Hospital and Health System Compounding Under Section 503A of the Federal Food, Drug, and Cosmetic Act Guidance for Industry

Administrative draft guidance, not enacted legislation. This captured publisher edition preserves the listed document and attachments; later developments are not independently consolidated.

Hospital and Health System
Compounding Under
Section 503A of the Federal
Food, Drug, and Cosmetic
Act
Guidance for Industry
DRAFT GUIDANCE
This guidance document is being distributed for comment purposes only.
Comments and suggestions regarding this draft document should be submitted within 60 days of
publication in the Federal Register of the notice announcing the availability of the draft
guidance. Submit electronic comments to https://www.regulations.gov. Submit written
comments to the Dockets Management Staff (HFA-305), Food and Drug Administration, 5630
Fishers Lane, Rm. 1061, Rockville, MD 20852. All comments should be identified with the
docket number listed in the notice of availability that publishes in the Federal Register.
For questions regarding this draft document, contact Tracy Rupp, 301-796-3100, Office of
Compounding Quality and Compliance (OCQC).
U.S. Department of Health and Human Services
Food and Drug Administration
Center for Drug Evaluation and Research (CDER)
Office of Compliance/Office of Compounding Quality and Compliance (OCQC)
October 2021
Compounding
Revision 1

Hospital and Health System
Compounding Under
Section 503A of the Federal
Food, Drug, and Cosmetic
Act
Guidance for Industry
Additional copies are available from:
Office of Communications, Division of Drug Information
Center for Drug Evaluation and Research
Food and Drug Administration
10001 New Hampshire Ave., Hillandale Bldg., 4 th Floor
Silver Spring, MD 20993-0002
Phone: 855-543-3784 or 301-796-3400; Fax: 301-431-6353
Email: druginfo@fda.hhs.gov
https://www.fda.gov/drugs/guidance-compliance-regulatory-information/guidances-drugs
U.S. Department of Health and Human Services
Food and Drug Administration
Center for Drug Evaluation and Research (CDER)
Office of Compliance/Office of Compounding Quality and Compliance (OCQC)
October 2021
Compounding
Revision 1

Contains Nonbinding Recommendations
Draft — Not for Implementation
TABLE OF CONTENTS
I. 	INTRODUCTION AND SCOPE .................................................................................... 1
II. 	BACKGROUND ............................................................................................................... 2
A. 	Compounding Under Section 503A of the FD&C Act ................................................................ 2
B. 	Risks Associated With Compounded Drug Products ................................................................. 3
C. 	Compounding by Hospitals and Health Systems ........................................................................ 5
1. Compounding Based on the Receipt of Valid Prescriptions (e.g., Chart Orders) for Individually
Identified Patients ................................................................................................................................ 5
2. Compounding of Drug Products That Are Essentially Copies ........................................................ 7
III. 	POLICY ............................................................................................................................. 8
A. 	The Prescription Requirement for Hospital and Health System Pharmacies Other Than
Outsourcing Facilities ............................................................................................................................ 9
1. Part 1: Circumstances When FDA Generally Does Not Intend To Take Action ............................ 9
2. Part 2: Risk-Based Factors for Regulatory Action ....................................................................... 10
B. 	Hospital and Health System Compounding of Drug Products That Are Essentially Copies
Under Section 503A of the FD&C Act ................................................................................................ 11

