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DRAFT GUIDANCE 
 
  This guidance document is being distributed for comment purposes only.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publication in the Federal Register of the notice announcing the availability of the draft 
guidance.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., 4th 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Draft  Not for Implementation 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 
2  the Federal Food, Drug, and Cosmetic Act  
3  Guidance for Industry1 
4   
5   
6  This draft guidance, when finalized, will represent the current thinking of the Food and Drug Administration 
7  (FDA or Agency) on this topic.  It does not establish any rights for any person and is not binding on FDA 
8  or the public.  You can use an alternative approach if it satisfies the requirements of the applicable statutes 
9  and regulations.  To discuss an alternative approach, contact the FDA staff responsible for this guidance as 
10  listed on the title page. 
11   
12   
13   
14   
15  I.  INTRODUCTION AND SCOPE  
16   
17  Pharmacies located within a hospital, or standalone pharmacies that are part of a health system, 
18  frequently provide compounded drug products for administration within the hospital or health 
19  system.2  Some of these compounders seek to compound drugs under section 503A of the 
20  Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 353a) and others have registered 
21  with the Food and Drug Administration (FDA, the Agency, or we) as outsourcing facilities and 
22  are subject to section 503B of the FD&C Act (21 U.S.C. 353b).3  
23   
24  This revised draft guidance describes how FDA intends to apply certain provisions of section 
25  503A of the FD&C Act to human drug products that are compounded by state-licensed 
26  pharmacies that are not outsourcing facilities for distribution within a hospital or health system.  
27  First, the revised draft guidance addresses the requirement that compounding be based on the 
28  receipt of a valid prescription order for an identified individual patient (section 503A(a) of the 
29  FD&C Act).  Second, it addresses the provision concerning compounded drug products that are 
30  essentially copies of a commercially available drug product (section 503A(b)(1)(D) of the FD&C 
31  Act).  This guidance does not apply to human drug products compounded by outsourcing 
32  facilities under section 503B of the FD&C Act, compounded drug products that are not 
33  distributed for use within a hospital or health system, or drug products compounded for use in 
34  animals.   
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 Qualitys 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)). 
1  Contains Nonbinding Recommendations 
Draft  Not for Implementation 
37  The contents of this document do not have the force and effect of law and are not meant to bind 
38  the public in any way, unless specifically incorporated into a contract. This document is intended 
39  only to provide clarity to the public regarding existing requirements under the law. FDA 
40  guidance documents, including this guidance, should be viewed only as recommendations, unless 
41  specific regulatory or statutory requirements are cited. The use of the word should in FDA 
42  guidance means that something is suggested or recommended, but not required. 
43   
44   
45  II.  BACKGROUND 
46   
47  Sections 503A and 503B of the FD&C Act address human drug compounding.   
48   
49  A.  Compounding Under Section 503A of the FD&C Act 
50   
51  Section 503A of the FD&C Act describes the conditions that must be satisfied for human drug 
52  products compounded by a licensed pharmacist in a State licensed pharmacy or Federal facility, 
53  or by a licensed physician, to be exempt from certain provisions of the FD&C Act: 
54   
55    Section 501(a)(2)(B) (concerning current good manufacturing practice (CGMP) 
56  requirements) 
57   
58    Section 502(f)(1) (concerning the labeling of drugs with adequate directions for use)  
59   
60    Section 505 (concerning the approval of drugs under new drug applications or 
61  abbreviated new drug applications) 
62   
63  A list of the conditions in section 503A of the FD&C Act that must be met for a compounded 
64  drug product to qualify for the exemptions in that section appears in the guidance for industry 
65  Pharmacy Compounding of Human Drug Products Under Section 503A of the Federal Food, 
66  Drug, and Cosmetic Act (June 2016, Revision 2).4 
67   
68  One of the conditions that must be met for a compounded drug product to qualify for the 
69  exemptions under section 503A of the FD&C Act is that it is compounded by a licensed 
70  pharmacist in a State-licensed pharmacy or Federal facility, or by a licensed physician:  
71   
72   . . . for an identified individual patient based on the receipt of a valid prescription order 
73  or a notation, approved by the prescribing practitioner, on the prescription order that a 
74  compounded product is necessary for the identified patient.5 
75   
76  This means that the drug product is compounded either: (1) after the receipt of a valid 
77  prescription order for an identified individual patient;6 or (2) in limited quantities before the 
78  receipt of a valid prescription order for an identified individual patient, if based on a history of 
 
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. 
