Compounded Drug Products That 
Are Essentially Copies of 
Approved Drug Products Under 
Section 503B of the Federal 
Food, Drug, and Cosmetic Act 
 
Guidance for Industry  
 
 
 
 
   
 
 
U.S. Department of Health and Human Services 
Food and Drug Administration 
Center for Drug Evaluation and Research (CDER) 
Office of Compliance/OUDLC 
 
 
January 2018 
Compounding and Related Documents 
 
 
1 
   
Compounded Drug Products That 
Are Essentially Copies of 
Approved Drug Products Under 
Section 503B of the Federal 
Food, Drug, and Cosmetic Act 
 
Guidance for Industry  
 
 
 
Additional copies are available from: 
Office of Communications 
Division of Drug Information, WO51, Room 2201 
Center for Drug Evaluation and Research 
Food and Drug Administration 
10903 New Hampshire Ave., Silver Spring, MD 20993  
Phone: 301-796-3400; Fax: 301-847-8714 
druginfo@fda.hhs.gov  
http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/default.htm 
 
 
 
 
 
 
 
 
U.S. Department of Health and Human Services 
Food and Drug Administration 
Center for Drug Evaluation and Research (CDER) 
Office of Compliance/OUDLC 
 
January 2018 
Compounding and Related Documents 
2 
  Contains Nonbinding Recommendations 
 
TABLE OF CONTENTS 
 
 
I.  INTRODUCTION AND SCOPE ............................................................................... 1 
II.  BACKGROUND ........................................................................................................ 2 
A.  Section 503B of the FD&C Act ....................................................................................... 2 
B.  Compounding, Generally............................................................................................... 3 
C.  Compounded Drugs that are Essentially Copies of Approved Drug Products .................... 3 
D.  Compounded Drugs that are Essentially Copies of Unapproved Non-Prescription Drug 
Products .............................................................................................................................. 4 
III.  POLICY ..................................................................................................................... 4 
A.  Definition of Essentially a Copy of an Approved Drug ....................................................... 5 
B.  Recordkeeping.............................................................................................................13 
APPENDICES A & B .......................................................................................................... 14 
 
 
 
3 
  Contains Nonbinding Recommendations 
 
Guidance for Industry1 
 
Compounded  Drug Products That Are Essentially Copies of 
Approved  Drug Products Under Section 503B of the Federal Food, 
Drug, and Cosmetic Act 
 
 
 
This guidance represents the current thinking of the Food and Drug Administration (FDA or the Agency) 
on this topic.  It does not create any rights for any person and is not binding on FDA or the public.  You 
can use an alternative approach if the approach satisfies the requirements of the applicable statutes and 
regulations.  To discuss an alternative approach, contact the FDA staff responsible for this guidance as 
listed in the title page.   
 
 
 
I.  INTRODUCTION AND SCOPE  
 
For a drug product compounded by an outsourcing facility  to qualify for the exemptions under 
section 503B of the Federal Food, Drug, and Cosmetic Act (FD&C Act), it must not be 
essentially  a copy of one or more approved drug products,2 and must meet the other conditions 
in section 503B.3  This guidance sets forth FDAs policies  concerning the essentially a copy 
provision  of section 503B.4  
 
In general, FDAs guidance documents do not establish legally  enforceable responsibilities.   
Instead, guidances describe the Agencys current thinking  on a topic and should be viewed only 
as recommendations,  unless specific regulatory or statutory requirements are cited.  The use of 
the word should in Agency guidances means that something  is suggested or recommended, but 
not required.  
 