Contains Nonbinding Recommendations
Draft — Not for Implementation
1
Hospital and Health System Compounding Under Section 503A of	1
the Federal Food, Drug, and Cosmetic Act	2
Guidance for Industry1
3
4
5
This draft guidance, when finalized, will represent the current thinking of the Food and Drug Administration	6
(FDA or Agency) on this topic. It does not establish any rights for any person and is not binding on FDA	7
or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes	8
and regulations. To discuss an alternative approach, contact the FDA staff responsible for this guidance as	9
listed on the title page.	10
11
12
13
14
I. 	INTRODUCTION AND SCOPE	15
16
Pharmacies located within a hospital, or standalone pharmacies that are part of a health system,	17
frequently provide compounded drug products for administration within the hospital or health	18
system.2 Some of these compounders seek to compound drugs under section 503A of the	19
Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 353a) and others have registered	20
with the Food and Drug Administration (FDA, the Agency, or we) as outsourcing facilities and	21
are subject to section 503B of the FD&C Act (21 U.S.C. 353b).3	
22
23
This revised draft guidance describes how FDA intends to apply certain provisions of section	24
503A of the FD&C Act to human drug products that are compounded by state-licensed	25
pharmacies that are not outsourcing facilities for distribution within a hospital or health system.	26
First, the revised draft guidance addresses the requirement that compounding be based on the	27
receipt of a valid prescription order for an identified individual patient (section 503A(a) of the	28
FD&C Act). Second, it addresses the provision concerning compounded drug products that are	29
essentially copies of a commercially available drug product (section 503A(b)(1)(D) of the FD&C	30
Act). This guidance does not apply to human drug products compounded by outsourcing	31
facilities under section 503B of the FD&C Act, compounded drug products that are not	32
distributed for use within a hospital or health system, or drug products compounded for use in	33
animals.	34
35
36
1 This guidance has been prepared by multiple offices in the Center for Drug Evaluation and Research (CDER) and
in consultation with the Office of Regulatory Affairs at the Food and Drug Administration.
2 For the purposes of this guidance, the term health system means an organization that includes at least one hospital
and at least one group of physicians that provides comprehensive care (including primary and specialty care) who
are connected with each other and with the hospital through common ownership or joint management. See the
Agency for Healthcare Research and Quality’s web page “Compendium of U.S. Health Systems, 2018,” available at
https://www.ahrq.gov/chsp/data-resources/compendium.html.
3 Title I of the Drug Quality and Security Act created a new section 503B of the FD&C Act, entitled “Outsourcing
Facilities” (see Public Law 113-54, section 102(a), 127 Stat. 587, 587-588 (2013)).

Contains Nonbinding Recommendations
Draft — Not for Implementation
2
The contents of this document do not have the force and effect of law and are not meant to bind	37
the public in any way, unless specifically incorporated into a contract. This document is intended	38
only to provide clarity to the public regarding existing requirements under the law. FDA	39
guidance documents, including this guidance, should be viewed only as recommendations, unless	40
specific regulatory or statutory requirements are cited. The use of the word should in FDA	41
guidance means that something is suggested or recommended, but not required.	42
43
44
II. 	BACKGROUND	45
46
Sections 503A and 503B of the FD&C Act address human drug compounding.	47
48
A. 	Compounding Under Section 503A of the FD&C Act	49
50
Section 503A of the FD&C Act describes the conditions that must be satisfied for human drug	51
products compounded by a licensed pharmacist in a State licensed pharmacy or Federal facility,	52
or by a licensed physician, to be exempt from certain provisions of the FD&C Act:	53
54
• 	Section 501(a)(2)(B) (concerning current good manufacturing practice (CGMP)	55
requirements)	56
57
• 	Section 502(f)(1) (concerning the labeling of drugs with adequate directions for use)	58
59
• 	Section 505 (concerning the approval of drugs under new drug applications or	60
abbreviated new drug applications)	61
62
A list of the conditions in section 503A of the FD&C Act that must be met for a compounded	63
drug product to qualify for the exemptions in that section appears in the guidance for industry	64
Pharmacy Compounding of Human Drug Products Under Section 503A of the Federal Food,	65
Drug, and Cosmetic Act (June 2016, Revision 2).4	
66
67
One of the conditions that must be met for a compounded drug product to qualify for the	68
exemptions under section 503A of the FD&C Act is that it is compounded by a licensed	69
pharmacist in a State-licensed pharmacy or Federal facility, or by a licensed physician:	70
71
. . . for an identified individual patient based on the receipt of a valid prescription order	72
or a notation, approved by the prescribing practitioner, on the prescription order that a	73
compounded product is necessary for the identified patient.5	
74
75
This means that the drug product is compounded either: (1) after the receipt of a valid	76
prescription order for an identified individual patient;6 or (2) in limited quantities before the	77
receipt of a valid prescription order for an identified individual patient, if based on a history of	78
4 We update guidances periodically. For the most recent version of a guidance, check the FDA guidance web page
at https://www.fda.gov/regulatory-information/search-fda-guidance-documents.
5 See section 503A(a) of the FD&C Act.
6 See section 503A(a)(1) of the FD&C Act.

