Federal Authority to Regulate the Compounding of Human Drugs

Andrew Nolan
Legislative Attorney

In light of the 2012 fungal meningitis outbreak, believed to have been caused by a contaminated compounded steroid injection, the regulation of human drug compounding has received significant attention. Drug compounding in its traditional form is the process of combining, mixing, or altering ingredients in order to create a medication for a particular patient. However, as illustrated by the entity that created the steroid medication linked with the meningitis outbreak, concerns have been raised about compounding pharmacies producing drugs on a larger scale. While drug compounding has historically been the focus of state governments through their regulation of pharmacies, questions have arisen regarding the extent the federal government can regulate the practice of compounding through the Food, Drug, and Cosmetic Act (FDCA).

Federal authority over compounding largely stems from the FDCA, enacted in 1938, and its subsequent amendments, including the Food and Drug Administration Modernization Act (FDAMA) of 1997, which added compounding specific provisions to the FDCA in section 503A. A First Amendment challenge to section 503A’s advertising provisions and a resulting Supreme Court decision has created a split amongst the federal courts regarding whether section 503A has any legal effect. The legal uncertainty regarding section 503A, coupled with section 503A’s basis in the FDCA’s “new drug,” “adulteration,” and “misbranding” provisions lends to an examination of the scope of federal authority under the base statute. Courts appear to agree that the federal government can regulate compounding activity that is akin to manufacturing, and courts have afforded deference to the FDA’s interpretation of when a compounder is acting like a manufacturer. However, uncertainty remains regarding the possible limits to the FDA’s power to regulate traditional compounding activities. This report will examine the FDA’s regulation of drug compounding and will discuss relevant legal authorities. The report will conclude by discussing potential limits to the FDA’s authority to regulate human drug compounding.


Date of Report: April 12, 2013
Number of Pages: 16
Order Number: R43038
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State Legalization of Recreational Marijuana: Selected Legal Issues

Todd Garvey
Legislative Attorney

Brian T. Yeh
Legislative Attorney

May a state authorize the use of marijuana for recreational purposes even if such use is forbidden by federal law? This novel and unresolved legal question has vexed judges, politicians, and legal scholars, and it has also generated considerable public debate among supporters and opponents of “legalizing” the recreational use of marijuana.

Under the federal Controlled Substances Act (CSA), the cultivation, distribution, and possession of marijuana are prohibited for any reason other than to engage in federally approved research. Yet 18 states and the District of Columbia currently exempt qualified users of medicinal marijuana from penalties imposed under state law. In addition, Colorado and Washington recently became the first states to legalize, regulate, and tax small amounts of marijuana for nonmedicinal (so-called “recreational”) use by individuals over the age of 21. Thus, the current legal status of marijuana appears to be both contradictory and in a state of flux: as a matter of federal law, activities related to marijuana are generally prohibited and punishable by criminal penalties, whereas at the state level, certain marijuana usage is increasingly being permitted. Individuals and businesses engaging in marijuana-related activities that are authorized by state law nonetheless remain subject to federal criminal prosecution or other consequences under federal law.

The Colorado and Washington laws that legalize, regulate, and tax an activity the federal government expressly prohibits appear to be logically inconsistent with established federal policy toward marijuana, and are therefore likely subject to a legal challenge under the constitutional doctrine of preemption. This doctrine generally prevents states from enacting laws that are inconsistent with federal law. Under the Supremacy Clause, state laws that conflict with federal law are generally preempted and therefore void and without effect. Yet Congress intended that the CSA would not displace all state laws associated with controlled substances, as it wanted to preserve a role for the states in regulating controlled substances. States thus remain free to pass laws relating to marijuana, or any other controlled substance, so long as they do not create a “positive conflict” with federal law, such that the two laws “cannot consistently stand together.”

