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This is the first of two parts. Read part 2.

As a bird specialist with expertise in other exotic pets such as rabbits and reptiles, Dr. Laura Wade faces a particular challenge when it comes to prescribing medicine:

Very few drugs are manufactured specifically for her kinds of patients.

Consequently, Wade relies 99 percent of the time upon compounding, a pharmaceutical practice in which drugs are manipulated in dosage, form and flavor to accommodate a specific patient's individual needs.

"I couldn't practice without it," said Wade, whose clinic is located near Buffalo, N.Y.

Compounding is the original way of making drugs. The advent of modern manufacturing and mass production relegated the old-fashioned art to the background. But compounding is undergoing a revival, driven in part by pet owners' greater willingness to invest in their animals' health; in part by pharmacies' interest in alternative markets; and in part by inconsistent and poorly enforced rules governing the industry.

Because compounding is considered distinct from pharmaceutical manufacturing, compounders operate outside the extensive, expensive testing and approval process overseen by the U.S. Food and Drug Administration (FDA). Compounded drugs are not FDA-approved. They are largely untested formally for safety and efficacy.

Observers say these facts are downplayed by an industry for which the blurry divide between compounding and manufacturing has become a business opportunity.

"Compounding has its place, no doubt about it," said Dr. Brett Cordes, a DVM serving as veterinary medical director for animal health at The Apothecary Shop in Phoenix, Ariz., which deals in both commercially manufactured and compounded pharmaceuticals.

"Unfortunately in veterinary medicine," Cordes went on, offering a personal opinion, "there's been a lot of — how should I say? — shenanigans going on."

The situation is dividing the compounding industry and sowing confusion among practitioners about the right and wrong ways to use compounded medications. Observers say veterinarians are by turns victims and instigators of the problem.

The most blatant offense is the use of compounding to create cheap replicas of existing FDA-approved drugs. Some veterinarians may confuse compounded knock-offs with legitimate generic versions of the drug. Others knowingly seek the less-expensive copies.

Gigi Davidson, director of clinical pharmacy services at North Carolina State College of Veterinary Medicine, has heard this directly from clinicians. During a recent talk to the Florida Association of Equine Practitioners, Davidson displayed a slide of pirated drugs. "Why would a veterinarian use a copy of a commercially available, approved, tested, proven product?" she asked the audience.

"Economics," listeners told her.

"You want to increase your profit margin?" she pressed.

No, they replied emphatically. "They said it was clients driving the use," Davidson recounted. The practitioners reported pressure from clients to come up with less-expensive avenues for treatment.

To Davidson's mind, allowing clients to drive medical decisions based on money is a dangerous precedent. "If a client asked you to use a dull scalpel because it's cheaper, would you do that?" she said. "Why are you outsourcing your medical judgment to clients?"

Another way in which compounding is abused in the veterinary community, observers say, is through resale of compounded medications to clients. Unlike in human medicine, reselling manufactured, commercially available medications to clients is a common and accepted practice in veterinary clinics. Clinic owners are understood to take a piece of the profit.

Compounded drugs are different. They are made on an as-needed basis for office use or by prescription for individual patients only. And because compounded medications have not been through the rigorous federal drug approval process, Cordes said it is essential for the pharmacist to have direct contact with the patient's owner in case of an adverse event or recall.

"We as a pharmacy cannot knowingly supply a DVM for resale because we lose that quality control," he said.

But stopping the practice is not necessarily a simple matter.

At Valley Drug and Compounding in California, a pharmacy devoted almost entirely to veterinary medications for small animals, co-owner Irving Reitzenstein, Pharm.D., said he tries to discourage resale by limiting the amount of medicine he dispenses at one time. California regulations allow a veterinarian to resell to a client a 72-hour supply — enough to tide over a patient until its owner can get the prescription filled. "When you've got an office asking for 200 capsules of something, they're not asking for a 72-hour supply," Reitzenstein said.