2  Contains Nonbinding Recommendations 
Draft  Not for Implementation 
79  the compounder receiving orders for the compounding of the drug product and in the context of 
80  certain established relationships.7  Section 503A of the FD&C Act does not provide for a 
81  compounded drug product leaving the compounding facility before the receipt of the 
82  prescription.  In December 2016, FDA issued a guidance for industry setting forth FDAs policy 
83  concerning the statutory prescription requirement at section 503A(a) of the FD&C Act, entitled 
84  Prescription Requirement Under Section 503A of the Federal Food, Drug, and Cosmetic Act.8 
85   
86  Another of the conditions in section 503A of the FD&C Act is that the drug product must be 
87  compounded by a licensed pharmacist or a licensed physician that does not compound regularly 
88  or in inordinate amounts (as defined by [FDA]) any drug products that are essentially copies of a 
89  commercially available drug product.9  Section 503A of the FD&C Act further states that: 
90   
91   . . . the term essentially a copy of a commercially available drug product does not 
92  include a drug product in which there is a change, made for an identified individual 
93  patient, which produces for that patient a significant difference, as determined by the 
94  prescribing practitioner, between the compounded drug and the comparable commercially 
95  available drug product.10 
96   
97  FDA issued a guidance for industry that set forth FDAs policies concerning the essentially a 
98  copy provision under section 503A of the FD&C Act, Compounded Drug Products That Are 
99  Essentially Copies of a Commercially Available Drug Product Under Section 503A of the 
100  Federal Food, Drug, and Cosmetic Act (January 2018) (503A copies guidance).11 
101   
102  B.  Risks Associated With Compounded Drug Products 
103   
104  Compounded drug products can serve an important role for patients in hospitals and health 
105  systems whose medical needs cannot be met by an FDA-approved drug product, such as a patient 
106  who has an allergy and needs a medication to be made without a certain dye, or an elderly patient 
107  or a child who cannot swallow a pill and needs a medicine in a liquid form that is not otherwise 
108  available.  Many hospital and health system pharmacies, for example, routinely compound oral 
109  liquids from tablets or other dosage forms for use in pediatric units.12   
110   
111  Although compounded drug products can serve an important need, they pose a higher risk to 
112  patients than FDA-approved drug products.  Compounded drug products are not FDA-approved, 
113  which means they have not undergone FDA premarket review for safety, effectiveness, and 
114  quality.  For these reasons, compounded drug products should only be used when an FDA-
115  approved product is not available to meet the medical needs of an individual patient.   
 
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.  
3  Contains Nonbinding Recommendations 
Draft  Not for Implementation 
116   
117  In addition, licensed pharmacists and licensed physicians who compound drug products in 
118  accordance with section 503A of the FD&C Act are not required to comply with CGMP 
119  requirements (section 501(a)(2)(b) of the FD&C Act).  Furthermore, FDA does not interact with 
120  the vast majority of licensed pharmacists and licensed physicians who compound drug products 
121  and seek to qualify for the exemptions under section 503A of the FD&C Act for the drug 
122  products they compound because these compounders are not licensed by FDA and generally do 
123  not register their compounding facilities with FDA.  Therefore, FDA is often not aware of 
124  potential problems with their compounded drug products or compounding practices unless it 
125  receives a complaint such as a report of a serious adverse event or visible contamination.   
126   
127  In 2012, contaminated injectable drug products that a compounding pharmacy shipped to 
128  patients and healthcare practitioners across the country caused a fungal meningitis outbreak that 
129  resulted in over 60 deaths and over 750 cases of infection.13  This was the most serious of a long 
130  history of outbreaks associated with contaminated compounded drug products.  