This report summarizes the Washington and Colorado marijuana legalization laws and evaluates whether, or the extent to which, they may be preempted by the CSA or by international agreements. It also highlights potential responses to these recent legalization initiatives by the U.S. Department of Justice (DOJ) and identifies other noncriminal consequences that marijuana users may face under federal law. Finally, the report closes with a description of legislative proposals introduced in the 113th Congress relating to the treatment of marijuana under federal law, including H.R. 499 (Ending Federal Marijuana Prohibition Act of 2013); H.R. 501 (Marijuana Tax Equity Act of 2013); H.R. 689 (States’ Medical Marijuana Patient Protection Act); H.R. 710 (Truth in Trials Act); H.R. 784 (States’ Medical Marijuana Property Rights Protection Act); and H.R. 964 (Respect States’ and Citizens’ Rights Act of 2013).


Date of Report: April 5, 2013
Number of Pages: 32
Order Number: R43034
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Health Care for Dependents and Survivors of Veterans

Sidath Viranga Panangala
Specialist in Veterans Policy

The Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) was established by the Veterans Health Care Expansion Act of 1973 (P.L. 93-82). CHAMPVA is primarily a health insurance program where certain eligible dependents and survivors of veterans receive care from private sector health care providers. 

Eligibility 

To be eligible for CHAMPVA benefits, the beneficiary must be the spouse or child of a veteran who has a total and permanent service-connected disability, or the widowed spouse or child of a veteran who (1) died as a result of a service-connected disability; or (2) had a total, permanent disability resulting from a service-connected condition at the time of death; or (3) died while on active duty status and in the line of duty; and does not qualify for health care under the Department of Defense (DOD) TRICARE program. The Caregivers and Veterans Omnibus Health Services Act of 2010 (P.L. 111-163) expanded CHAMPVA benefits for primary caregivers of certain seriously injured veterans if they do not have any other form of health insurance. Under current law a child (other than a helpless child) loses eligibility when (1) the child turns 18, unless enrolled in an accredited school as a full-time student; or (2) the child, who has been a full-time student, turns 23 or loses full-time student status; or (3) the child marries. 

Benefits 

The CHAMPVA program covers most health care services and supplies that are determined to be medically necessary, including inpatient and outpatient care, prescription drugs, mental health services, and skilled nursing care. Certain types of care require advance approval, commonly known as preauthorization. Currently, preauthorization is required for durable medical equipment, hospice services, mental health/substance abuse services, organ and bone marrow transplants, and dental procedures that are directly related to covered medical conditions. 

Payments 

CHAMPVA beneficiaries usually pay 25% of the cost of medical care up to an annual catastrophic cap of $3,000 plus an annual outpatient deductible of $50 per individual or $100 per family. CHAMPVA pays the remaining 75% of the cost of the beneficiaries’ medical care. CHAMPVA is generally a secondary payer to other health insurance coverage and Medicare. CHAMPVA is the primary payer for Medicaid, Indian Health Service, and State Victims of Crime Compensation Programs.


Date of Report: April 4, 2013
Number of Pages: 16
Order Number: RS22483
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Medicaid: A Primer

Elicia J. Herz
Specialist in Health Care Financing

In existence for 48 years, Medicaid is a means-tested entitlement program that financed the delivery of primary and acute medical services as well as long-term care to more than 71 million people in FY2012. The estimated annual cost to the federal and state governments was roughly $432 billion in FY2011. In comparison, the Medicare program provided health care benefits to nearly 49 million seniors and certain persons with disabilities in CY2011, and cost roughly $560 billion in FY2011. Because Medicaid represents a large component of federal mandatory spending, Congress is likely to continue its oversight of Medicaid’s eligibility, benefits, and costs.

Understanding the complex statutory and regulatory rules that govern Medicaid is further complicated by the fact that each state designs and administers its own version of the program under broad federal rules. State variability is the rule rather than the exception in terms of eligibility levels, covered services, and how those services are reimbursed and delivered. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) makes both mandatory and optional changes to Medicaid along some of these dimensions.

