Health officials reported eight deaths and 105 cases of fungal meningitis stemming from compounded versions of a steroid injection used largely to treat back pain. They estimated that as many as 13,000 people in 23 U.S. states may have been exposed to the drugs.

The source of the tainted drugs, the New England Compounding Center Inc in Framingham, Mass., is one of thousands of pharmacies that repackage or recombine medications on a sizable scale, sometimes for off-label use by thousands of patients.

They operate in a legal limbo created by existing laws and federal court rulings that have effectively blocked the regulatory powers of the Food and Drug Administration, despite repeated threats to public health in the last decade.

Democratic lawmakers said the new crisis showed it was time for Congress to strengthen the FDA's hand in overseeing this side of the drug industry. There was no immediate comment from Republican members of Congress, who tend to favor deregulation.

Pending legal cases may land the issue at the steps of the Supreme Court.

"These compounding pharmacies are operating now on a scale where (regulation) should be a priority," said Senator Richard Blumenthal, a member of the Senate Health, Education, Labor and Pensions Committee, who is urging hearings and an investigation in prelude to new legislation.

His concerns were echoed by U.S. Representative Edward Markey, another Democrat who sent a letter to the FDA asking whether agency rules ensure that compounded drugs meet the same safety standards as the products of major drug manufacturers.

While compounding to produce appropriate doses of medications for individual patients has long been a feature of neighborhood drugstores, its prevalence and scale has grown as doctors and patients seek less expensive ways to fill prescriptions.

Disease outbreaks have been traced to compounding pharmacies repeatedly in the last decade, including other cases of meningitis and hepatitis C infections.

"If regulation doesn't set a standard that seeks to prevent this, we can expect these outbreaks to keep happening," said Dr. John Santa, director of the Health Ratings Center at the Consumers Union advocacy group.

LIMITED POWER

Of the 56,000 or so free-standing U.S. pharmacies — the Walgreens and Duane Reades of America's Main Streets — more than half perform compounding, says the Houston-based International Academy of Compounding Pharmacists.

IACP estimates that there are 7,500 U.S. pharmacies specializing in advanced compounding and that 1 percent to 3 percent of prescriptions are compounded.

The FDA's main authority over the safety, efficacy, use and production of drugs pertains to manufacturers, not pharmacies that are mostly regulated at the state level.

"Congress exempted drugs compounded by pharmacists from the usual safety and efficacy requirements," said Dr. Michael Carome of the Washington-based public advocacy group Public Citizen. "And now it's led to a public health disaster."

The 1997 Food and Drug Administration Modernization Act states that such requirements don't apply to drugs "compounded for an identified individual patient based on the unsolicited receipt of a valid prescription order."

That means compounding pharmacists do not have to show that the version of a drug that they produce - such as crushing and dissolving a tablet - is still safe or effective.

Critics like Carome say that has provided a loophole now exploited by pharmacies compounding large lots of a medication. In NECC's case, the company shipped 17,676 vials of the steroid methylprednisolone acetate to 76 healthcare facilities in 23 states from July through September, according to the Massachusetts Health Department.

"This is not traditional compounding we're talking about," said David Miller, chief executive of the IACP. "It is multi-state selling and large-scale manufacturing."

Pharmacies have further challenged the law's prohibition against advertising their compounded drugs. The Ninth U.S. Circuit Court of Appeals in San Francisco overturned that restriction in 1998 and ruled unconstitutional the entire section that governs the FDA's authority over compounding.

The case, brought by seven pharmacies, eventually wound up before the Supreme Court, which agreed that the prohibition against advertising was unconstitutional but did not address whether language allowing FDA regulation should stand on its own.

In a separate 2008 ruling, the Fifth Circuit Court in New Orleans said the same section 503A could be used to regulate compounding drugs. Now a third appellate court, the Eleventh Circuit in Atlanta, is set to rule on a Florida case that went against FDA at the district court level.

Richard Samp, chief counsel at the nonprofit Washington Legal Foundation, said that if the forthcoming ruling in Atlanta clashes with the decision in New Orleans, "the Supreme Court could decide to step in to resolve the conflict."

(Writing by David Morgan; Editing by Michele Gershberg and David Brunnstrom)

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