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the compounder receiving orders for the compounding of the drug product and in the context of	79
certain established relationships.7 Section 503A of the FD&C Act does not provide for a	80
compounded drug product leaving the compounding facility before the receipt of the	81
prescription. In December 2016, FDA issued a guidance for industry setting forth FDA’s policy	82
concerning the statutory prescription requirement at section 503A(a) of the FD&C Act, entitled	83
Prescription Requirement Under Section 503A of the Federal Food, Drug, and Cosmetic Act.8	
84
85
Another of the conditions in section 503A of the FD&C Act is that the drug product must be	86
compounded by a licensed pharmacist or a licensed physician that “does not compound regularly	87
or in inordinate amounts (as defined by [FDA]) any drug products that are essentially copies of a	88
commercially available drug product.”9 Section 503A of the FD&C Act further states that:	89
90
. . . the term ‘essentially a copy of a commercially available drug product’ does not	91
include a drug product in which there is a change, made for an identified individual	92
patient, which produces for that patient a significant difference, as determined by the	93
prescribing practitioner, between the compounded drug and the comparable commercially	94
available drug product.10	
95
96
FDA issued a guidance for industry that set forth FDA’s policies concerning the “essentially a	97
copy” provision under section 503A of the FD&C Act, Compounded Drug Products That Are	98
Essentially Copies of a Commercially Available Drug Product Under Section 503A of the	99
Federal Food, Drug, and Cosmetic Act (January 2018) (503A copies guidance).11	
100
101
B. 	Risks Associated With Compounded Drug Products	102
103
Compounded drug products can serve an important role for patients in hospitals and health	104
systems whose medical needs cannot be met by an FDA-approved drug product, such as a patient	105
who has an allergy and needs a medication to be made without a certain dye, or an elderly patient	106
or a child who cannot swallow a pill and needs a medicine in a liquid form that is not otherwise	107
available. Many hospital and health system pharmacies, for example, routinely compound oral	108
liquids from tablets or other dosage forms for use in pediatric units.12	
109
110
Although compounded drug products can serve an important need, they pose a higher risk to	111
patients than FDA-approved drug products. Compounded drug products are not FDA-approved,	112
which means they have not undergone FDA premarket review for safety, effectiveness, and	113
quality. For these reasons, compounded drug products should only be used when an FDA-	114
approved product is not available to meet the medical needs of an individual patient.	115
7 See section 503A(a)(2) of the FD&C Act.
8 Available on the FDA guidance web page.
9 See section 503A(b)(1)(D) of the FD&C Act.
10 See section 503A(b)(2) of the FD&C Act.
11 See footnote 8.
12 In this guidance, hospital pharmacy refers to a pharmacy that is connected to a hospital through common
ownership or joint management, and health system pharmacy refers to a pharmacy that is connected to a health
system by common ownership or joint management. A pharmacy may be both a hospital pharmacy and a health
system pharmacy. A hospital pharmacy or a health system pharmacy may also be an outsourcing facility. This
guidance applies to hospital pharmacies and health system pharmacies that are not also outsourcing facilities.