This report describes the basic elements of Medicaid, focusing on the federal rules governing who is eligible, what services are covered, how the program is financed, how beneficiaries share in the cost of care, how providers are paid, and the role of special waivers in expanding eligibility and modifying benefits. Examples of both mandatory and optional eligibility groups and benefits as defined in the federal statute are described. Basic program statistics are also provided. Finally, selected legislative changes at the federal level via the ACA, and the Supreme Court decision in National Federation of Independent Business v. Sebelius announced on June 28, 2012, that affect Medicaid in significant ways are also described.


Date of Report: April 4, 2013
Number of Pages: 19
Order Number: RL33202
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Long-Term Services and Supports: Overview and Financing

Kirsten J. Colello
Specialist in Health and Aging Policy

Janemarie Mulvey
Specialist in Health Care Financing

Scott R. Talaga
Analyst in Health Care Financing

Long-term services and supports (LTSS) refer to a broad range of health and health-related services and supports that are needed by individuals over an extended period of time. The need for LTSS affects persons of all ages and is generally measured by limitations in an individual’s ability to perform daily personal care activities (e.g., eating, bathing, dressing, walking) or activities that allow individuals to live independently in the community (e.g., shopping, housework, meal preparation). Most individuals prefer to be cared for in their own homes with the assistance of informal providers such as family members or friends, if available. The most recent published data estimating the number of Americans in need of LTSS indicate that about 10.9 million individuals living in the community need LTSS, or 4.1% of the community-resident population. It was estimated another 1.8 million individuals needing LTSS live in an institutional setting, such as a nursing home.

LTSS include a variety of services and supports to assist an individual in maintaining an optimal level of functioning and/or improving his or her quality of life. Examples include a home health aide administering medication, a contractor building a wheelchair ramp onto a home, or a nursing facility where a person resides. LTSS also vary in cost and intensity, depending on the individual’s underlying conditions, the severity of his or her disabilities, the setting in which services are provided, and the caregiving arrangement (i.e., informal care versus formal care).

Formal, or paid, LTSS are a significant component of personal health care spending in the United States. In 2011, of the $2.3 trillion spent on all U.S. personal health care services, $317.1 billion (13.9%) was spent on LTSS. Spending for LTSS includes payments for services in nursing facilities and residential mental health and substance abuse facilities. Spending also includes LTSS provided in an individual’s own home, such as home health services as well as a wide range of home and community-based services (HCBS), including personal care, homemaker or chore services (e.g., housework or meal preparation), and adult day health services. A substantial amount of LTSS is also provided by informal caregivers––family and friends––who provide care without compensation. As a result, spending on LTSS may be underestimated, as spending data do not include uncompensated care provided by informal caregivers.

LTSS are paid by a variety of public and private sources. Public sources accounted for the majority (72.8%) of spending on LTSS in 2011 and include Medicaid, Medicare, and other public programs such as the Veterans Health Administration (VHA) and the State Children’s Health Insurance Program (CHIP). The remainder (27.2%) was paid by private sources, which include out-of-pocket spending, private insurance, and other charitable contributions. For 2011, Medicaid (combined federal and state spending) was the single largest payer of LTSS.

Given that the majority of LTSS are publicly funded with federal dollars, LTSS financing may be an important issue for Congress. On January 2, 2013, the President signed H.R. 8, the American Taxpayer Relief Act of 2012 (ATRA, P.L. 112-240). Among other things, ATRA established a Congressional Long-Term Care Commission, which is required to develop a plan for the establishment, implementation, and financing of an LTSS system. A vote on the developed plan and any legislative proposals is required six months after its establishment.

This report provides an overview of LTSS, including who needs LTSS, how need for LTSS is determined, and how much LTSS costs. The report also provides information on who the primary LTSS payers are, how much they spend, and what types of services are purchased.


Date of Report: April 4, 2013
Number of Pages: 28
Order Number: R42345
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