                                              
1 This guidance was prepared by multiple offices in the Center for Drug Evaluation and Research, in consultation 
with the Office of Regulatory Affairs at the Food and Drug Administration. 
2 See section 503B(a)(5). 
3 See section 503B(a)(11). 
4 This guidance does not apply to drugs compounded for use in animals, to biological products subject to licensure 
in a biologics license application, or to repackaged drug products.    For policies pertaining to mixing, diluting, and 
repackaging biological products, see FDAs guidance Mixing, Diluting, and Repackaging Biological Products 
Outside the Scope of an Approved Biologics License Application.  For policies pertaining to repackaged drug 
products, see FDAs guidance Repackaging of Certain Human Drug Products by Pharmacies and Outsourcing 
Facilities. 
All FDA guidances are available on the FDA guidance web page. FDA updates guidances regularly.  To make sure 
you have the most recent version of a guidance, always consult the guidance web page at 
http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/default.htm. 
 
1       Contains Nonbinding Recommendations 
 
II.  BACKGROUND 
 
A.  Section 503B of the FD&C Act 
 
In 2013, the Drug Quality and Security Act created a new section 503B of the FD&C Act, which 
describes a new category of compounders called outsourcing facilities.5 Section 503B of the 
FD&C Act describes the conditions  that must be satisfied for human drug products compounded 
by, or under the direct supervision  of, a licensed pharmacist in an outsourcing facility  to qualify 
for exemptions from the following  three sections of the FD&C Act:  
 
  Section 502(f)(1) (concerning the labeling  of drugs with adequate directions for use)  
  Section 505 (concerning the approval of drugs under new drug applications  (NDAs) or 
abbreviated new drug applications  (ANDAs)) 
  Section 582 (concerning drug supply chain security requirements).   
 
In contrast to drug products compounded under section 503A of the FD&C Act, drug products 
compounded by outsourcing  facilities under section 503B cannot qualify for exemption from 
current good manufacturing practice (CGMP) requirements in section 501(a)(2)(B) of the FD&C 
Act.  Outsourcing facilities are also subject to FDA inspections according to a risk-based 
schedule, specific adverse event reporting requirements, and other conditions  that help to 
mitigate the risks of the drug products they compound.  
 
One of the conditions  that must be met for a compounded  drug product to qualify for the 
exemptions under section 503B of the FD&C Act is that the drug is not essentially a copy of 
one or more approved drugs.6  Section 503B(d)(2) defines essentially a copy of an approved 
drug as  
 
-  A drug that is identical or nearly identical to an approved drug, or a marketed drug 
not subject to section 503(b) and not subject to approval in an application 
submitted under section 505, unless, in the case of an approved drug, the drug 
appears on the drug shortage list in effect under section 506E at the time of 
compounding, distribution, and dispensing (section 503B(d)(2)(A)); or 
-  A drug, a component of which is a bulk drug substance that is a component of an 
approved drug or a marketed drug that is not subject to section 503(b) and is not 
subject to approval in an application submitted under section 505, unless there is a 
change that produces for an individual patient a clinical difference, as determined 
                                              
5 See Pub.L. No.113-54, 102(a), 127 Stat. 587, 587-588 (2013).  Under section 503B(b), a compounder can elect to 
register with FDA as an outsourcing facility.  Section 503B(d)(4) defines an outsourcing facility as a facility at one 
geographic location or address that is engaged in the compounding of sterile drugs; has elected to register as an 
outsourcing facility; and complies with all of the requirements of section 503B.  An outsourcing facility is not 
required to be a licensed pharmacy, although compounding must be done by, or under the direct supervision of, a 
licensed pharmacist.  In addition, an outsourcing facility may or may not obtain prescriptions for identified 
individual patients. 
6 See section 503B(a)(5). 
 
2       Contains Nonbinding Recommendations 
 
by the prescribing practitioner, between the compounded drug and the comparable 
approved drug (section 503B(d)(2)(B)). 
 
A compounded drug product only qualifies for the exemptions in section 503B if it is 
compounded by an outsourcing facility  that compounds all of its drugs, both sterile and non-
sterile, in accordance with all of the conditions  of section 503B.7  A complete list of the 
conditions  that must be met for a drug product to qualify  for the exemptions in section 503B 
appears in the guidance For Entities Considering Whether to Register As Outsourcing Facilities 
Under Section 503B of the Federal Food, Drug, and Cosmetic Act.  
 
