In October 2020 FDA made a standard Memorandum of Understanding (MOU) available for signature by states. The standard MOU was developed in consultation with the National Association of Boards of Pharmacy (NABP) as described in section 503A of the Federal Food, Drug, and Cosmetic Act (FD&C Act). The MOU was intended to be a key public health protection to help enhance communication and maximize federal and state resources for oversight of compounded drugs produced by traditional pharmacies.
At issue is the provision to limit compounders in states not signing the MOU to 5% of their production for interstate distribution. Under section 503A of the Food, Drug and Cosmetic (FD&C) Act, if certain conditions are met, drug products compounded by a licensed pharmacist in a state-licensed pharmacy or federal facility or by a licensed physician can qualify for exemptions from key provisions of the FD&C Act. One of those conditions is that a compounder located in a state that has not entered into a standard MOU with FDA does not distribute compounded drugs out of the state in which they are compounded in an amount that exceeds 5 percent of the compounder’s total prescription orders dispensed or distributed.
Soon after issuing the standard MOU, FDA was sued by several compounding pharmacies in the U.S. District Court for the District of Columbia. In September 2021, the court remanded the standard MOU to FDA to either certify that it will not have a significant economic effect on small businesses or prepare a regulatory flexibility analysis. FDA issued a February 2022 statement indicating it considers the standard MOU published in October 2020 to be suspended. This means that the FDA will not enter into new agreements with states based on this standard MOU during the rulemaking process. FDA does not expect states that have signed the standard MOU to carry out the activities described in the MOU. In addition, the standard MOU will be updated based on the content of a final rule, and FDA intends to announce a new opportunity for all states to consider and sign the updated standard MOU.