503B Facilities Help Address Drug Shortages

Pharmacy Practice in Focus: Health SystemsMarch 2022
Volume 11
Issue 2

Leveraging automation capabilities and operational capacity at scale, they bridge gaps and mitigate the impact of disruptions.

A recent survey of health system pharmacy leaders and frontline staff showed that 94%1 of respondents have been affected by pharmaceutical supply interruptions over the past 18 months or longer. Severe production outages arising from natural disasters, manufacturing quality issues, raw materials sourcing, and now a global pandemic have served as a clarion call to address supply fragility and ensure sustainable access to high-quality medications.

In and out of a pandemic, a multifactorial approach is critical to combating drug shortages. Although no silver bullet exists, outsourced 503B compounding facilities can help to bridge gaps and to mitigate the impact of continuing drug supply disruptions.

Passed in 2013, the Drug Quality and Security Act allows 503B outsourcing facilities to compound certain products in anticipation of providers’ needs and based on meeting certain FDA requirements.2 503B outsourcing facilities differ from other compounders in that they:

  • are inspected by the FDA according to a risk-based schedule;
  • can source compounded drugs to clinics, hospitals, and specialists without a patient-specific prescription;
  • must comply with the FDA’s Current Good Manufacturing Practice (CGMP) requirements; and
  • must meet other conditions, such as reporting adverse events and providing the FDA with specific information about the products that are compounded.

With their automation capabilities and operational capacity, 503B outsourcing facilities streamline anticipatory batch compounding for large-volume sterile and nonsterile drug products and produce medications on the FDA’s drug shortage list. The facilities work with active pharmaceutical ingredients and raw materials meeting a CGMP standard so patients and providers have access to drugs that would otherwise be unavailable. In addition to producing in bulk, a 503B compounding facility can typically increase the manufacture of a drug within 5 to 6 weeks of its appearance on the FDA shortage list,3 helping reduce supply disruptions and price impacts.

As pharmacy leaders and teams are increasingly asked to do more with less, health system and hospital pharmacies with established 503B relationships can
be vital. Throughout COVID-19, provider teams with limited resources and staff
have turned to 503B facilities for help with production of laborious or infrequently used medications. This has provided an alternative supply option with high product certainty and quality. By committing to obtaining certain volumes of needed drugs from their 503B partners, pharmacies help to mitigate reflexive purchasing and to manage demand, which can reduce cost and waste.

The FDA has increasingly recognized the value of 503Bs, issuing a series of guidance documents in April 2020 for compounders to temporarily address shortages under certain circumstances.4 Overall, the FDA exercised regulatory flexibility 110 times in 2020 to address drug shortages for 78 products,5 but more must be done. Pharmaceutical suppliers agree; a recent Premier Inc survey of more than 50 drug manufacturers ranked expedited approvals as the single most effective strategy for alleviating drug shortages.1

Lessons learned throughout the pandemic show that many flexibilities could be implemented effectively and safely to mitigate drug shortages in more ordinary times. The FDA should allow 503Bs to continue producing certain drugs not on the shortage list, based on specific criteria such as regional or short-term shortages or demand surges for certain dosage strengths or packaging sizes. This waiver proved particularly helpful during the pandemic. It allowed 503B compounders to quickly and seamlessly fill capacity gaps and alleviate spot shortages before they became severe enough to spread nationwide and onto the FDA drug shortage list.

The FDA should permanently abandon the arbitrary geographical limitation known as the “1-mile radius” provision for hospital compounding. This waiver allows hospitals to consolidate pharmacy services into a single hub to preserve personal protective equipment, maximize use of available pharmacy staff, and avoid compounding at the patient bedside, which can lead to increased rates of medication errors.

Moving forward, the FDA should adopt a time-based standard rooted in scientific evidence for the stability and sterility of the compounded product.

Finally, the Coronavirus Aid, Relief, and Economic Security Act requires drug manufacturers to provide the FDA with additional information about supply disruptions, including the likely duration and severity of shortages.6 If the FDA adds such details to its drug shortage list, outsourcing facilities may decide to compound other vital products that they otherwise would not.

These policy levers are important tools in our arsenal against drug shortages, and they must be complemented by private-sector solutions that create the right economic incentives for new market entrants and healthy competition.

Compounding pharmacies are accredited, highly qualified institutions that are well positioned to respond effectively and swiftly to drug shortages. 503Bs can play an important role in enhancing pharmacy supply chain resiliency during COVID-19 and beyond.

Mike Wascovich, PharmD, MBA, RPh, is vice president for pharmacy field services at Premier Inc in Charlotte, North Carolina.


1. INSCRIPT. Drug shortages: pervasive challenges, proven solutions. Premier Inc. February 2022. Accessed February 22, 2022. https://offers.premierinc.com/rs/381-NBB-525/images/PremierRx_INSCRIPTDrugShort- ages.pdf

2. Information for outsourcing facilities. FDA. Updated September
10, 2020. Accessed February 22, 2022. https://www.fda.gov/drugs/ human-drug-compounding/information-outsourcing-facilities

3. Why 503B pharmacies are indispensable during drug shortages. Olympia Pharmaceuticals. Accessed February 22, 2022. https://www.olympiapharmacy.com/resources/drug-shortage-info/

4. Temporary policy for compounding of certain drugs for hospitalized patients by outsourcing facilities during the COVID-19 public health emergency. FDA. April 2020. Accessed February 22, 2022. https://www.fda.gov/regulatory-information/search-fda-guidance-documents/temporary-policy-compounding-certain-drugs-hospitalized-patients-outsourcing-facilities-during-covid

5. Broughel J. Allowing compounding pharmacies to address drug shortages. Mercatus Center at George Mason University. November 1, 2021. Accessed February 22, 2022. https://www.mercatus.org/publications/healthcare/allowing-compounding-pharmacies-address-drug-shortages

6. Coronavirus Aid, Relief, and Economic Security Act, 15 USC §9001 (2020). Accessed February 22, 2022. https://www.congress.gov/116/plaws/publ136/PLAW-116publ136.pdf

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