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116
In addition, licensed pharmacists and licensed physicians who compound drug products in	117
accordance with section 503A of the FD&C Act are not required to comply with CGMP	118
requirements (section 501(a)(2)(b) of the FD&C Act). Furthermore, FDA does not interact with	119
the vast majority of licensed pharmacists and licensed physicians who compound drug products	120
and seek to qualify for the exemptions under section 503A of the FD&C Act for the drug	121
products they compound because these compounders are not licensed by FDA and generally do	122
not register their compounding facilities with FDA. Therefore, FDA is often not aware of	123
potential problems with their compounded drug products or compounding practices unless it	124
receives a complaint such as a report of a serious adverse event or visible contamination.	125
126
In 2012, contaminated injectable drug products that a compounding pharmacy shipped to	127
patients and healthcare practitioners across the country caused a fungal meningitis outbreak that	128
resulted in over 60 deaths and over 750 cases of infection.13 This was the most serious of a long	129
history of outbreaks associated with contaminated compounded drug products.	130
131
Since the 2012 fungal meningitis outbreak, FDA has investigated numerous other outbreaks and	132
other serious adverse events, including deaths, associated with compounded drug products that	133
were contaminated or otherwise unsafe. For example, in 2019, FDA received a report	134
concerning seven patients who received an injectable drug product compounded with L-	135
glutathione and experienced adverse events consistent with reactions patients experience with	136
high levels of endotoxins. FDA’s testing of the L-glutathione samples confirmed higher levels	137
of endotoxin than is appropriate based on the dose of L-glutathione received intravenously. The	138
L-glutathione powder the compounding pharmacies received was labeled with “Caution: Dietary	139
Supplement” and should not have been used to compound sterile injectable drug products.14 In	140
2017, FDA received adverse event reports concerning at least 43 patients who were administered	141
eye injections of a compounded drug product during cataract surgery and later experienced	142
various adverse events, including vision impairment. FDA’s investigation revealed the presence	143
of an excipient in an amount that was much greater than what is found in FDA-approved	144
ophthalmic products.15	
145
146
FDA has also identified many pharmacies that compounded drug products under insanitary	147
conditions whereby the drug products may have been contaminated with filth or rendered	148
injurious to health and that shipped the compounded drug products made under these conditions	149
to patients and health care providers in large volumes across the country.16 The longer a	150
compounded drug product that is contaminated is held by a pharmacist or physician before	151
13 See the Centers for Disease Control and Prevention’s web page “Multistate Outbreak of Fungal Meningitis and
Other Infections,” available at http://www.cdc.gov/HAI/outbreaks/meningitis.html.
14 See FDA’s web page “FDA highlights concerns with using dietary ingredient glutathione to compound sterile
injectables,” available at https://www.fda.gov/drugs/human-drug-compounding/fda-highlights-concerns-using-
dietary-ingredient-glutathione-compound-sterile-injectables.
15 See FDA’s web page “FDA’s investigation into Guardian’s compounded triamcinolone-moxifloxacin drug
product,” available at https://www.fda.gov/drugs/human-drug-compounding/fdas-investigation-guardians-
compounded-triamcinolone-moxifloxacin-drug-product.
16 See FDA actions, including warning letters and injunctions related to insanitary conditions at compounding
facilities, on the Agency’s web page “Compounding: Inspections, Recalls, and other Actions,” available at
http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCompounding/ucm339771.htm.

Contains Nonbinding Recommendations
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distribution, or the longer it is held in inventory in a healthcare facility before administration, the	152
greater the likelihood of microbial proliferation and increased patient harm.	153
154
C. 	Compounding by Hospitals and Health Systems	155
156
To the extent that hospitals and health systems have a need for compounded drug products, FDA	157
encourages them to obtain such products from outsourcing facilities. Compounders	158
that elect to become outsourcing facilities must register with FDA, are subject to CGMP	159
requirements, and are inspected by FDA according to a risk-based schedule (section 503B of the	160
FD&C Act). This helps to mitigate the risk that their drug products will be contaminated or	161
otherwise made under substandard conditions.	162
163
However, we are aware that hospitals and health systems have a variety of distribution practices	164
for drug products that have been compounded in their pharmacies. For example, some	165
pharmacies compound drug products only for use in the hospital in which the pharmacy is	166
located (e.g., for the treatment of patients during a hospital admission, or for use in the hospital’s	167
emergency room), while some health system pharmacies distribute their drug products to other	168
facilities within their health system (e.g., to other hospitals, clinics, infusion centers, or long-term	169
care facilities within the health system).	170
171
Certain characteristics of hospital and health system pharmacies can differentiate them from	172
pharmacies that are not owned or managed by hospitals and health systems, and from	173
conventional manufacturers. For example, the scope of distribution of drug products	174
compounded by hospital and health system pharmacies is often limited, in that the pharmacies	175
generally compound drug products for practitioners who treat patients within the hospital or	176
health system and distribute the drug products only within the hospital or to related healthcare	177
system facilities that are generally located within close proximity to the pharmacy. Further,	178
when the hospital or health system and its pharmacy are connected by common ownership or	179
joint management, they may share recordkeeping systems and oversight that facilitate the	180
identification and investigation of adverse events or product quality issues associated with	181
compounded drugs.	182
183
1. 	Compounding Based on the Receipt of Valid Prescriptions (e.g., Chart Orders)	184
for Individually Identified Patients	185
186
In some cases, a hospital or health system pharmacy compounds drug products only after	187
receiving a prescription for an identified individual patient. Obtaining prescriptions for	188
individually identified patients accords with the prescription requirement in section 503A of the	189
FD&C Act and helps to ensure that compounded drug products are produced and distributed only	190
to patients with a medical need for the compounded drug product. We encourage all hospitals	191
and health systems to obtain prescriptions in accordance with section 503A of the FD&C Act.	192
193
We recognize, however, that hospital and health system pharmacies have sometimes also	194
compounded and distributed drug products within the hospital or health system before the receipt	195
of a patient-specific prescription, which would not satisfy the prescription requirement in section	196
503A of the FD&C Act. For example, a hospital or health system may maintain a supply of	197