As a general rule, "We try to limit it to 100 solid dosage units or a pint of liquid," he said, but the rule is not hard and fast. "(For) a 24-hour emergency facility, a pint of antibiotic liquid might be nothing," he noted. "So it's very difficult sometimes to know when you're crossing that line."

Many veterinarians feel the same way. Dr. Wade, the avian and exotics practitioner in western New York, said she used to keep a variety of compounded drugs on hand for the sake of efficiency and flexibility. Then, the clinic owner, Dr. Melinda Burgwardt, asked Wade what she knew about rules governing compounding. "I kind of knew there were some regulations, but I didn't know specifics," Wade said.

Both practitioners began a long journey — still ongoing — to figure out what was acceptable and what wasn't. "At one point, (Burgwardt) asked me not to have any of this (medication) in-house," Wade said. "I said, ‘I can't work that way. How can I do this in a way that's legal and still takes care of my patients?' "

Wade ended up whittling her office-use supply to small amounts of four or five medications she needs most frequently. Having to wait to obtain the drugs until after a specific patient presents with a special need is too confining, given the nature of her practice. "I just need it when I need it," she said.

What Wade keeps on hand she believes she can justify medically to anyone who might inquire. "I oversee it pretty carefully," she said. "I want to play by the rules, but there is no black and white for me; it's all gray."

Burgwardt, who's been in practice 23 years, recalls learning nothing about compounding rules in veterinary school. At one time, when clinic staff ordered a compound for in-house use and the pharmacy asked for the patient's name, Burgwardt said, "We didn't think anything of it and gave (the name of) one of our personal pets. Then I started hearing on VIN that it was illegal."

It was through many online discussions on the Veterinary Information Network (VIN) that Burgwardt began to develop an appreciation for the complicated realm compounding occupies. After spending countless hours pondering the subject, she is exasperated by the whole matter.

"I think the rules for the pharmacies are made to protect the drug companies, and the rules for the veterinarians — they got stuck in the middle," she said.

Cordes, the veterinarian at The Apothecary Shop, sees it differently. "How do you verify quality?" he said. "If you're willing to break the rules, how do you know that anything a pharmacy is doing is quality or not? We as veterinarians need to know that when we reach for a compound, we are equally as liable as the compounding pharmacy."

Federal laws and rules challenged, challenging

The FDA is acutely aware of problems and confusion associated with compounding, according to former officials of and consultants to the agency. Since 1996, the agency has sent out scores of warning letters to pharmacies alleging illegal compounding for veterinary use. But to all appearances, the agency has not followed up with vigor.

"(The warnings) have been, as far as I can tell, essentially ignored," said Dr. Mark Papich, a veterinarian and clinical pharmacologist at North Carolina State University College of Veterinary Medicine, noting that many of the pharmacies continue their questionable practices.

Hamstringing FDA enforcement are a welter of complicated court decisions and litigation involving various laws on drug manufacturing and compounding.

Helping to confuse matters is the fact that compounding for human use and for veterinary use are governed by different rules. And while some compounders serve only the veterinary community, many serve both, making the division all the more confounding.

Three laws pertain to the issue: The Food, Drug and Cosmetic Act (FDCA), dating to 1938 and revised time and again over the years; the Animal Medicinal Drug Use Clarification Act (AMDUCA) of 1994, an amendment to the FDCA; and the Food and Drug Administration Modernization Act (FDAMA) of 1997, another FDCA amendment. (See timeline, upper right)

In one recent court battle, the government was sued over a provision in FDAMA that prohibits pharmaceutical compounders from advertising specific products if they wish to quality for an exemption from the drug-approval process. The issue went all the way to the U.S. Supreme Court, which held that the provision was an unconstitutional restriction of free speech.

Nevertheless, the use of advertising in compounding remains a point of contention. Aggressive marketing confuses practitioners and corrupts the purpose of compounding, critics say.

"I think veterinarians sometimes have been misled by some compounding pharmacies because they advertise their products to make it look like they're actually (approved) products," said Dr. Katrina Mealey, who teaches small animal medicine and pharmacology at Washington State University.

