I prescribe compounded medications. Can I be sued?

Dr. Skin has a large dermatology practice and treats a variety of medical and cosmetic conditions. He has studied and lectured extensively on the topic of rosacea. He understands much of the pathophysiology of rosacea. 

Dr. Skin prescribes a variety of topical and oral agents to treat the inflammatory component of rosacea as well as lasers and light sources to treat the fixed vascular components and telangiectases.   He also started to use, with succcess, a novel topical cream to lessen flushing.

Recently, Dr. Skin received a fax from a compounding pharmacy advertising a compounded version of the product that he had been using, but  at a discounted rate. In addition, Dr. Skin can increase his office income by selling this “copycat version.” 

Dr. Skin began to give this topical cream to his patients. Unfortunately, several patients had a violent combined irritant/infectious reaction to the product that led to facial scaring. One finds out that the product was compounded and not cleared by the U.S. Food and Drug Administration (FDA). He hires an attorney, a chat room is started, and Dr. Skin is soon the recipient of multiple medical malpractice lawsuits and a complaint from the local state Board of Medical Examiners. Did he do anything wrong? 

Dermatologists need to be careful when considering compounding because of the many regulations surrounding this practice. Various organizations have introduced limitations on in-office compounding. These include the FDA, Centers for Medicare and Medicaid Services (CMS) and state boards of medicine.      

The landscape is continuously evolving, particularly with the recent concerns about the safety of compounding drugs in physician practices triggered by the 2012 incidents in which hundreds of patients who used contaminated compounded steroid-based medications developed fungal meningitis. Although compounding performed by most dermatologists is clearly far less risky than the aforementioned meningitis cases, dermatologists, like all physicians have been swept up in the regulatory efforts around this issue. 

It should be noted that the Food Drug & Cosmetic Act (FDCA) does prohibit physicians from using compounding prescriptions that are essentially copies of commercially available drugs. The FDCA does allow physicians some leeway by stating “the term - essentially a copy of the commercially available product - does not include a drug product in which there is clearly a change, made for the identified individual patient, which produces for that specific patient a significant difference, as determined by the prescribing physician, between the compounded drug and the comparable commercially available drug product.”

Physicians need to tread carefully if they are not making a significant change to an already available drug for a reason specific to the patient for whom the drug is being compounded. If the FDA finds that a physician violated these compounding regulations, it is a criminal act with a penalty including up to a year in prison and/or a $1,000 fine. 

A second violation carries increased penalties of up to three years in prison and/or a fine up to $10,000. Penalties may also include mandatory exclusion from Medicare and Medicaid. The individual state in which the physician practices may invoke additional penalties. 

In addition, compounding pharmacies must be licensed. Buying drugs from unlicensed sources is illegal. Purchasing such drugs may also put patients at risk. Engaging in these practices may result in criminal investigation and prosecution. 

Dr. Skin tried to make extra income by using what may have been an illegal drug. This activity not only may lead to a lawsuit. It also may lead to issues with his local board of medical examiners and the FDA. Lastly, his poor decision may very well lead to a requirement of significant legal fees that very likely will not be covered by his medical malpractice coverage.