Regulations Guiding Sterile Compounding Are Complex

Health-System Edition, July 2021, Volume 10, Issue 4

Understanding the categories is key to evaluating and making decisions about outsourcing products or improving internal production standards.

In 2013, the Drug Quality and Security Act (DQSA) was enacted in response to several cases of infections liked to contaminated steroid injections produced by New England Compounding Center in Framingham, Massachusetts, which led to at least 64 deaths and more than 700 injuries.1

The DQSA created requirements to increase tracking of pharmaceuticals through the supply chain process (Drug Supply Chain Security Act) and improve the quality of compounding processes through the Compounding Quality Act (CQA). The CQA gave the FDA more oversight authority over compounding pharmacies, specifically creating the 503B category of the federal Food, Drug, and Cosmetics Act (FDCA) for pharmacies to operate under established high-quality standards of current good manufacturing practices (cGMP) as outsourcing facilities. The act also reinstated section 503A of the FDCA, allowing a sterile compounding facility to operate under United States Pharmacopeia (USP) standards rather than the more rigorous cGMP under certain conditions.

BASICS OF 503A, 503B

Through the implementation of DQSA, 503A remained a designation by the FDA for overweight of sterile compounding by a licensed pharmacist within a state-licensed facility. Compounding is pursuant to a prescription or provider order in anticipation of the order. This anticipatory compounding is defined in FDA guidance documents as no more than a 30-day supply based on average or previous usage. With oversight by state boards of pharmacy, USP standards define beyond-use dates (BUDs) and environmental monitoring requirements.

The newly designated 503B compounding pharmacies were more aligned with manufacturing processes, typically in large batches, and not necessarily pursuant to a provider order. Assignments of BUDs and batch sizes are based on rigorous cGMP standards. All methods and processes must be validated, including initial stability and testing, before adding a product to the market availability. The 503B site is registered with and subject to inspection by the FDA, including any follow-up for reported deficiencies on form 483.


The increased FDA oversight has also generated several guidance documents. These publications are not legally enforceable regulations. They represent recommendations by the FDA for compliance with existing regulations and are intended to clarify the path to compliance. For example, there is guidance related to compounding "Essentially Copies of Approved Drug Products,"2 which prohibits attempts to duplicate a product with the same active pharmaceutical ingredient. The guidance also indicates the copy does not have to be exact, because "essential" covers nearly identical changes that might be viewed as clinically insignificant.

There are also draft guidance documents that are being finalized but represent the FDA's thought process. One example that received a great deal of attention around sterile compounding is "Hospital and Health System Compounding Under the Federal Food, Drug, and Cosmetic Act,"3 where a criterion for a 503A compounding pharmacy is that it must be within a 1-mile radius of the health care facility. This has created concern for some hospitals. The draft guidance clarifies that this is an attempt to limit production to a hospital campus rather than allowing a 503A facility to distribute across a larger geographic location and function as a manufacturer without applying the standards to ensure a higher level of quality.

The FDA has not yet released final guidance around this topic.


Evaluating the pros and cons related to moving from 503A to a registered 503B facility is a complex challenge that many health care systems (HCSs) face. The advantages of moving to a registered 503B can be attractive. From a quality perspective, applying cGMP standards can improve safety and reduce risk. This also includes a more extensive environmental monitoring and reporting program. Larger-scale production can reach outside the health care system, serving a large territory, even interstate. This can also result in improved efficiencies with larger and less frequent batches for a specific line item. BUDs may also be extended, and with future anticipated changes to USP General Chapter <797> in limiting BUDs, this may become more important. There is also extensive reporting required, including adverse event documentation, which improves safety profiles and tacking for compounded medications. All of this must be evaluated as a financial revenue model, because many of these advantages come with significantly increased costs. Health systems must be able to financially sustain this large-scale operation, which can be challenging and may result in a much larger, volume-driven expansion than what might be part of the strategic vision of a health care organization. There are restrictions to the products that can be produced under 503B, as well, including limitations to bulk source products, essential copies of an approved medication, and medications previously removed from the market.

The advantages of remaining in a 503A status should also be evaluated. Although production would have to remain within the health care system network, this allows for direct control over adherence to USP and quality standards, as well as for application of cGMP standards to further improve safety, exceeding the 503A requirements. This may include a robust environmental monitoring program, more aggressive potency and stability testing than required, and many other components of cGMP. Because compounding sterile products always carries a level of risk, limiting the distribution network can reduce the extent. Despite the smaller network of distribution, the cost savings compared with purchasing from an outsourcing company can be substantial. Medication shortage management can also be handled within the HCS, allowing for more nimble reaction to changes in the market.

Understanding the regulations that guide sterile compounding can be complex, and this is a cursory review, but it is essential for pharmacy leaders focused on quality and safety. Understanding the differences between 503A and 503B is a critical part of continuously improving internal production standards or evaluating and making the challenging decisions related to outsourcing products.


1. Multistate outbreak of fungal meningitis and other infections. CDC. October 30, 2015. Accessed June 16, 2021.

2. Compounded drug products that are essentially copies of approved drug products under Section 503B of the federal Food, Drug, and Cosmetic Act—guidance for industry. US Department of Health and Human Services. January 2018. Accessed June 16, 2021.,a%20clinical%20difference%2C%20as%20determined

3. Hospital and health system compounding under the federal Food, Drug, and Cosmetic Act guidance for industry. FDA. April 2016. Accessed June 16, 2021.

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