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Understanding 503 Compounding Pharmacies

Compounding pharmacies are specialized pharmacies that prepare customized medications for patients. These medications are typically not available commercially, either because they are not produced by pharmaceutical manufacturers or because the patient has unique needs that cannot be met by mass-produced medications.

vaccines on a fill line

The tragic events of 2012 at New England Compounding heightened the regulatory scrutiny associated with compounding pharmacies, as state pharmacy boards were proven to not have the ability to properly regulate these operations which have the potential to endanger public health. To better protect patients Federal Food, Drug, and Cosmetic Act (FDCA) Section 503A was revised and section 503B created to address outsourcing facilities.

FDCA now defines two main types of compounding pharmacies in the United States: 503A and 503B pharmacies.

503A pharmacies are traditional compounding pharmacies that are regulated by state pharmacy boards. They can prepare customized medications for individual patients or for small groups of patients with similar needs. The medications they prepare are typically based on a prescription from a healthcare provider, and they must comply with United States Pharmacopeial Convention (USP) <795> and <797> standards for compounding.

503B pharmacies, on the other hand, are more closely regulated by the FDA and are subject to Current Good Manufacturing Practices (cGMP) regulations. They are allowed to prepare larger batches of medications for use in hospitals, clinics, and other healthcare facilities. The medications they prepare must be sterile and comply with USP <795>, <797>, and <800> standards for compounding. This additional manufacturing capacity eases some of the pain of the healthcare system struggling with drug shortages. However, the entrants into the 503B compounding space are often not traditional manufacturers, accustomed to the rigors of current Good Manufacturing Practices or heightened quality standards for 503B compounders such as:

  • Federal registration required

  • Inspection authority embedded in Section 503B

  • Must compound a sterile human drug product

  • FDA inspections pursuant to FDA’s current Good Manufacturing Practices

The differences between the two types of facilities, 503A and 503B, are prescription requirements, safety and quality, cost savings, availability, liability, and regulatory authority.

While 503A facilities are exempt from cGMP (current good manufacturing practices) they are still subject to FDA inspections and USP <797> standards. With limited resources and rapidly advancing therapeutics, hospitals and health system pharmacies often find regulatory compliance challenging. In the healthcare environment FDA and USP Subject Matter Experts (SMEs) are rarely on staff, making it difficult to meet key requirements related to:

  • Separation of compounding and dispensing areas to prevent contamination

  • Compounding Cleanroom(s)

  • Environmental Monitoring

  • Equipment

  • Material Storage

  • Standard Operating Procedures (SOPs)

  • Quality control

Additionally, small scale manufacturing must be flexible and efficient, making the most of limited resources for many Hospital pharmacy business models to work.

To protect patient access to life saving medications and a valuable revenue stream - hospitals now more than ever need trusted partners to navigate the regulatory landscape.


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