Davidson at NC State said the role of compounding is to answer the needs of individual patients, not to stimulate demand. "If I as a pharmacist want to create a need for a compound, that is not acceptable," she said.

Reitzenstein said some advertising is appropriate, and some not. "If you're going to advertise, you're going to advertise who you are, what you do and how you do it," he said. "I don't think it's appropriate to promote one particular product."

Marcy Kelly, vice president of marketing and sales at Wedgewood Village Pharmacy, one of the nation's largest compounding pharmacies, passionately disagrees. The availability of preparations needs to be communicated, she said, to inform patients or practitioners who otherwise might not realize they have more options.

"When you are treating cats diagnosed with megacolon, a life-threatening condition, and Propulsid, the human health drug that you commonly prescribe, goes off the market, you are anxious to find an alternative," Kelly said. "When you receive information from a pharmacy that they can prepare it for your patients, then that's meaningful to you."

Wade, the avian specialist in New York state, agreed that marketing can convey valuable information. "I can tell you from all the compounding pharmacies I've seen at different conferences, everybody promotes their flavors; everybody promotes their special thing," she said. "It's like, we wouldn't know that, if they didn't promote their different things. ... I think a lot of people don't appreciate what a wonderful option (compounding) is for us."

What's it made of?

Another contentious aspect of veterinary compounding is the use of bulk active pharmaceutical ingredients, the raw materials from which finished medications are made. Under the FDCA, only manufacturers undergoing the federal drug-approval process are allowed access to bulk chemicals. Under AMDUCA, compounders are supposed to use finished, approved drugs as their starting material when compounding for animals.

Compounders say that is an impossible rule. "If you didn't use bulk drugs, you couldn't provide (the service)," said Kelly at Wedgewood. "Veterinary patients have needs that cannot be serviced without using bulk ingredients."

Reitzenstein agreed that compounding from finished drugs is simply impractical in certain situations. For example, the feline thyroid medication methimazole, the medication he makes up most commonly, comes in an approved pill slightly larger than a baby aspirin, and weighs 100 to 200 mg. Of that, the active ingredient may constitute only 2.5 mg or 5 mg, he said: "It's 95 percent binders and fillers."

For cats that fight pills, Reitzenstein receives orders frequently for liquid or transdermal methimazole. He said it is too difficult to derive the active ingredient in appropriate amounts from such small pills. "The only way we can work with it is with bulk chemicals," he said.

The objection to liberal use of bulk ingredients in compounding is that ingredient quality is not assured. "We don't know what's in there," said Mealey of WSU. "We don't know if it's pure, if it has contaminants. It's potentially very risky. The FDA doesn't necessarily inspect those (ingredients). And we know what happened with melamine in dog food that had some inspection," she added, referring to the international poisoning scandal in which unscrupulous suppliers in China added the industrial chemical melamine to a pet food ingredient to inflate its apparent protein content.

Bulk ingredients used in manufactured drugs undergoing the FDA approval process, by contrast, are subject to careful scrutiny, according to Dr. Rich Carnevale, a former FDA deputy director of new animal drug evaluation now serving as vice president for scientific regulatory and international affairs at the Animal Health Institute, which represents pharmaceutical manufacturers and other animal-health companies.

"As part of the approval of the finished product, they have approved the manufacturer of the bulk ingredient," Carnevale said. "They will have ... (reviewed) how it was produced, from start to finish."

Compounders counter that their bulk-ingredient suppliers are not without oversight. The International Academy of Compounding Pharmacies (IACP) states on its Web site: "Just like big pharmaceutical manufacturing companies, compounding pharmacies get their ingredients for medications from suppliers that are registered and inspected by the FDA. Foreign suppliers are FDA-registered facilities."