131   
132  Since the 2012 fungal meningitis outbreak, FDA has investigated numerous other outbreaks and 
133  other serious adverse events, including deaths, associated with compounded drug products that 
134  were contaminated or otherwise unsafe.  For example, in 2019, FDA received a report 
135  concerning seven patients who received an injectable drug product compounded with L-
136  glutathione and experienced adverse events consistent with reactions patients experience with 
137  high levels of endotoxins.  FDAs testing of the L-glutathione samples confirmed higher levels 
138  of endotoxin than is appropriate based on the dose of L-glutathione received intravenously.  The 
139  L-glutathione powder the compounding pharmacies received was labeled with Caution: Dietary 
140  Supplement and should not have been used to compound sterile injectable drug products.14  In 
141  2017, FDA received adverse event reports concerning at least 43 patients who were administered 
142  eye injections of a compounded drug product during cataract surgery and later experienced 
143  various adverse events, including vision impairment.  FDAs investigation revealed the presence 
144  of an excipient in an amount that was much greater than what is found in FDA-approved 
145  ophthalmic products.15   
146   
147  FDA has also identified many pharmacies that compounded drug products under insanitary 
148  conditions whereby the drug products may have been contaminated with filth or rendered 
149  injurious to health and that shipped the compounded drug products made under these conditions 
150  to patients and health care providers in large volumes across the country.16  The longer a 
151  compounded drug product that is contaminated is held by a pharmacist or physician before 
 
13 See the Centers for Disease Control and Preventions web page Multistate Outbreak of Fungal Meningitis and 
Other Infections, available at http://www.cdc.gov/HAI/outbreaks/meningitis.html. 
14 See FDAs 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 FDAs web page FDAs investigation into Guardians 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 Agencys web page Compounding: Inspections, Recalls, and other Actions, available at 
http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCompounding/ucm339771.htm.  
4  Contains Nonbinding Recommendations 
Draft  Not for Implementation 
152  distribution, or the longer it is held in inventory in a healthcare facility before administration, the 
153  greater the likelihood of microbial proliferation and increased patient harm.   
154   
155  C.  Compounding by Hospitals and Health Systems 
156   
157  To the extent that hospitals and health systems have a need for compounded drug products, FDA 
158  encourages them to obtain such products from outsourcing facilities.  Compounders  
159  that elect to become outsourcing facilities must register with FDA, are subject to CGMP 
160  requirements, and are inspected by FDA according to a risk-based schedule (section 503B of the 
161  FD&C Act).  This helps to mitigate the risk that their drug products will be contaminated or 
162  otherwise made under substandard conditions.   
163   
164  However, we are aware that hospitals and health systems have a variety of distribution practices 
165  for drug products that have been compounded in their pharmacies.  For example, some 
166  pharmacies compound drug products only for use in the hospital in which the pharmacy is 
167  located (e.g., for the treatment of patients during a hospital admission, or for use in the hospitals 
168  emergency room), while some health system pharmacies distribute their drug products to other 
169  facilities within their health system (e.g., to other hospitals, clinics, infusion centers, or long-term 
170  care facilities within the health system).   
171   
172  Certain characteristics of hospital and health system pharmacies can differentiate them from 
173  pharmacies that are not owned or managed by hospitals and health systems, and from 
174  conventional manufacturers.  For example, the scope of distribution of drug products 
175  compounded by hospital and health system pharmacies is often limited, in that the pharmacies 
176  generally compound drug products for practitioners who treat patients within the hospital or 
177  health system and distribute the drug products only within the hospital or to related healthcare 
178  system facilities that are generally located within close proximity to the pharmacy.  Further, 
179  when the hospital or health system and its pharmacy are connected by common ownership or 
180  joint management, they may share recordkeeping systems and oversight that facilitate the 
181  identification and investigation of adverse events or product quality issues associated with 
182  compounded drugs.   