B.  Compounding, Generally 
 
Compounded  drug products serve an important role for patients whose clinical  needs cannot be 
met by an FDA-approved drug product, such as for a patient who has an allergy and needs a 
medication to be made without a certain dye contained in an FDA-approved drug product, or an 
elderly patient or a child who cannot swallow a pill  and needs a medicine in a liquid  form that is 
not available in an approved product.  Drug products for identified  individual  patients can be 
compounded by licensed pharmacists in State-licensed pharmacies and Federal facilities and by 
licensed physicians operating under section 503A of the FD&C Act.8  Drug products can also be 
compounded by outsourcing  facilities for identified  individual  patients pursuant to prescriptions 
or for distribution  to health care practitioners without receiving prescriptions.  Sections 503A and 
503B restrict the compounding  of drug products that are essentially copies of commercially 
available (section 503A) or approved drug products (section 503B). 
 
C.  Compounded Drugs that are Essentially Copies of Approved Drug Products 
 
Although compounded  drugs can serve an important need, they can also pose a higher risk to 
patients than FDA-approved drugs.  Drug products compounded by outsourcing  facilities in 
accordance with the conditions  of section 503B are exempt from FDA drug approval 
requirements and the requirement to be labeled with adequate directions for use. There are 
greater assurances of quality when drugs are compounded  by outsourcing  facilities that meet the 
conditions  of section 503B and CGMP requirements than there are for drugs compounded  by 
entities that are not required to comply with CGMP requirements and are not routinely  overseen 
by FDA.  However, as with all compounded drugs, drugs compounded by outsourcing  facilities 
have not undergone FDA premarket review for safety, effectiveness, and quality,  and lack a 
premarket inspection and finding  of manufacturing quality that is part of the drug approval 
process.  Because they are subject to a lower regulatory standard, compounded drugs should only 
be distributed  to health care facilities or dispensed to patients to fulfill  the needs of patients 
whose medical needs cannot be met by an FDA-approved drug. 
 
                                              
7 See sections 503B(a)(11) and 503B(d)(4)(A)(iii). 
8 Section 503A of the FD&C Act describes the conditions that must be met for a human drug product compounded 
by a licensed pharmacist in a State-licensed pharmacy or Federal facility, or by a licensed physician, to qualify for 
exemptions from sections 501(a)(2)(B), 502(f)(1), and 505 of the FD&C Act.  The conditions applicable to 
compounders seeking to operate under section 503A are discussed in separate guidance documents applicable to 
these entities. 
3       Contains Nonbinding Recommendations 
 
The restrictions on compounding  drugs that are essentially copies of approved products ensure 
that outsourcing  facilities do not compound drug products under the exemptions in section 503B 
for use in patients who could use an approved product.  Compounding  copies of these products 
would unnecessarily expose patients to drug products that have not been shown to be safe and 
effective.   
 
In addition  to these immediate public health risks, section 503Bs prohibition  on producing  a 
drug product that is essentially a copy of an approved drug product protects the integrity  and 
effectiveness of the new drug and abbreviated new drug approval processes.  Sponsors would be 
less likely  to invest in, and seek approval of, innovative,  life-saving  medications if an 
outsourcing  facility could, after a drug is approved, compound substitutes that may be less 
expensive because they have not gone through the drug approval process.  
 
Sponsors would also be less likely  to seek approval of an ANDA for a generic drug if 
outsourcing  facilities were permitted to compound drugs that are essentially copies of approved 
drugs without going through the ANDA process.  An ANDA must include data to demonstrate 
that the drug has the same active ingredient and is bioequivalent  to an approved drug.  FDA also 
conducts a premarketing inspection  of proposed manufacturing facilities before approving  the 
application.   Section 503Bs restrictions on producing a drug product that is essentially a copy of 
an approved drug product protect the integrity of both the new drug and the abbreviated new 
drug approval processes. 
 
