3 Things to Know About 503B Outsourcing Facilities

In the spring of 2012, a compounding pharmacy in Massachusetts shipped a batch of steroid drugs to medical facilities around the country. Within a few months, 800 patients became ill and 76 died.

Investigations revealed that the drug became tainted with mold due to unsanitary conditions at the compounding facility, leading to a fungal meningitis outbreak. This tragedy, which could have been avoided had the facility observed appropriate standards, led Congress to pass the Drug Quality and Security Act. The act was signed into law in November 2013 and added a new section to the Federal Food, Drug and Cosmetic Act (FD&C) Act. Titled 503B, the section established the regulation of “outsourcing facilities” that provide patient-specific medications.

Today, pharmacy compounding facilities are required to demonstrate compliance with the FDA standards for sanitary conditions and quality as outlined in 503B. Here are three things to know about section 503B and the regulations governing outsourcing facilities.

Outsourcing facilities solve problems. Outsourcing facilities are FDA-registered locations where sterile drugs are compounded. Rather than issuing medicine pursuant to patient prescriptions, outsourcing facilities produce compounded drugs in bulk for institutions to address workflow constraints, become more operationally efficient and assist with drug supply during shortages. To qualify as an outsourcing facility, compounders must follow current good manufacturing practice (CGMP) requirements, submit to FDA inspections and comply with the requirements set forth by section 503B.

These facilities create pharmaceutical products to meet needs that traditional FDA-approved drug manufacturers and commercially available drugs cannot. For example, outsourcing facilities might offer unique sizes or dosages, or make drugs without the preservatives found in their commercial counterparts.
These facilities are also helpful during drug shortages, explains Mark Walsh, PharmD, HealthTrust’s director of Clinical Pharmacy Strategy. “When a drug shortage occurs, the FDA allows 503B facilities to compound products that would not otherwise be allowed during normal market conditions.”

Walsh explains that 503B outsourcing facilities are typically prohibited from making products that are essentially copies of FDA-approved drugs available on the market. However, in the case of a drug shortage, when traditional FDA-approved drug manufacturers are unable to meet the demands of patients, hospitals and providers, these prohibitions are lifted. “During this period, the FDA allows 503B facilities to assist in alleviating market demand challenges,” he says.
Walsh provides regulatory and clinical input to help inform HealthTrust’s 503B contracting process. He says one of the benefits of 503B facilities is that they help diversify the supply chain, adding to the choices available. “This increase in supply chain diversification creates additional flexibility in the market to allow for more rapid means of addressing drug shortages when they occur.”

Small healthcare providers rely on outsourcing facilities for another reason. For places like physician offices and dialysis centers, complying with the extensive regulations around compounding is nearly impossible.

“There are regulations governing sterile compounding at any practice site—what the beyond-use date should be, what engineering and environmental factors need to be accounted for, etc.,” Walsh explains. “For some facilities to become compliant with those standards, it could be cost-prohibitive. 503B facilities offer ready-to-use products, removing the need for compliance with the costly engineering standards that would have been required if the product was compounded in-house. This allows smaller facilities to remain compliant with the regulations.”

2 503B provides accountability and assurance. To become a verified outsourcing facility, Section 503B requires compounders to register with the FDA and report all compounded drug products. The FDA then inspects all registered facilities according to a risk-based schedule.

Since the 2012 meningitis outbreak, the FDA has inspected hundreds of outsourcing facilities and reports that, without regulation, unsanitary conditions will continue. Initial inspections have revealed everything from dead insects to microbial growth at compounding sites. Thanks to 503B requirements, outsourcing facilities are held accountable to best practices. These requirements and inspections mean that, while drugs at outsourcing facilities are not FDA-approved, a registered and inspected outsourcing facility meets CGMP standards.

Other requirements set forth by 503B include ingredient compliance with the United States Pharmacopeia (a compendium of drug information) and the labeling of drugs with the required information. The section also prohibits outsourcing facilities from making drugs removed from the market due to safety or lack of efficacy, as well as the replication of approved drugs.

“Previous to the 503B regulations there wasn’t really any guidance that addressed how to deal with these type of entities,” Walsh says. “Compounding facilities existed in this gray area of pharmacy, but they shipped interstate. It was undefined who was in charge of regulating them. 503B allowed for federal oversight and tried to create the standards that organizations needed to adhere to.”

As a newer addition to the FD&C Act, some of 503B’s original regulations lacked clarity and specificity. Because of this, the FDA continues to refine the guidelines. In early 2018 the organization released its work plan for 503B facilities and continues to produce additional guidance documents for both drug manufacturers and purchasers.

3 Due diligence is essential. Section 503B creates accountability for compounders and assurance for purchasers. The FDA provides oversight through registration and inspections, and outsourcing facilities agree to comply with 503B requirements. Still, guidelines for best practices continue to evolve. Purchasers should do their part to ensure they’re obtaining drugs from a reputable facility.

“The process is heavily dependent on the providers or hospitals—whoever is ordering—to do their due diligence on the suppliers from which they are purchasing to ensure they are acting in accordance with both the words and the intent of the regulations governing 503B,” Walsh says. “I’ve seen different suppliers interpret the same language in completely different ways.”

For hospitals and other healthcare providers purchasing drugs from outsourcing facilities, Walsh recommends researching different outsourcing facilities and reading the guidance documents on the FDA’s website. After all, some vendors may follow the basic requirements set forth by 503B but not the overall intent. “The essence of 503B is that it’s trying to protect patients,” Walsh adds.

It may sound complicated at first, but with new regulations and added accountability, outsourcing facilities can solve problems for healthcare providers and meet the needs of individual hospitals and patients.

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