About Compounding

Compounding allows pharmacists to create customized medication for an individual patient pursuant to a prescription. Pharmacists’ ability to compound medications is authorized in federal law for good reason: Manufactured drugs don’t come in dosages that are right for everyone, and prescribers must be able to prescribe customized medications when, in their judgment, a manufactured drug is not the best course of therapy for a patient or the appropriate FDA-approved drug is not available.

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What is Compounding?

Traditional Compounding

In traditional compounding, a pharmacist creates a customized medication, most often from an active pharmaceutical ingredient, for an individual patient based on a prescription from a licensed provider. Pharmacists’ ability to compound medications from pure ingredients is authorized in federal law and FDA guidance in two circumstances:

Appropriateness: Manufactured drugs don’t come in strengths and dosage forms appropriate for everyone, and providers must be able to prescribe a customized medication when a commercially available FDA-approved drug does not come in a dosage form, strength, or combination the provider judges right for a particular patient.

Accessibility: To assure continuity of patient care during a drug shortage, providers may prescribe a compounded version of an FDA-approved drug when the FDA-approved drug appears on the FDA Drug Shortages list.

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Working with a prescriber, a compounding pharmacist can prepare customized medications that meet the individual needs of children, adults, and animals:

When the patient is allergic to certain preservatives, dyes, or binders in available off-the-shelf medications.
When treatment requires tailored dosage strengths or delivery forms.
When combining several medications can increase adherence.
When a patient cannot ingest the medication in its commercially available form.
When medications require flavor additives to make them more palatable for patients.
When a manufactured drug is listed as “currently in shortage” by FDA.

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Outsourcing Facilities

Compounded medications are also prepared by entities known as outsourcing facilities. These compounding pharmacies typically make medicines in bulk for hospitals and clinics. Outsourcing facilities must adhere to manufacturing standards called Current Good Manufacturing Practices, which are much like those that govern manufacturers of FDA-approved drugs. As a result, federal law allows outsourcing facilities to prepare much larger batches of compounded drugs without a patient-specific prescription and to distribute those medicines to hospitals and clinics for administration in-clinic by a physician or other provider.

That’s an important distinction between traditional and outsourcing pharmacies: Traditional compounding pharmacies dispense compounded drugs pursuant to a prescription. Outsourcing facilities distribute compounded drugs to health care facilities without the need for a patient-specific prescription. Given the prevalence of drug shortages today, many American hospitals and clinics rely on compounded drugs prepared by outsourcing facilities to preserve the lives of patients they serve.

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Outsourcing facilities differ from traditional compounding pharmacies in that they:

Can source compounded drugs in bulk to hospitals and physician specialists and clinics without a patient-specific prescription.
Must comply with current good manufacturing practice (CGMP) requirements.
Are inspected by FDA according to a risk-based schedule.
Must meet certain other conditions such as reporting adverse events and providing FDA with certain information about the products they compound.

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For generations, pharmacy compounders have played a vital role in American healthcare by preparing essential, personalized medications for patients with needs ranging from autism and oncology to dermatology, hormone therapy, and animal care.

How Is Compounding Regulated?

Legal Foundation

When Congress wrote the Federal Food, Drug and Cosmetic Act, it included section 503A, which specifically and intentionally exempted compounded medications from FDA approval. It is a practical and logical impossibility to test a single drug formulation, created for a specific patient, in the same way that you would test a mass-produced drug. Congress understood that.

Strict Standards

Still, compounding pharmacies must adhere to high standards of quality and compliance. Every one of the ingredients that compounding pharmacies use must come from FDA-registered facilities and manufacturers. Compounding labs and the equipment in them are subject to exacting regulation and are inspected by state boards of pharmacy and by the FDA.

State & Federal

All traditional compounding pharmacies and pharmacists are licensed and regulated by state boards of pharmacy. State boards of pharmacy regulate the practice of pharmacy compounding; FDA regulates the substances that can be compounded and compounded products.

USP Mandates

Practice standards set by the United States Pharmacopeial Convention (USP) are integrated into the day-to-day practices of compounding pharmacies and are mandated by law in most states.