D.  Compounded Drugs that are Essentially Copies of Unapproved Non-
Prescription Drug Products  
 
The definition  of essentially a copy of an approved drug in section 503B(d)(2) also refers to drug 
products that are not subject to section 503(b) (i.e., non-prescription  drug products) and that are 
not subject to approval in an application  submitted under section 505.  Congress did not provide 
exemptions under section 503B for such drugs, which ensures that outsourcing  facilities do not 
compound unapproved over-the-counter drug products under the exemptions in section 503B. 
Such products may only be produced under the requirements that apply generally to conventional 
drug manufacturers. Section 503B also protects FDAs over-the-counter (OTC) drug monograph 
process.  FDA has an ongoing  process to evaluate the safety and effectiveness of OTC 
medications,  and if the Agency determines that an OTC drug meeting certain conditions  is 
generally recognized as safe and effective, it will publish  a final monograph specifying  those 
conditions.   Compounding  copies of such drug products would undermine the OTC drug 
monograph process under which drug manufacturers must comply with the published 
monograph,  which includes a set of specific regulatory requirements that limit  the formulation  of 
the drug product, and both the content and format of its labeling.    
 
III.  POLICY 
 
Under section 503B(a)(5) of the FD&C Act, a compounded  drug must not be essentially a copy 
of one or more approved drugs.9   
                                              
9 FDA is considering the applicability of the policies described in this guidance to hospitals and health systems and 
 
4       Contains Nonbinding Recommendations 
 
 
A.  Definition of Essentially a Copy of an Approved Drug 
 
The definition  of essentially a copy of an approved drug has two components, specified in 
sections 503B(d)(2)(A) and 503B(d)(2)(B) of the Act.  Section 503B(d)(2)(A) applies to a 
compounded drug that is identical  or nearly identical to an approved drug or an unapproved 
non-prescription  drug.  All other compounded drugs are evaluated under section 503B(d)(2)(B).  
FDA applies these provisions  as depicted in the diagrams in Appendices A and B.  
 
The definition  of essentially a copy of an approved drug in section 503B(d)(2) addresses both 
drug products approved under section 505 and marketed drug products that are not subject to 
section 503(b) and that are not subject to approval in an application  submitted under section 505. 
 
For purposes of this provision: 
 
  Approved drug means a drug product that (1) is approved under section 505 of the FD&C 
Act, (2) does not appear on the list described in subsection 503B(a)(4) of drugs that have 
been withdrawn or removed from the market because such drugs or components of such 
drugs have been found to be unsafe or not effective. 
  Marketed drug not subject to section 503(b) and not subject to approval in an application 
submitted under section 505 means any non-prescription  drug product marketed without 
an approved application.10   We refer to these products as covered OTC drug products 
throughout  the remainder of this guidance document. 
  A drug appears on the drug shortage list in effect under section 506E if the drug is in 
currently in shortage status (and not in resolved status), as indicated in FDAs drug 
shortage database.11 
 
In addition,  FDA does not intend to take action against an outsourcing facility  for failing  to 
compound in accordance with section 503B(a)(5) if it fills  orders for a compounded drug that is 
essentially a copy of an approved drug that has been discontinued  and is no longer marketed.12 
                                              
