The Food and Drug Administration (FDA) Draft Memorandum of Understanding

What is FDA’s Draft Memorandum of Understanding (MOU)?


The Food and Drug Administration (FDA) is using an obscure provision of federal law to try to deny patients access to compounded medications, including bioidentical hormone replacement therapy (BHRT). Here is how it works.

Under a federal law (section 503A of the Food, Drug and Cosmetic Act), FDA is authorized to draft an agreement, called a memorandum of understanding (MOU), that would need to be signed and agreed to by each individual state. The purpose of the MOU is to help states and the FDA address any legitimate issues with compounded medications that are shipped into one state from a pharmacy in another state. The intent of this law is to make sure that states share information among themselves and with the FDA to help it address legitimate consumer complaints and potential safety issues.


This law was originally passed in 1997, at a time when there was far less regulation of compounded medications that were shipped from one state to another. In the last 22 years, FDA has never finalized an MOU to carry out the intent of the 1997 law.


If a state does not sign a finalized MOU, FDA can limit “distribution” of compounded medications by a compounding pharmacy across state lines to no more than 5 percent of total medications distributed or dispensed. Distribution is when a prescription leaves a pharmacy without a patient name on it. Under state and federal law and years of legal precedent, distribution does not include patient-specific prescriptions, which is what the patient gets with a medication with his or her name on the label. So the MOU was never intended to include or limit regular prescriptions filled by compounding pharmacies and shipped across state lines.

So what’s the big deal?
The big deal is that FDA, in a power grab, is trying to twist and change the definition of distribution to include patient-specific dispensing. This is very unprecedented and alarming and could severely affect the ability of patients to get compounded prescriptions from their pharmacy of choice. It could override the personal decision made by you and your healthcare provider over what is best for you.
In the 22 years that this law has been on the books, for various reasons FDA never finalized an MOU. In the intervening years, state regulation of compounding pharmacy and interstate shipment has grown very robust. For example, all states now require an out-of-state pharmacy to be licensed or registered in the state where the prescription is actually sent. All states have adopted much more rigorous quality standards than were in existence in 1997 and have enacted other stringent requirements to insure patient safety and quality control. And states share information, which was the primary goal of the 1997 law and the MOU. If a resident of a state has a complaint on a medication filled by an out-of-state pharmacy, the resident files a complaint in their home state. The state can take enforcement action if there is a legitimate complaint, including revoking the out-of-state license of the pharmacy. So, in many ways, states stepped in to do the job envisioned in the 1997 law.
And, since 1997, many compounding pharmacies have specialized in the medications they provide. Some specialize in making medications for BHRT patients. Some have other specialties such as serving autistic children, individuals with auto immune disorders, organ transplant patients or pediatric care. They excel at their specialty, and medical providers in most if not all the states use and value their services. Some provide medications that are simply not available in each individual state.

Almost half the states have indicated that they will not sign the current draft MOU, which poses onerous regulatory burdens on individual state boards of pharmacy without a funding source. In fact, not a single state has indicated that it will sign FDA’s latest draft. Some are even prohibited by state law from entering into this type of agreement. Essentially, FDA wants state boards of pharmacies to enforce rules that have little to do with patient safety, and which would deplete the resources that states need for safety and quality control inspections.

The current draft MOU contains this onerous and anti-patient restriction on your ability to get compounded medications from the pharmacy of your choice. The draft is seriously flawed, and exceeds the statutory authority given to the agency by the federal statue.

It is important that FDA withdraw its current draft MOU and issue one that guarantees a patient’s access to compounded medications from his or her pharmacy of choice.