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certain compounded drug products within the hospital or health system but outside of the	198
pharmacy (e.g., in an emergency department, operating room, or automated dispensing machine)	199
in anticipation of a patient presenting with a critical need for the drug when there is no time for	200
the patient to wait for the hospital pharmacy to receive a prescription or order for that patient	201
before providing the drug. The hospital or health system then documents the prescription or	202
order in the patient’s chart. To the extent that hospitals or health systems treat patients for whom	203
an FDA-approved product is unavailable or not medically appropriate and have a medical need	204
for non-patient-specific compounded drug products to be held before the patient who will receive	205
them is identified, they should obtain those drug products from outsourcing facilities.	206
Outsourcing facilities, which are subject to CGMP requirements and other conditions that help to	207
ensure drug quality and a clinical need for the drug products they compound from bulk drug	208
substances, may compound and distribute drug products to healthcare facilities without first	209
receiving prescriptions for identified individual patients.	210
211
We encourage hospitals and health systems to look to outsourcing facilities, or to register their	212
pharmacies as outsourcing facilities, when they wish to obtain non-patient-specific compounded	213
drug products.17	
214
215
FDA will make enforcement decisions on a case-by-case basis, recognizing that it needs to make	216
the best use of limited Agency resources. In considering action to achieve hospital and health	217
system compliance with the prescription requirement in section 503A of the FD&C Act, FDA	218
intends to focus on practices that pose the greatest risks to public health. FDA also intends to	219
prioritize actions that would protect both the integrity of the drug approval system on which	220
patients depend to protect drug quality, safety and effectiveness, and the important distinction	221
between compounding by outsourcing facilities and hospital and health system pharmacies that	222
are not outsourcing facilities.	223
224
FDA recognizes that outsourcing facilities may not always be able to meet medical needs for	225
non-patient-specific compounded drug products to be used in hospitals and health systems. On	226
the other hand, a health system pharmacy that compounds drug products without patient-specific	227
prescriptions for facilities within its health system could function as a large manufacturing	228
operation without the standards that normally apply to conventional manufacturers to help ensure	229
drug quality, safety, and effectiveness, and without the protections afforded by the prescription	230
requirement in section 503A of the FD&C Act. If such a pharmacy contaminates or otherwise	231
adulterates or misbrands drug products, these products have the potential to harm many patients.	232
The compounding of large quantities of unapproved drug products also has the potential to	233
17 To qualify for the exemptions under section 503B from sections 502(f)(1), 505, and 582 of the FD&C Act, drugs
compounded by outsourcing facilities must meet all the conditions of section 503B of the FD&C Act. Outsourcing
facilities must also comply with CGMP requirements in section 501(a)(2)(B) of the FD&C Act. For more
information for entities considering whether to register with FDA as an outsourcing facility under section 503B of
the FD&C Act, see FDA’s guidance for industry Guidance For Entities Considering Whether to Register As
Outsourcing Facilities Under Section 503B of the Federal Food, Drug, and Cosmetic Act (August 2015). For more
information about the process for registering as an outsourcing facility under section 503B of the FD&C Act, see the
Agency’s guidance for industry Registration of Human Drug Compounding Outsourcing Facilities Under Section
503B of the FD&C Act (November 2014).

