10 business days upon receipt of the questions.
    Without objection, the subcommittee is adjourned.
    [Whereupon, at 2:43 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    
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