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Find out how to identify a legitimate compounding pharmacy.

Learn more

The NASEM Report: Troubling, at Best

A 2020 FDA-funded report on compounded hormones from the National Academies of Science, Engineering and Medicine recommends across-the-board restrictions on compounded hormones. These restrictions would undermine physicians’ professional judgment and interfere with the practice of medicine, and could prove catastrophic for millions of patients who benefit from those therapies. But that NASEM report is compromised by potential bias, conflicts of interest, and bad science.

Download APC's Response to the NASEM Report Explore the NASEM Report's flaws

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Compounding

Frequently Asked Questions

What is a compounding pharmacy? How does it differ from a regular pharmacy?

There are two types of compounding pharmacies. Traditional compounding pharmacies make custom, tailored medications and dispense them to individual patients based on a prescription from the patient’s doctor or provider. Outsourcing facilities create compounded medicines in bulk — no prescription required — and distribute them to hospitals and clinics — and for certain drugs, to traditional compounding pharmacies as well.
In both cases, compounding is customized health care, creating medicines for individual patients under two circumstances:

Appropriateness: Manufactured drugs don’t come in strengths and dosage forms that are appropriate for everyone. Providers must be able to prescribe a customized medication when a commercially available FDA-approved drug does not come in a dosage form, strength, or combination the provider judges right for a particular patient.

Accessibility: To assure continuity of patient care when a drug is not accessible, a prescriber may prescribe a compounded version of any FDA-approved drug when the FDA-approved drug appears on the FDA Drug Shortages list.

Traditional compounded drugs are not knock-offs, dupes, or counterfeits. Compounding pharmacies simply create personalized, customized medications and treatments based on qualified prescribers’ orders.

Are compounding pharmacies regulated like regular pharmacies?

Yes, compounding pharmacies are rigorously regulated and inspected; they adhere to the stringent compounding standards of the US Pharmacopeia; they are licensed by state boards of pharmacy, and are inspected by those state boards and often by FDA as well. Every one of the active ingredients that compounding pharmacies use must come from FDA-registered facilities and manufacturers.

What is the turnaround time for compounded prescriptions?

Compounded prescriptions have to be compounded by hand for individual patients. Most compounding pharmacies keep some of the frequently used compounds made in advance so patients can get their medications as quickly as possible. However, some compounds can only be made when a prescriber’s order is placed, which can take longer than simply grabbing pills off a shelf.

Does insurance cover my compound?

It depends. Generally compounding pharmacies have been excluded from insurance networks, which means they typically don’t file your insurance claim directly. In most cases, compounding pharmacies can provide you the information you need to file a claim with your insurance company. The good news is many times compounded medications are in the same price range of a typical insurance copay or generic drug.

Are compounding pharmacies FDA-approved?

The FDA is responsible for approving individual medications, not overseeing pharmacies. Traditional pharmacies and compounding pharmacies are overseen by State Boards of Pharmacy, and compounding pharmacies are governed and overseen by all the same boards and bodies as traditional pharmacies.

The FDA is responsible for regulating manufactured drugs. It does not approve compounded medicines. It is a practical impossibility to trial compounded drugs in the same way that manufactured drugs are tested — how could they since a compounded medicine is created for one unique patient. The critical thing to note, however, is that the lack of FDA approval does not mean a drug is unsafe.

Do medications from compounding pharmacies work?

These medications are carefully formulated and created for each individual patient, which typically provides an even more targeted therapy for the patient. Another benefit of compounding pharmacies is that if the medication doesn’t work as originally prescribed, they can work closely with the patient and prescriber to find the right formulation of their customized medication.

Do compounding pharmacies have a sterile room?

Compounding pharmacies can prepare both sterile and non-sterile compounded medications. Non-sterile dosage forms include topical creams, oral tablets and capsules, and suppositories — essentially, medications used in or on parts of the body where sterility is not necessary for patient safety. Sterile preparations have much stricter compounding standards and requirements to ensure that no microorganisms or other potential contaminants are present. Sterile compounds include ophthalmic solutions, injectables, or parenteral nutrition.

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