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undermine the integrity of the drug approval process and the protections Congress sought to	234
create with outsourcing facility compounding.	235
236
Section III.A below discusses how FDA intends to prioritize enforcement of the prescription	237
requirement in section 503A of the FD&C Act with respect to hospitals and health systems based	238
on our current understanding of the risks.	239
240
2. 	Compounding of Drug Products That Are Essentially Copies	241
242
As stated above, to qualify for the exemptions under section 503A of the FD&C Act from	243
sections 501(a)(2)(B), 502(f)(1), and 505(a), a drug product must be compounded by a licensed	244
pharmacist or licensed physician who does not compound regularly or in inordinate amounts any	245
drug product that is essentially a copy of a commercially available drug product.18 Pursuant to	246
section 503A(b)(2) of the FD&C Act, a compounded drug product is not essentially a copy of a	247
commercially available drug product if a change is made to the commercially available drug	248
product for an identified individual patient, and the prescribing practitioner has determined that	249
the change will produce a significant difference for that patient. As described in FDA’s 503A	250
copies guidance, if a compounder intends to rely on such a determination to establish that a	251
compounded drug is not essentially a copy of a commercially available drug product, the	252
compounder should ensure that the determination is documented on the prescription. A drug	253
product is not considered to be commercially available if the drug product has been discontinued	254
and is no longer marketed or the drug product appears on the FDA drug shortage list in effect	255
under section 506E of the FD&C Act.	256
257
The restrictions on compounding drug products that are essentially copies of commercially	258
available drug products help to ensure that pharmacies, Federal facilities, and physicians do not	259
compound drug products under section 503A of the FD&C Act for use in patients who could use	260
an approved product. Compounding drug products that are essentially copies of these products	261
unnecessarily exposes patients to drug products that have not been shown to be safe and	262
effective. In addition to the immediate public health risks, the limitation in section 503A of the	263
FD&C Act on producing drug products that are essentially copies of a commercially available	264
drug product protects the integrity of the new drug and abbreviated new drug approval processes.	265
Applicants would be less likely to invest in, and seek approval of, innovative, lifesaving	266
medications if pharmacies could, after a drug is approved, compound “substitutes” that may be	267
less expensive because they have not gone through the drug approval process.	268
269
Accordingly, the “essentially a copy” provision of section 503A of the FD&C Act provides	270
important protections for public health. In general, FDA intends to apply the policies described	271
in the 503A copies guidance when it regulates compounding by hospital and health system	272
pharmacies that are not registered as outsourcing facilities. However, the Agency has also	273
concluded that certain compliance policies described in the 503A copies guidance regarding the	274
documentation of a prescriber’s determination of significant difference are appropriately	275
modified when drug products are compounded by hospital and health system pharmacies that are	276
not outsourcing facilities. In the hospital and health system setting, medication orders generally	277
18 See section 503A(b)(1)(D) of the FD&C Act.

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are for a limited amount of a drug product, to be used over a relatively brief period of time, and	278
medications may frequently need to be re-ordered or modified after an initial administration,	279
even though the patient and the condition that led the prescriber to order a compounded drug	280
product have not changed. Additionally, decisions about when and how to use medications are	281
often made under medication-use policies set by a pharmacy and therapeutics (P&T) committee	282
(or its equivalent) that prescribers are expected to follow.19 The P&T committees are comprised	283
of medical staff that develop policies to support the appropriate use of medications within the	284
hospital and health system. Such P&T committees are common in hospitals and health systems	285
and the activities they perform are a requirement for accreditation by some accrediting	286
organizations, such as The Joint Commission.20 For example, a P&T committee may determine	287
that all patients in a neonatal unit administered certain oral medications should receive a	288
compounded liquid dosage form because the approved drug product, available only in a tablet	289
formulation, is medically inappropriate for them.	290
291
Accordingly, at this time and based on our current understanding of the risks of compounded	292
drug products, section III below sets forth a compliance policy regarding the prescription	293
requirement and essentially a copy provision for drug products that are compounded by hospitals	294
and health system pharmacies under section 503A of the FD&C Act.	295
296
297
III. 	POLICY	298
299
In the discussion that follows, we describe our current intent regarding prioritizing our	300
enforcement resources with respect to drug compounding by hospital and health system	301
pharmacies that are not outsourcing facilities.	302
303
FDA will make enforcement decisions on a case-by-case basis, recognizing that the Agency is	304
unable, as a practical matter, to take enforcement action against every violation, and that it needs	305
to make the best use of limited Agency resources. FDA intends to prioritize enforcement based	306
on the considerations articulated in this guidance.	307
308
This guidance does not in any way alter the fact that compounded drugs must meet the	309
conditions in section 503A of the FD&C Act to qualify for the exemptions in that section. The	310
Agency retains discretion to pursue enforcement action at any time if hospital and health system	311
pharmacies that are not outsourcing facilities do not compound drugs in accordance with the	312
prescription requirement, or if a drug product that is essentially a copy of a commercially	313
19 For this guidance, the term pharmacy and therapeutics committee is an advisory committee that is responsible for
developing, managing, updating, and administering a formulary system. A formulary system is an ongoing process
whereby a health care organization, through its physicians, pharmacists, and other health care professionals,
establishes policies on the use of drug products and therapies and identifies drug products and therapies that are the
most medically appropriate and cost-effective to best serve the health interests of a given patient population. See the
American Society of Health-System Pharmacists, 2006, Principles of a Sound Drug Formulary System. In B
Hawkins, editor, Best Practices for Hospital & Health-System Pharmacy: Position & Guidance Documents of
ASHP, 2006-2007 Edition, Bethesda (MD): ASHP, 110–113.
20 The Medication Management Standards in The Joint Commission’s Hospital Accreditation Program (HAP)
require hospitals to have policies governing the use of medications within the facility. For additional information on
The Joint Commission, see the Commission’s website at https://www.jointcommission.org.

