After Recalls, Pharmacies Wonder How Well They REALLY Know Their Subcontractors

by BakerHostetler

Pharmacy compounding has been a very hot topic over the last 12 months. Whether it is news from Capitol Hill regarding possible legislation, regulation from the Food and Drug Administration (FDA) or action by a state board of pharmacy, the world of compounding is rapidly changing, and many pharmacies are turning to subcontractors for their regulatory needs. But, by doing so, they may be risking more than they realize.

Sterility Testing

One area where many pharmacies have turned to subcontractors is sterility testing. Both the United States Pharmacopeia (USP) reference chapters, particularly USP 797, which has been adopted by several state boards of pharmacy, and FDA Current Good Manufacturing Practices (cGMP) reference sterility testing. For example, according to USP 797 standards, compounding pharmacies must abide by specific beyond-use dating (BUD) requirements based on the risk level and storage conditions of the compounded product. In order to utilize an extended BUD, compounding pharmacies typically must conduct sterility testing, but many pharmacies do not have the equipment, training or personnel to conduct their own sterility testing. Consequently, many compounding pharmacies subcontract or outsource the sterility testing process. But, as more compounding pharmacies utilize sterility testing subcontractors, issues have arisen that may have some pharmacies asking themselves how well they really know their subcontractors.

Front Range Laboratories

In early September 2013, several compounding pharmacies issued voluntary recalls of sterile compounded products following an FDA inspection of the pharmacies' sterility testing laboratory subcontractor. Specifically, on August 21, 2013, the FDA issued a public statement that warned pharmacies of "concerns about the adequacy of testing performed by Front Range Laboratories, Inc. ["Front Range"] . . . a testing laboratory used by more than 100 pharmacies in 32 states, to verify quality, sterility, and expiration dating." The statement explained that "[i]n a recent inspection, FDA investigators observed that methods used by Front Range to assess sterility and other qualities . . . may have resulted in pharmacies receiving inaccurate laboratory test results" and recommended that "pharmacies not use this firm for sterility and other quality attributes testing at this time." Shortly after the FDA issued this statement, compounding pharmacies across the nation began announcing voluntary product recalls due to sterility concerns, with several of the recall announcements specifically referencing the FDA inspection of Front Range as the cause of the recall. No adverse events have been reported in connection with these recalls to date, but one pharmacy reported that mold was found in bottles of one of its recalled products after use, and another reported that it had discontinued its relationship with Front Range as a result of the incident.

In response, Front Range issued a statement in which it emphasized that the FDA's inspection "was not prompted by inaccurate laboratory results, safety concerns, serious adverse event reports or quality issues" related to products tested for its compounding pharmacy clients. Front Range also pointed out that the FDA inspection underlying the recalls compared Front Range's sterility testing to the FDA's cGMP sterility requirements even though neither Front Range nor any of its clients are drug manufacturers subject to cGMP requirements. Instead, Front Range claims that the methods it has used "to assess sterility and other quality attributes" are "established by USP." Nonetheless, Front Range indicated that it would be addressing the use of cGMP in its testing operations going forward.


As the Front Range incident illustrates, pharmacies that outsource certain functions, including sterility testing, are at the mercy of their subcontractors, and unless they take appropriate precautions to protect themselves, could suffer the consequences of their subcontractors' actions. It is important to note that even if the pharmacies described above are entitled to indemnification via their contracts with Front Range, because the recalls were issued in the name of the pharmacy, not Front Range, indemnification alone may be unable to address the incident's impact on the pharmacies' reputations. In addition, the pharmacies now may be required to report the recall on their pharmacy license renewal applications and insurance forms, which could result in additional regulatory hurdles.

So, what can a pharmacy do to protect against these types of risks? Here are a few essential recommendations for pharmacies seeking to protect themselves from subcontractor misconduct:

  • Review and, if necessary, amend subcontractor services agreements to ensure that the necessary safeguards, such as auditing and inspection rights, are in place;
  • Conduct real, meaningful inspections and oversight of subcontractors;
  • Ensure that subcontractors hold the proper certifications and licenses;
  • Review subcontractors policies and procedures to ensure they are meeting the proper standards;
  • Stay up to date on the regulatory and legal requirements for compounding pharmacies and ensure subcontractors are aware of and complying with any new standards or requirements; and
  • If you are uncomfortable for any reason, be prepared to terminate the subcontractor relationship.

The FDA and various state boards of pharmacy have made it clear that entering into a contract is not enough to insulate the pharmacy. While pharmacies may rely on their subcontractors to perform certain services, pharmacies must be aware that, ultimately, it is the pharmacy's licenses and reputation that is at stake. It is therefore in the pharmacies' best interest to ensure the necessary safeguards are in place so that they really know their subcontractors.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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