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Millions of Americans use compounded drugs created by a pharmacist or physician who combines, mixes, or changes a drug’s ingredients to meet individuals’ needs. They trust the 7,500 or so compounding pharmacies that do this work.

That trust is sometimes misplaced. In 2012, for example, contaminated steroid painkillers mass-produced by the now-defunct New England Compounding Center in Framingham, Mass., killed more than 100 people and sickened more than 750 others in 20 states. Barry Cadden, the center’s president, and Glenn Chin, a pharmacist, were sentenced to prison for their roles in the tainted-drug scandal.


As a result of the 2012 outbreak, the Drug Quality and Security Act of 2013 was enacted, creating 77 “outsourcing facilities” that are permitted produce compounded drugs in bulk.

Because the 2013 law still does not sufficiently protect patient safety, former Food and Drug Administration Commissioner Scott Gottlieb issued interim guidelines in 2018 to increase oversight. The International Academy of Compounding Pharmacists, a trade association, recently alleged that the FDA had “overreached,” and was “circumventing” the federal rule-making process requiring stakeholder input. In fact, the agency established a public comment docket on its proposed guidelines and held a public meeting in May.

As Gottlieb said last year when announcing the 2018 Compounding Policy Priorities Plan, “a growing number of enterprises [have been] acting as large-scale drug manufacturers seeking to operate outside of the purview of FDA oversight by operating under the guise of a pharmacy license. These outfits often created substantial risk … by manufacturing and shipping large quantities of purportedly sterile drugs and not adhering to good manufacturing practices.”


State pharmacy boards currently have primary oversight of pharmacies that are not registered with the FDA as outsourcing facilities, but only 22 states and the District of Columbia do routine inspections of compounding pharmacies. The FDA, which regulates prescription and over-the-counter drugs, oversees outsourcing facilities but does not test or approve drugs created in compounding pharmacies for safety or effectiveness. As a result, there is a greater risk that unsafe compounds will be produced in unsanitary conditions — as happened at the New England Compounding Center — and by pharmacies seeking to profit from illegal bulk sales.

The list of unnecessary tragedies is long. In 2017, more than 60 people in Texas lost all or some of their eyesight due to a contaminated compounded steroid injected into the eye. The year before, 17 New York cancer patients developed fungal infections due to a contaminated compounded intravenous medication. A report by the Pew Charitable Trusts identified more than 50 instances of compounding problems between 2001 and 2017.

In addition to creating public health problems, some compounders are defrauding and over-billing government programs like Medicare, the Office of Workers’ Compensation, and Tricare, as well as insurers.

Earlier this year, a Mississippi compounder and a marketer for the company pled guilty to defrauding Tricare, the armed services’ health-insurance program, of as much as $192 million. Last year, a South Florida compounding pharmacist and his assistant were found guilty of a scheme involving pharmacies, physicians, and marketers who defrauded Tricare of tens of millions of dollars. In a 2017 case awaiting trial, eight people associated with three pharmacies were charged with a scheme to cheat the Office of Workers’ Compensation to the tune of $158 million by obtaining reimbursements for up to $28,000 per container of compounded pain-relief creams.

Taxpayers appear to be getting cheated in other ways, as compounders’ reimbursement claims to federal programs have skyrocketed. Medicare Part D spending on compounded topical creams rose by more than 3,400% between 2006 and 2015.

The compounding pharmacists’ trade association has lobbied to leave most oversight to states and to those who prescribe and produce compounded drugs. Although there are good arguments for local control of many government functions, health care and medications know no state boundaries. And industry self-regulation smacks of the proverbial fox guarding the henhouse.

Compounding pharmacies are not bartenders mixing a gin and tonic. They produce essentially new drugs, and ensuring drug safety and effectiveness is the FDA’s mission. States must do a better job, but the regulatory loophole that allows compounders to avoid necessary federal scrutiny must be closed.

Andrew L. Yarrow is a former New York Times reporter and affiliate faculty member at George Mason University who frequently writes about health policy.