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available drug product is compounded regularly or in inordinate amounts, regardless of whether	314
such conduct would generally be a lower enforcement priority based on the priorities articulated	315
in this guidance.	316
317
A. 	The Prescription Requirement for Hospital and Health System Pharmacies	318
Other Than Outsourcing Facilities	319
320
To qualify for the exemptions from sections 501(a)(2)(B) (concerning CGMP requirements),	321
502(f)(1) (concerning labeling of drugs with adequate directions for use), and 505 (concerning	322
FDA approval of drugs under new drug applications or abbreviated new drug applications) of the	323
FD&C Act under section 503A of the FD&C Act, a drug product compounded by a licensed	324
pharmacist in a State-licensed pharmacy or Federal facility, or by a licensed physician, must be	325
compounded in accordance with all of the provisions of section 503A of the FD&C Act,	326
including when such compounding takes place in a hospital or health system pharmacy.	327
328
With respect to the prescription requirement in section 503A of the FD&C Act, FDA intends to	329
focus its regulatory attention on practices that, based on our current understanding of the risks of	330
compounded drug products, pose the greatest risks to public health.21 	We also intend to focus	331
enforcement to protect the integrity of the drug approval system on which patients depend to	332
protect drug quality, safety, and effectiveness, and the important distinction between	333
compounding by outsourcing facilities and by hospital and health system pharmacies that are not	334
outsourcing facilities.	335
336
FDA’s compliance policy regarding hospital and health system pharmacies that are not	337
outsourcing facilities falls into two parts: Part 1 describes limited circumstances in which the	338
Agency generally does not intend to take action. If the circumstances described in Part 1 are not	339
present, FDA generally intends to consider the risk-based factors for regulatory action described	340
in Part 2.	341
342
1. 	Part 1: Circumstances When FDA Generally Does Not Intend To Take Action	343
344
FDA generally does not intend to take action with respect to the prescription requirement in	345
section 503A of the FD&C Act if a hospital or health system pharmacy that is not an outsourcing	346
facility compounds and distributes a compounded drug product without first receiving a valid	347
prescription order (including a chart order) for an identified individual patient (see section	348
503A(a) of the FD&C Act) when the practice is strictly limited and controlled and the following	349
circumstances are present:	350
351
(1) The compounded drug products are administered only to patients within the hospital or	352
health system.22	
353
21 For more information on the prescription requirement, including anticipatory compounding policies, see FDA’s
guidance for industry Prescription Requirement Under Section 503A of the Federal Food, Drug, and Cosmetic Act
(December 2016).
22 Administration within the hospital or health system does not include providing units of a drug product to a patient
for use outside the hospital or health system, such as a bottle of compounded pills or a liquid for use at home.

