API Sourcing: Is This Really a Good Idea?

Pharmacy Times Health Systems Edition, November 2019, Volume 8, Issue 6

Health System Pharmacists Should Think About the Implications of Acquiring and Dispensing These Compounded Products.

My organization decided several years ago, following the New England Compounding Center (NECC) meningitis outbreak that began in September 2012, sickened more than 800 individuals, and resulted in more than 100 deaths, that we would develop the capability to insource all our sterile com- pounding needs and eliminate dependence on outsourcing pharmacies.

We built the facilities and recruited the expertise to develop a very high-quality program. Every time I learn about another recall by an outsourcing pharmacy because of questionable sterility or other quality concerns, I am thankful that we took those steps.

I realize that for health-system pharmacies that do not have the resources or have elected to not develop insourcing capabilities, outsourcing pharmacies continue to play a vital role in meeting their patient care needs. Therefore, the profession needs to remain vigilant regarding the quality of products acquired from these third-party vendors.

Several large outsourcing pharmacy operations, some of which are on contract with our group purchasing organization, regularly send me their catalogs, and I have been amazed to see the proliferation of compounded sterile products that are prepared from nonsterile bulk drug substances, also known as active pharmaceutical ingredients (APIs). Do the pharmacists ordering these products really think this is a good idea? Have they even given it much thought?

For a drug product compounded by an outsourcing facility to qualify for exemption under section 503B of the Federal Food, Drug, and Cosmetic Act, one condition that must be met is that the product not be compounded using a bulk drug substance unless (a) that substance appears on a list maintained by the secretary of the US Department of Health & Human Services, which identifies bulk drugs for which there is a recognized clinical need, or (b) the drug appears on the shortage list maintained by the FDA at the time of the compounding, distribution, and dispensing of the drug.1

Facilities qualifying under section 503B are permitted to compound drugs for nonpatient specific distribution, and section 503B does not place any restrictions on interstate commerce, so the restrictions on the use of APIs are intended to prevent outsourcing facilities from developing into conventional manufacturing operations that produce unapproved new drugs without complying with critically important requirements, such as new drug application standards.2 The current list of approved APIs for compounding by 503B registered facilities contains no approved drugs,3 and nearly all the agents listed in the catalogs I received were not on the FDA drug shortage list. So, how do these outsourcing pharmacies compound and market these products without violating federal law?

It turns out there is a loophole large enough to drive a truck delivering API-sourced products through. In January 2017, the FDA published a guidance document titled “Interim Policy on Compounding Using Bulk Drug Substances Under Section 503B of the Federal Food, Drug, and Cosmetic Act.” 4 A call for candidate drugs to be considered for inclusion on the approved list of bulk drug substances for compounding resulted in thousands of submissions. Of these, several hundred are considered to have been submitted with adequate evidence to be evaluated for inclusion on the 503B approved bulk drug list, and the FDA has not determined that the drug presents a significant safety risk when used in compounding. This list is referred to as the 503B Category 1 list (available at www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCompounding/UCM467374.pdf).

In the January 2017 guidance document, the FDA indicates no intention to take action against an outsourcing facility that is compounding with bulk drugs on the Category 1 list until it makes a final determination of which products will appear on the approved 503B bulk drug product list. This remarkable position basically permits 503B-registered outsourcing facilities to act as conventional manufacturing operations without the usual FDA oversight and approval, the very thing the 503B regulations were trying to avoid. So, for the foreseeable future, we will have unauthorized pharmaceutical manufacturers masquerading as 503B-compliant outsourcing facilities. To me, this sounds like a recipe for disaster.

So, what is the health-systems pharmacist’s responsibility? If registered 503B compounding facilities are compliant with other regulatory requirements, they must acquire API from FDA-registered manufacturers, and they are supposed to receive a certificate of analysis. However, given the recent recalls of angiotensin receptor blockers, histamine-2 receptor antagonists, and generic alprazolam, because of contamination with trace amounts of potential carcinogens in the API, I am not sure that these requirements give us a great deal of assurance that these products are safe.

In 2015, the American Society of Health-System Pharmacists (ASHP) published a guideline related to outsource compounding services. In it, the ASHP stated its belief “that the health care organization’s pharmacist-in-charge (eg, a pharmacy director) must take responsibility for patient outcomes from all medication-related activities performed at or for the organization’s work sites, whether they are carried out by the organization’s staff or by contractors.” 5

Based on this expectation of shared accountability for drug safety, are health-system pharmacists adequately completing their due diligence prior to acquiring API-sourced sterile compounded drugs? I suspect most are not, and many likely do not have the qualified resources to assess the overall safety of the operations of the outsourcing facility. It is also important to remember that the primary motive for the use of API instead of an FDA-approved drug source in the compounding process is financial, especially in the absence of drug shortages. The combination of financial motivation and the relaxation of the very regulatory standards developed to help prevent another NECC disaster is a slippery slope. I caution my colleagues to think long and hard about the implications of acquiring and dispensing API-sourced compounded products.


  • FD&C Act provisions that apply to human drug compounding. FDA website. www.fda.gov/drugs/human-drug-compounding/fdc-act-provisions-apply-hu- man-drug-compounding. Updated June 21, 2018. Accessed October 29, 2019.
  • Evaluation of bulk drug substances nominated for use in compounding under Section 503B of the Federal Food, Drug, and Cosmetic Act. FDA website. www.fda.gov/regulatory-information/search-fda-guidance-documents/ evaluation-bulk-drug-substances-nominated-use-compounding-under-sec- tion-503b-federal-food-drug-and. Updated March 15, 2019. Accessed October 29, 2019.
  • 503B bulks list. FDA website fda.gov/media/120692/download. Updated March 1, 2019. Accessed October 29, 2019.
  • FDA. Interim policy on compounding using bulk drug substances under section 503B of the Federal Food, Drug, and Cosmetic Act. www.fda.gov/regulatory-information/search-fda-guidance-documents/interim-policy-compound- ing-using-bulk-drug-substances-under-section-503b-federal-food-drug-and. Updated August 27, 2018. Accessed October 29, 2019.
  • ASHP guidelines on outsourcing sterile compounding services. Am J Health Syst Pharm. 2015;72(19):1664-1675. doi: 10.2146/sp150024.