183   
184  1.  Compounding Based on the Receipt of Valid Prescriptions (e.g., Chart Orders) 
185  for Individually Identified Patients 
186   
187  In some cases, a hospital or health system pharmacy compounds drug products only after 
188  receiving a prescription for an identified individual patient.  Obtaining prescriptions for 
189  individually identified patients accords with the prescription requirement in section 503A of the 
190  FD&C Act and helps to ensure that compounded drug products are produced and distributed only 
191  to patients with a medical need for the compounded drug product.  We encourage all hospitals 
192  and health systems to obtain prescriptions in accordance with section 503A of the FD&C Act.   
193   
194  We recognize, however, that hospital and health system pharmacies have sometimes also 
195  compounded and distributed drug products within the hospital or health system before the receipt 
196  of a patient-specific prescription, which would not satisfy the prescription requirement in section 
197  503A of the FD&C Act.  For example, a hospital or health system may maintain a supply of 
5  Contains Nonbinding Recommendations 
Draft  Not for Implementation 
198  certain compounded drug products within the hospital or health system but outside of the 
199  pharmacy (e.g., in an emergency department, operating room, or automated dispensing machine) 
200  in anticipation of a patient presenting with a critical need for the drug when there is no time for 
201  the patient to wait for the hospital pharmacy to receive a prescription or order for that patient 
202  before providing the drug.  The hospital or health system then documents the prescription or 
203  order in the patients chart.  To the extent that hospitals or health systems treat patients for whom 
204  an FDA-approved product is unavailable or not medically appropriate and have a medical need 
205  for non-patient-specific compounded drug products to be held before the patient who will receive 
206  them is identified, they should obtain those drug products from outsourcing facilities.  
207  Outsourcing facilities, which are subject to CGMP requirements and other conditions that help to 
208  ensure drug quality and a clinical need for the drug products they compound from bulk drug 
209  substances, may compound and distribute drug products to healthcare facilities without first 
210  receiving prescriptions for identified individual patients.   
211   
212  We encourage hospitals and health systems to look to outsourcing facilities, or to register their 
213  pharmacies as outsourcing facilities, when they wish to obtain non-patient-specific compounded 
214  drug products.17   
215   
216  FDA will make enforcement decisions on a case-by-case basis, recognizing that it needs to make 
217  the best use of limited Agency resources.  In considering action to achieve hospital and health 
218  system compliance with the prescription requirement in section 503A of the FD&C Act, FDA 
219  intends to focus on practices that pose the greatest risks to public health.  FDA also intends to 
220  prioritize actions that would protect both the integrity of the drug approval system on which 
221  patients depend to protect drug quality, safety and effectiveness, and the important distinction 
222  between compounding by outsourcing facilities and hospital and health system pharmacies that 
223  are not outsourcing facilities.   
224   
225  FDA recognizes that outsourcing facilities may not always be able to meet medical needs for 
226  non-patient-specific compounded drug products to be used in hospitals and health systems.  On 
227  the other hand, a health system pharmacy that compounds drug products without patient-specific 
228  prescriptions for facilities within its health system could function as a large manufacturing 
229  operation without the standards that normally apply to conventional manufacturers to help ensure 
230  drug quality, safety, and effectiveness, and without the protections afforded by the prescription 
231  requirement in section 503A of the FD&C Act.  If such a pharmacy contaminates or otherwise 
232  adulterates or misbrands drug products, these products have the potential to harm many patients.  
233  The compounding of large quantities of unapproved drug products also has the potential to 
 
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 FDAs 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 
Agencys guidance for industry Registration of Human Drug Compounding Outsourcing Facilities Under Section 
503B of the FD&C Act (November 2014). 
6  Contains Nonbinding Recommendations 
Draft  Not for Implementation 
234  undermine the integrity of the drug approval process and the protections Congress sought to 
235  create with outsourcing facility compounding.   
236   
237  Section III.A below discusses how FDA intends to prioritize enforcement of the prescription 
238  requirement in section 503A of the FD&C Act with respect to hospitals and health systems based 
239  on our current understanding of the risks. 