What does it mean to be FDA-registered? Under federal rules, all facilities engaged in manufacturing, preparing, propagating, compounding or processing drugs — including bulk ingredients — are required to register with the agency each year. Laura Alvey, a spokeswoman for the FDA's Center for Veterinary Medicine, said registered facilities are inspected at least once every two years. "It's important to note," she added, "that FDA registration does not mean that the product is legal or FDA approved."

Reitzenstein said he obtains bulk ingredients solely from reputable sources — suppliers who can certify the authenticity and purity of their drugs. He believes the majority of compounding pharmacies do the same. However, he added that suppliers without proven track records constantly solicit for his business, an indication that the temptation to obtain drugs from shadowy outlets is ever-present for compounders.

"We know there's tremendous concern about chemicals coming in from China," he said. "I get e-mails at least once or twice a month from companies predominantly in China that say that they can supply us with chemicals."

The FDA recognizes a limited need by compounders to use bulk drugs. Through FDAMA, the government makes exceptions for the use of bulk ingredients in compounded products for human patients. But the veterinary counterpart to that act, AMDUCA is silent on the question of bulk use. That's no accident, said Davidson.

Leaving it ambiguous was a compromise to get the law passed, she said: "Codifying the use of bulk chemicals for compounding would have been very threatening to the pharmaceutical industry, so they threw every lobbying effort they had at keeping it out," she said. "But the FDA knew there were a handful of products that could be compounded only through the use of bulk ingredients, so FDA, veterinarians and pharmacies said, ‘Do not prohibit it.' "

Promised guidelines don't materialize

As AMDUCA was being developed, the FDA produced a "compliance policy guide," or CPG, which laid out the circumstances under which its enforcement officers would look the other way when bulk ingredients were used in compounding.

The CPG said bulk ingredients could be used when the health of the animal was threatened and no alternatives existed, said Davidson, who served on a task force that put together the document in 1992. "Some folks started using that as a loophole," she said. "It got badly out of control on the veterinary side."

So the FDA issued a new CPG in 2003 that greatly narrowed the agency's tolerance for the use of bulk ingredients. The guidelines make an exception for only nine drugs, all poison antidotes for livestock. "There's not anything for companion animals at all," Davidson said. "It's a very short-sighted document."

As a critic of the guidelines, Davidson is in good company. So many people objected to the new CPG that the FDA on Sept. 1, 2004, announced it would draft a new version, and make it available for public comment that fall.

But it never did. Five years later, agency spokeswoman Alvey won't say why. In an e-mail response to questions, she replied only: "I think it's fair to say that we don't anticipate any revisions to the 2003 CPG in the near future."

Reitzenstein said the ongoing lack of certainty and clarity creates chronic stress. "The  CPG basically says ‘This is how we will probably decide how to define the law. And we may or may not enforce it, but this is what our intent probably is,' " he said. "It's difficult to function under an environment like that."

Observers say the FDA is unwilling to act until legal questions surrounding the issue are resolved once and for all. The 1998 court fight over advertising prohibitions was followed in 2004 by a case in which pharmacies challenged the authority of the agency to oversee compounding at all, asserting that the regulation of pharmacy practices is the jurisdiction of states alone.

The pharmacies won the first round in 2006, but the decision was overturned on appeal in 2008 and sent back to the trial court. On Nov. 6, Judge Robert Junell in the U.S. District Court Western District of Texas issued a revised judgment stating that compounded drugs are not generally exempt from the law governing "new drugs" and "new animal drugs" — in effect, that the FDA does have authority over compounding.

The lawyer for the pharmacies, Terry Scarborough of Austin, Texas, told VIN News Service that the plaintiffs, for reasons he could not disclose, have opted not to appeal that fundamental question to the U.S. Supreme Court. However, they may challenge other aspects of the revised decision.

"That new decision is like any decision — either side can appeal, and you can start the process all over again," Scarborough said.

He said the plaintiffs may dispute parts of the order relating to FDA inspections of compounding pharmacies. The parties, he said, have until early January to decide their next move.

Part 2: Quality and availability of compounded drugs at stake