U.S. and state health regulators called on Congress on Tuesday to strengthen federal oversight of compounding pharmacies as lawmakers prepared for two days of hearings on a deadly fungal meningitis outbreak linked to a compounded steroid.

But the main federal regulator, the U.S. Food and Drug Administration, said in a statement to Reuters that it faces legal restrictions in regulating drug compounders such as the New England Compounding Center. The Massachusetts pharmacy was at the center of the outbreak that has infected 438 people, including 32 who have died, in 19 states.

The chief public health officer for Massachusetts also urged immediate congressional action to bolster federal oversight of the little-known, lightly regulated compounding industry, which is primarily overseen by state pharmacy boards.

"It is clear that the patchwork of disparate state regulations is not enough to keep the public safe," Dr. Lauren Smith, interim commissioner of the Massachusetts Department of Public Health, said in written testimony filed with a U.S. House of Representatives oversight panel.

Lawmakers hope to shed light on why regulators failed to act against NECC despite multiple problems dating back to 1999. They also are focusing on whether new legislation may be needed to grant FDA clear authority to police the drug compounding industry.

"FDA's authority over compounding pharmacies is more limited by law and needs to be strengthened," said the federal agency's statement to Reuters. "We look forward to working with Congress to prevent this from happening again."

Those sentiments were echoed on Tuesday by a new report from the minority Democratic staff of the oversight and investigations panel.

"Legal authority over compounding has been complicated by court decisions that have cast doubt on FDA's authority to regulate compounders," the report said. "Compounders operate in a regulatory gap between state-regulated pharmacies and federally regulated drug manufacturers."

Smith and FDA Commissioner Margaret Hamburg are scheduled to testify on Wednesday before the panel, the House Energy and Commerce subcommittee for oversight and investigations. A second congressional hearing is scheduled to take place before the Senate Health, Education, Labor and Pensions Committee on Thursday.

The Massachusetts health commissioner, who took office less than three weeks ago, said she is determined to find out why the Massachusetts Board of Registration in Pharmacy voted to sanction the company in September 2004 but ultimately agreed to a far weaker consent agreement with NECC in January 2006.

"I will not be satisfied until we know the full story behind this decision," she said in her written testimony.

DEFRAUDING FDA

Smith said the Massachusetts pharmacy board's executive director and staff attorney learned in April 2006 that executives from a company hired to ensure NECC's compliance were convicted of federal crimes related to defrauding the FDA.

"However, we found no evidence to indicate that the executive director or staff attorney ... provided this crucial information to the board. Nor did they see fit to send inspectors back to NECC in 2006 to determine if they were fulfilling the requirements of the corrective action plan," Smith said.

But in May 2006, the board affirmed NECC to be in compliance with the consent agreement.

Smith also believes the board would have acted immediately against NECC last July -- a month before it produced the final doses of steroid injections linked to the outbreak -- if board staff had told board members about a complaint against NECC brought by Colorado authorities.

Earlier this month, the state fired board director James Coffey and board counsel Susan Manning for failing to act on the Colorado complaint.

The Massachusetts pharmacy board was left to oversee NECC's operations in 2003 when state and FDA officials agreed that its activities did not constitute a manufacturing operation that would need to meet stringent federal standards for safety and efficacy, the FDA acknowledged on Tuesday.

The decision was originally disclosed on Monday by a House Republican staff report.

Where to draw the line between drug manufacturing and drug compounding is a central question for Congress as lawmakers debate the potential need for new legislation to expand the FDA's authority.

Drug compounding is a little-known practice in which pharmacists traditionally alter or recombine drugs to meet the special needs of specific patients. It is overseen mainly by state authorities who are often ill-equipped for the job.

The activity has evolved in recent decades to include large-scale production that some experts view as drug manufacturing that should be subject to FDA regulation.

Not everyone agrees that the FDA needed new authority to stop New England Compounding Center from operating, however.

Advocacy group Public Citizen earlier this month called on the Obama administration to launch an independent probe of the FDA's lack of action against NECC. The group alleges that the FDA already has the authority it needs, but that agency officials failed to take steps that could have prevented the current outbreak.

Smith's written testimony also shows that NECC co-owner Barry Cadden was named to a state task force to study oversight of the compounding pharmacy industry in 2002. The task force met for two years and discussed potential regulatory changes.

But there is no record of formal recommendations and no changes were ever adopted.

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