  • The title of your story: Compounding pharmacies need stricter federal oversight shows me you have no understanding of the NECC disaster. There were regulations, laws and rules in place already, that would have prevented the NECC disaster if those laws, rules and regulations were being enforced. The Mass. Board of Pharmacy and FDA were caught not doing their jobs and enforcing laws and rules already on the books. They got caught sleeping at the wheel. Then they over corrected to try and cover up their incompetence by passing more rules and laws. I blame NECC on the Mass. Board of pharmacy and the FDA. They let it happen.

  • I’ve been a compounding pharmacist for nearly 30 years. I’m very familiar with bad players like NECC and others and they certainly should not be unchecked. But Federal law explicitly carves out a space for compounding pharmacy as the jurisdiction of individual state boards of pharmacy. This is exactly the same principle as physicians being governed by their state board of medicine and not by the FDA. There are thousands of compounders who care deeply for their patients and are truly making a difference in ways big pharma just can’t. My pharmacy undergoes rigorous inspections from a highly respected compounding accreditation board and we offer our providers and patients the greatest possible quality and customer service. We would be absolutely mortified and heartbroken to think that anything we might compound would harm our patients. So we take the utmost precautions in preparing custom compounds for them. It’s no secret that the FDA receives a large majority of its funding from big pharma’s fees. Both big pharma and FDA have clearly been vehemently opposed to compounding pharmacy. If that’s not a conflict of interest, I don’t know what is.

  • The content of the article as it relates to the title is not 100% factual. The author’s title indicates ‘compounding pharmacies’ need stricter oversight, yet the article references a case in New York where compounded products were made at an outpatient clinic. So even though he singles out the pharmacies, a more accurate depiction of the article should be ‘all organizations that compound medications, whether a hospital, outpatient center, pharmacy, etc.’ Oversight, if needed, should be enforced in all settings. If new laws or standards restrict pharmacies, it should restrict everyone. Selective enforcement should not be allowed.

  • Sure guys go ahead go crazy.
    When in trouble, when in doubt ,running circles Scream & Shout!
    Restrict those pharmacies more or even curtail their activities and you will be threatening my life, because compounding is vital to me think about it.

  • There’s a big difference between sterile, bulk, and patient specific compounding to meet special needs. Legitimate compounding already has numerous standards that apply along with science based formulas. I’ve seen these work when nothing else would, or the patient couldn’t wait decades for drug companies to do the market research and exhaustive studies and still potentially not be affordable.

    As far as the fox guarding the hen house, take a look at hospitals. They have also been found guilty, or settled, and fined millions. Plus, it’s their own people that are reporting the quality and outcomes data that the government uses to determine value based reimbursement. Most of the healthcare spend is on that side of the equation.

    • Correct ! Assuming the drug company would even want to make the product in the first place. We spend the most in the world on hospitals and our health system, and at last check, we weren’t even in the top 30 on actual quality.

  • This is a story about how good things can go wrong when GREED is involved. This story has nothing to do with proper government oversight. The federal government isn’t allotted funding to even properly investigate issues surrounding GREED. FURTHERMORE, the federal government is hired by big pharma and finance companies to write regulations to sabotage smaller companies like community personal compounding pharmacies. Gottlieb left the FDA and now works for a big pharma company. Andrew, please fact check the industry before writing an article outside of your field of expertise. Compounding pharmacies are the little guys doing the work the people of the country desperately need.

  • Andrew, there’s a trade-off here somewhere. I go to a compounding pharmacy for some fairly innocuous hormones that my insurer doesn’t cover, and which I cannot afford to purchase out-of-pocket from big pharma. I save several hundred dollars per month using compounds. Maybe we should regulate the prices pharma charges before going after the little guy who is providing our only affordable alternative.

    • Donna, you are on the right track! Andrew, maybe ask Donna for guidance or maybe she could write the next article on healthcare and compounding pharmacies as it seems she has more insight.

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