240   
241  2.  Compounding of Drug Products That Are Essentially Copies  
242   
243  As stated above, to qualify for the exemptions under section 503A of the FD&C Act from 
244  sections 501(a)(2)(B), 502(f)(1), and 505(a), a drug product must be compounded by a licensed 
245  pharmacist or licensed physician who does not compound regularly or in inordinate amounts any 
246  drug product that is essentially a copy of a commercially available drug product.18  Pursuant to 
247  section 503A(b)(2) of the FD&C Act, a compounded drug product is not essentially a copy of a 
248  commercially available drug product if a change is made to the commercially available drug 
249  product for an identified individual patient, and the prescribing practitioner has determined that 
250  the change will produce a significant difference for that patient.  As described in FDAs 503A 
251  copies guidance, if a compounder intends to rely on such a determination to establish that a 
252  compounded drug is not essentially a copy of a commercially available drug product, the 
253  compounder should ensure that the determination is documented on the prescription.  A drug 
254  product is not considered to be commercially available if the drug product has been discontinued 
255  and is no longer marketed or the drug product appears on the FDA drug shortage list in effect 
256  under section 506E of the FD&C Act.   
257   
258  The restrictions on compounding drug products that are essentially copies of commercially 
259  available drug products help to ensure that pharmacies, Federal facilities, and physicians do not 
260  compound drug products under section 503A of the FD&C Act for use in patients who could use 
261  an approved product.  Compounding drug products that are essentially copies of these products 
262  unnecessarily exposes patients to drug products that have not been shown to be safe and 
263  effective.  In addition to the immediate public health risks, the limitation in section 503A of the 
264  FD&C Act on producing drug products that are essentially copies of a commercially available 
265  drug product protects the integrity of the new drug and abbreviated new drug approval processes.  
266  Applicants would be less likely to invest in, and seek approval of, innovative, lifesaving 
267  medications if pharmacies could, after a drug is approved, compound substitutes that may be 
268  less expensive because they have not gone through the drug approval process.  
269   
270  Accordingly, the essentially a copy provision of section 503A of the FD&C Act provides 
271  important protections for public health.  In general, FDA intends to apply the policies described 
272  in the 503A copies guidance when it regulates compounding by hospital and health system 
273  pharmacies that are not registered as outsourcing facilities.  However, the Agency has also 
274  concluded that certain compliance policies described in the 503A copies guidance regarding the 
275  documentation of a prescribers determination of significant difference are appropriately 
276  modified when drug products are compounded by hospital and health system pharmacies that are 
277  not outsourcing facilities.  In the hospital and health system setting, medication orders generally 
 
18 See section 503A(b)(1)(D) of the FD&C Act.   
7  Contains Nonbinding Recommendations 
Draft  Not for Implementation 
278  are for a limited amount of a drug product, to be used over a relatively brief period of time, and 
279  medications may frequently need to be re-ordered or modified after an initial administration, 
280  even though the patient and the condition that led the prescriber to order a compounded drug 
281  product have not changed.  Additionally, decisions about when and how to use medications are 
282  often made under medication-use policies set by a pharmacy and therapeutics (P&T) committee 
283  (or its equivalent) that prescribers are expected to follow.19  The P&T committees are comprised 
284  of medical staff that develop policies to support the appropriate use of medications within the 
285  hospital and health system.  Such P&T committees are common in hospitals and health systems 
286  and the activities they perform are a requirement for accreditation by some accrediting 
287  organizations, such as The Joint Commission.20  For example, a P&T committee may determine 
288  that all patients in a neonatal unit administered certain oral medications should receive a 
289  compounded liquid dosage form because the approved drug product, available only in a tablet 
290  formulation, is medically inappropriate for them.  
291   
292  Accordingly, at this time and based on our current understanding of the risks of compounded 
293  drug products, section III below sets forth a compliance policy regarding the prescription 
294  requirement and essentially a copy provision for drug products that are compounded by hospitals 
295  and health system pharmacies under section 503A of the FD&C Act. 