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354
(2) The compounded drug products are used or discarded within 24 hours of transfer out of	355
the pharmacy.23	
356
357
(3) The drug products are compounded in accordance with all other applicable requirements	358
of the FD&C Act and FDA regulations (e.g., the drug products are not made under	359
insanitary conditions (section 501(a)(2)(A)) or misbranded (e.g., section 502(g)).	360
361
2. 	Part 2: Risk-Based Factors for Regulatory Action	362
363
With respect to a hospital or health system pharmacy that does not compound drug products	364
within the limits and controls described above, the Agency intends to prioritize its regulatory	365
actions with respect to the prescription requirement to focus on the potential for harm to the	366
public health and to the integrity of the drug approval system. At this time and based on the	367
Agency’s current understanding of the risks, FDA generally intends to assess the following	368
considerations in prioritizing its compliance and enforcement resources:	369
370
• 	Evidence of poor compounding practices or lack of sterility assurance. For example,	371
the pharmacy compounds drug products under insanitary conditions, such as microbial	372
contamination, performing aseptic manipulations with exposed hair or skin, and exposing	373
sterile drug products and materials to lower than ISO 5 quality air.24	
374
375
• 	Non-patient-specific compounded drug products not for emergency uses. Drug	376
products are compounded and sent out of the pharmacy before the receipt of a patient-	377
specific prescription in an amount that exceeds the amount needed for emergency	378
situations (e.g., immediate administration for unplanned procedures in emergency or	379
operating rooms).	380
381
• 	Routine, large amounts of non-patient-specific compounded drug products. The	382
pharmacy routinely compounds a large total number of compounded drug products that	383
are sent out of the pharmacy before the receipt of valid prescriptions or orders for	384
individually identified patients.	385
386
However, administration within the hospital or health system includes scenarios where administration of a drug
product is initiated at the hospital or health system facility, where the drug product is later transferred with the
patient when he or she leaves the facility. For example, an infusion may be initiated in the health care facility and
subsequently transitioned to the home setting using the same IV bag containing the product that was compounded by
the health care facility.
23 Such a limit mitigates concerns about the amount and scope of distribution of the compounded drug product. FDA
selected 24 hours as the window within which compounded drug products be used or discarded because the Agency
has heard from stakeholders that non-patient-specific drugs are needed for emergency uses. FDA anticipates that
non-patient-specific compounded drugs that are kept on hand for longer periods can and should be obtained from
outsourcing facilities because outsourcing facilities can compound and distribute drugs without receiving patient-
specific prescriptions and, because they are subject to CGMPs, conduct appropriate stability tests and have more
robust sterility assurance practices.
24 For more examples of insanitary conditions, see FDA’s guidance for industry Insanitary Conditions at
Compounding Facilities (November 2020).

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• 	Routine interstate distribution of large amounts of non-patient-specific compounded	387
drug products. The pharmacy routinely engages in interstate distribution of large	388
amounts of compounded drug products, including distribution within the hospital or	389
health system, without first receiving valid prescriptions for individually identified	390
patients, particularly when the hospital or health system pharmacy is not located near a	391
state border or when it distributes such products to multiple states.	392
393
• 	No procedures to obtain non-patient-specific compounded drug products from an	394
outsourcing facility. The hospital or health system lacks procedures to obtain non-	395
patient specific compounded drug products from an outsourcing facility where such	396
products are available and appropriate.	397
398
The above policy is intended to focus FDA’s regulatory efforts. FDA encourages hospitals and	399
health systems to obtain any non-patient-specific compounded drug products they may need	400
from outsourcing facilities where that is possible, and to consider registering their pharmacies as	401
outsourcing facilities.	402
403
B. 	Hospital and Health System Compounding of Drug Products That Are	404
Essentially Copies Under Section 503A of the FD&C Act	405
406
At this time and based on the Agency’s current understanding of risks, FDA generally does not	407
intend to take action against a hospital or health system pharmacy that is not an outsourcing	408
facility for compounding a drug product regularly or in inordinate amounts that is essentially a	409
copy of a commercially available drug product when the following circumstances are present:	410
411
• 	The compounded drug product is administered only to patients within the hospital or	412
health system.25	
413
414
• 	The pharmacy obtains from the prescriber a statement that: specifies a change between	415
the compounded drug product and the commercially available drug product; indicates	416
that the compounded drug product will be administered only to patients for whom the	417
change produces a significant difference from the commercially available drug product;	418
and describes the intended patient population for the compounded drug product.26	
419
420
• 	A statement is on file for each prescriber that covers each drug product that is	421
compounded.	422
423
• 	The statement is maintained in the hospital or health system pharmacy to address routine	424
orders for patients for whom the change produces a significant difference.	425
426
25 See footnote 22.
26 The 503A copies guidance provides information about FDA’s policies regarding compounding drug products that
are on the FDA Drug Shortage List.

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Except as stated above, FDA intends to apply the policies described in its 503A copies guidance	427
to drug products compounded by hospital and health system pharmacies that are not outsourcing	428
facilities.27	
429
27 Id.