FDA Revises Compounding Guidance

Health-System Edition, November 2021, Volume 10, Issue 6

Agency's interpretation may significantly affect how health systems and hospitals provide pharmaceuticals to patients.

In this issue, my colleague Sharyl Zaccaglino, MS, director of research quality and compliance at the University of Rochester Medical Center in New York, provides a succinct overview of the requirements of section 503B on outsourcing pharmacies.

Her summary is timely given that on October 7, 2021, the FDA published revised guidance titled “Hospital and Health System Compounding Under Section 503A of the Federal Food, Drug, and Cosmetic Act” in the Federal Register.1 When finalized, this guidance could have a significant effect on the number of health systems and hospitals providing pharmaceuticals for the care of patients within their facilities and may lead to increased reliance on 503B outsourcing pharmacies. Immediately after the release of this revised guidance, many were happy to learn that the absurd and arbitrary “1-mile rule” was dropped. However, we should be cautious in our celebration because other limitations are being introduced with this revision that, depending on interpretation, could greatly limit pharmacy practice.

Probably the single most important issue to understand with this guidance is the FDA’s definition of a compounded drug and how that may contrast with how local boards of pharmacy and pharmacy professionals interpret the term.

In the guidance, the FDA speaks about a compounded drug as a product used for patients “whose medical needs cannot be met by an FDA-approved drug product….” They go on to say that “compounded drugs are not FDA approved…” and that “…compounded drug products should only be used when an FDA-approved product is not available to meet the needs of an individual patient.”

In other words, a health system pharmacy that prepares an FDA-approved drug in accordance with its labeling and according to United States Pharmacopeia (USP) standards for stability, sterility, and storage is not preparing a compounded drug product and those activities should be outside the scope of the guidance. This guidance is specifically concerned with the preparation of drug products that are not FDA approved by a health system or hospital pharmacy that is not registered as a 503B outsourcing pharmacy for the treatment of patient-specific needs, as documented by a patient prescription or order.

Most pharmacists in health systems and hospitals refer to the preparation of nonsterile and sterile FDA-approved drugs as “compounding.” However, the FDA is quite clear in that this guidance is specifically concerned with the extemporaneous compounding of drug products that the agency has not approved. Of course, altering an FDA-approved drug to meet unique needs, such as using tablets to prepare an oral suspension, meets the definition of compounding under this guidance. We should interpret and apply this guidance, once finalized, according to its stated intent.

The document goes on to state that the FDA has limited enforcement resources and that it will be selective in its enforcement priorities according to criteria detailed in the document. This can also be interpreted as enforcement for compliance with 503A requirements for health systems and hospitals, which will remain primarily with local boards of pharmacy. It is reasonable to anticipate that this guidance will be adopted by the state boards and maybe even before it has been finalized by the FDA.

The challenge is that state boards of pharmacy may apply very different definitions of compounding than is presumably intended by this guidance.

For example, in New York State, where I practice, our board defines compounding as the “combining, admixing, mixing, diluting, pooling, reconstituting, or otherwise altering of a drug or bulk drug substance to create a drug.”2

This has been broadly interpreted to mean that even adding water to an FDA-approved amoxicillin suspension consistent with the approved label is “compounding.” Under this draft guidance, this product reconstituted in a hospital pharmacy would need to be discarded after 24 hours, despite the FDA-approved label indicating that the drug is stable for at least 10 days.

More importantly, it is likely that the New York State Board of Pharmacy, and probably boards of pharmacy in many other states, will interpret any preparation of an FDA-approved drug product in a clean room as “compounding” under this guidance, which is arguably not the intent.

During the comment period, we should implore the FDA to clearly define what is meant by a compounded drug and ask that the intent of this guidance be limited to that category of drug products not approved by the agency. The preparation, storage, and distribution of FDA-approved drugs compliant with regulatory guidance and standards established by the FDA, Joint Commission, and USP should not be restricted further by this guidance.

The guidance is clearly intended to compel health systems to rely on 503B registered outsourcing pharmacies for most compounding needs, based upon the assumption that FDA-regulated pharmacies will lead to higher quality and patient safety. Ironically, all the examples cited in terms of patient safety issues were from outsourced pharmacy providers, not health system or hospital pharmacy providers.

As I have written previously in this column, outsourcing pharmacies have found a loophole in the federal regulations that allows them to compound products using bulk active pharmaceutical ingredients without an approved drug application. This is essentially creating a shadow pharmaceutical industry without the safeguards intended by the Food, Drug, and Cosmetic Act, which the FDA is responsible for upholding.3 In fact, it is becoming difficult to find outsourced products that are not compounded using active pharmaceutical ingredients, despite no shortage of FDA-approved drugs. I suspect this is being driven by profit at the potential expense of patient safety. For those of us who do not wish to partake in this quasi-legal pharmaceutical industry, a broad application of this guidance by local boards of pharmacy may force our hands. The good news is that if history is any indicator, it will likely take the FDA several years to finalize the guidance.

Curtis E. Haas, PharmD, FCCP, is the chief pharmacy officer for the University of Rochester health care system in New York.


  1. Hospital and health system compounding under section 503A of the Federal Food, Drug, and Cosmetic Act. FDA. October 2021. Accessed October 28, 2021. https://www.federalregister.gov/ documents/2021/10/07/2021-21970/hospital-and-health-system-compounding-under-section-503a-of-the-federal-food-drug-and-cosmetic-act
  2. Regulations of the Commissioner: part 63, pharmacy and registered pharmacy technicians. New York State Department of Education, Office of the Professions. U pdated April 13, 2021. Accessed October 28, 2021. http://www.op.nysed.gov/prof/pharm/part63.htm#6314
  3. Haas CE. API sourcing: is this really a good idea? Pharmacy Times®. Directions in Health-System PharmacyTM. November 17, 2019. Accessed October 28, 2021. https:// www.pharmacytimes.com/publications/health-system-edition/2019/November2019/ api-sourcing-is-this-really-a-good-idea