296   
297   
298  III.  POLICY 
299   
300  In the discussion that follows, we describe our current intent regarding prioritizing our 
301  enforcement resources with respect to drug compounding by hospital and health system 
302  pharmacies that are not outsourcing facilities. 
303   
304  FDA will make enforcement decisions on a case-by-case basis, recognizing that the Agency is 
305  unable, as a practical matter, to take enforcement action against every violation, and that it needs 
306  to make the best use of limited Agency resources.  FDA intends to prioritize enforcement based 
307  on the considerations articulated in this guidance.  
308   
309  This guidance does not in any way alter the fact that compounded drugs must meet the 
310  conditions in section 503A of the FD&C Act to qualify for the exemptions in that section.  The 
311  Agency retains discretion to pursue enforcement action at any time if hospital and health system 
312  pharmacies that are not outsourcing facilities do not compound drugs in accordance with the 
313  prescription requirement, or if a drug product that is essentially a copy of a commercially 
 
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, 110113. 
20 The Medication Management Standards in The Joint Commissions 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 Commissions website at https://www.jointcommission.org.    
8  Contains Nonbinding Recommendations 
Draft  Not for Implementation 
314  available drug product is compounded regularly or in inordinate amounts, regardless of whether 
315  such conduct would generally be a lower enforcement priority based on the priorities articulated 
316  in this guidance. 
317   
318  A.  The Prescription Requirement for Hospital and Health System Pharmacies 
319  Other Than Outsourcing Facilities 
320   
321  To qualify for the exemptions from sections 501(a)(2)(B) (concerning CGMP requirements), 
322  502(f)(1) (concerning labeling of drugs with adequate directions for use), and 505 (concerning 
323  FDA approval of drugs under new drug applications or abbreviated new drug applications) of the 
324  FD&C Act under section 503A of the FD&C Act, a drug product compounded by a licensed 
325  pharmacist in a State-licensed pharmacy or Federal facility, or by a licensed physician, must be 
326  compounded in accordance with all of the provisions of section 503A of the FD&C Act, 
327  including when such compounding takes place in a hospital or health system pharmacy.  
328   
329  With respect to the prescription requirement in section 503A of the FD&C Act, FDA intends to 
330  focus its regulatory attention on practices that, based on our current understanding of the risks of 
331  compounded drug products, pose the greatest risks to public health.21   We also intend to focus 
332  enforcement to protect the integrity of the drug approval system on which patients depend to 
333  protect drug quality, safety, and effectiveness, and the important distinction between 
334  compounding by outsourcing facilities and by hospital and health system pharmacies that are not 
335  outsourcing facilities.   
336   
337  FDAs compliance policy regarding hospital and health system pharmacies that are not 
338  outsourcing facilities falls into two parts: Part 1 describes limited circumstances in which the 
339  Agency generally does not intend to take action.  If the circumstances described in Part 1 are not 
340  present, FDA generally intends to consider the risk-based factors for regulatory action described 
341  in Part 2. 
342   
343  1.  Part 1:  Circumstances When FDA Generally Does Not Intend To Take Action 
344   
345  FDA generally does not intend to take action with respect to the prescription requirement in 
346  section 503A of the FD&C Act if a hospital or health system pharmacy that is not an outsourcing 
347  facility compounds and distributes a compounded drug product without first receiving a valid 
348  prescription order (including a chart order) for an identified individual patient (see section 
349  503A(a) of the FD&C Act) when the practice is strictly limited and controlled and the following 
350  circumstances are present: 
351   
352  (1) The compounded drug products are administered only to patients within the hospital or 
353  health system.22  
 
21 For more information on the prescription requirement, including anticipatory compounding policies, see FDAs 
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    
355  (2) The compounded drug products are used or discarded within 24 hours of transfer out of 
356  the pharmacy.23 
357   
358  (3) The drug products are compounded in accordance with all other applicable requirements 
359  of the FD&C Act and FDA regulations (e.g., the drug products are not made under 
360  insanitary conditions (section 501(a)(2)(A)) or misbranded (e.g., section 502(g)). 
361   
362  2.  Part 2:  Risk-Based Factors for Regulatory Action 
363   
364  With respect to a hospital or health system pharmacy that does not compound drug products 
365  within the limits and controls described above, the Agency intends to prioritize its regulatory 
366  actions with respect to the prescription requirement to focus on the potential for harm to the 
367  public health and to the integrity of the drug approval system.  At this time and based on the 
368  Agencys current understanding of the risks, FDA generally intends to assess the following 
369  considerations in prioritizing its compliance and enforcement resources:  
370   
371    Evidence of poor compounding practices or lack of sterility assurance.  For example, 
372  the pharmacy compounds drug products under insanitary conditions, such as microbial 
373  contamination, performing aseptic manipulations with exposed hair or skin, and exposing 
374  sterile drug products and materials to lower than ISO 5 quality air.24 
375   
376    Non-patient-specific compounded drug products not for emergency uses.  Drug 
377  products are compounded and sent out of the pharmacy before the receipt of a patient-
378  specific prescription in an amount that exceeds the amount needed for emergency 
379  situations (e.g., immediate administration for unplanned procedures in emergency or 
380  operating rooms). 
381   
382    Routine, large amounts of non-patient-specific compounded drug products.  The 
383  pharmacy routinely compounds a large total number of compounded drug products that 
384  are sent out of the pharmacy before the receipt of valid prescriptions or orders for 
385  individually identified patients. 
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 FDAs guidance for industry Insanitary Conditions at 
Compounding Facilities (November 2020).   
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387    Routine interstate distribution of large amounts of non-patient-specific compounded 
388  drug products.  The pharmacy routinely engages in interstate distribution of large 
389  amounts of compounded drug products, including distribution within the hospital or 
390  health system, without first receiving valid prescriptions for individually identified 
391  patients, particularly when the hospital or health system pharmacy is not located near a 
392  state border or when it distributes such products to multiple states. 
393   
394    No procedures to obtain non-patient-specific compounded drug products from an 
395  outsourcing facility.  The hospital or health system lacks procedures to obtain non-
396  patient specific compounded drug products from an outsourcing facility where such 
397  products are available and appropriate.  
398   
399  The above policy is intended to focus FDAs regulatory efforts.  FDA encourages hospitals and 
400  health systems to obtain any non-patient-specific compounded drug products they may need 
401  from outsourcing facilities where that is possible, and to consider registering their pharmacies as 
402  outsourcing facilities. 
403   
404  B.  Hospital and Health System Compounding of Drug Products That Are 
405  Essentially Copies Under Section 503A of the FD&C Act 
406   
407  At this time and based on the Agencys current understanding of risks, FDA generally does not 
408  intend to take action against a hospital or health system pharmacy that is not an outsourcing 
409  facility for compounding a drug product regularly or in inordinate amounts that is essentially a 
410  copy of a commercially available drug product when the following circumstances are present: 
411   
412    The compounded drug product is administered only to patients within the hospital or 
413  health system.25 
414   
415    The pharmacy obtains from the prescriber a statement that: specifies a change between 
416  the compounded drug product and the commercially available drug product; indicates 
417  that the compounded drug product will be administered only to patients for whom the 
418  change produces a significant difference from the commercially available drug product; 
419  and describes the intended patient population for the compounded drug product.26 
420   
421    A statement is on file for each prescriber that covers each drug product that is 
422  compounded. 
423   
424    The statement is maintained in the hospital or health system pharmacy to address routine 
425  orders for patients for whom the change produces a significant difference. 
426   
 
25 See footnote 22. 
26 The 503A copies guidance provides information about FDAs policies regarding compounding drug products that 
are on the FDA Drug Shortage List.  
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Draft  Not for Implementation 
427  Except as stated above, FDA intends to apply the policies described in its 503A copies guidance 
428  to drug products compounded by hospital and health system pharmacies that are not outsourcing 
429  facilities.27   
 
27 Id. 
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