intends to address these issues in separate guidance or rulemaking. FDA regards a health system as collection of 
hospitals that are owned and operated by the same entity and that share access to databases with drug order 
information for their patients. There is no definition of health system that applies to all sections of the FD&C Act. 
However, this is the definition of a health system used in section 506F of the Act concerning hospital repackaging 
of drugs in shortage.  
10 This includes unapproved OTC drugs whether they are marketed under FDAs OTC Drug Monograph Review 
program or outside the monograph system. 
11 See http://www.accessdata.fda.gov/scripts/drugshortages/default.cfm. 
12 FDA maintains a list of approved drug products that sponsors have indicated are not marketed in the discontinued 
section of the list of Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book). See 
http://www.accessdata.fda.gov/scripts/cder/ob/default.cfm. Specifically, the list includes approved drug products 
that have never been marketed, are for exportation, are for military use, have been discontinued from marketing and 
we have not determined that they were withdrawn for safety or effectiveness reasons, or have had their approvals 
withdrawn for reasons other than safety or effectiveness subsequent to being discontinued from marketing. 
5       Contains Nonbinding Recommendations 
 
 
 
In the discussion  that follows, in subsection 1, we explain how we intend to apply the definition 
of essentially a copy of an approved drug in section 503B(d)(2) when the compounded  drug is 
compared to an approved drug, and then in subsection 2, we explain how we intend to apply this 
definition  when the compounded  drug is compared to a covered OTC drug product.  
 
1.  Application of the Essentially a Copy Definition in Section 503B(d)(2) When the 
Compounded Drug Is Compared to an Approved Drug (see Appendix A) 
 
a.  Compounded  drugs that are identical or nearly identical to an approved drug (section 
503B(d)(2)(A)) 
 
Under section 503B(d)(2)(A), a compounded drug is essentially a copy of an approved 
drug if the compounded drug is identical  or nearly identical  to an approved drug unless 
the approved drug appears on the drug shortage list in effect under section 506E at the 
time of compounding,  distribution,  and dispensing. 
 
i.  Identical or nearly identical (Appendix A, box 1) 
 
FDA intends to consider a compounded drug product to be identical or nearly identical  to 
an approved drug if the compounded drug product and the FDA-approved drug have the 
same: 
  active ingredient(s),   
  route of administration,13   
  dosage form,14  
  dosage strength, and 
  excipients.15  
 
A compounded drug product that has all of these characteristics in common with an 
FDA-approved drug product is essentially a copy of an approved drug, unless the 
                                              
13 See 
https://www.fda.gov/Drugs/DevelopmentApprovalProcess/FormsSubmissionRequirements/ElectronicSubmissions/
DataStandardsManualmonographs/ucm071667.htm. Additionally, if the approved drug can be used (regardless of 
how it is labeled) by the same route of administration prescribed for the compounded drug, we intend to treat the 
compounded drug as though it has the same route of administration for purposes of this analysis. For example, if the 
approved drug is an injectable drug sold in a vial that is labeled for intra-muscular use, but this drug can also be 
drawn from the vial by a smaller needle for subcutaneous administration, a compounded drug product sold in a 
similar vial and prescribed for sub-cutaneous use would be considered to have the same route of administration 
under this analysis.  
14 See 
https://www.fda.gov/ForIndustry/DataStandards/StructuredProductLabeling/ucm162038.htm.   
15 In some cases, information about the excipients contained in an approved drug is not publicly available and not 
known to the outsourcing facility.  In such cases, FDA does not intend to consider whether the compounded drug 
has the same excipients that the approved drug is labeled to contain in determining whether a compounded drug is 
identical or nearly identical to an approved drug.   
6       Contains Nonbinding Recommendations 
 
approved drug appears on FDAs drug shortage list at the time of compounding, 
distribution,  and dispensing.   If a compounded drug product is identical  or nearly 
identical to an approved drug that is not on FDAs drug shortage list at the time of 
compounding,  distribution,  and dispensing,  the compounded product is essentially a 
copy, and an outsourcing  facility may not produce it under section 503B.   
 
In establishing  this policy,  FDA considered the following.  Under section 503B(d)(2)(A), 
the identical or nearly identical compounded  product cannot be exempted from the 
copying restriction by a prescriber determination  that there is a change to the 
compounded product that produces a clinical  difference for an individual  patient.  
Compounded  products meeting the criteria outlined  above are not expected to contain 
changes from an approved drug that would produce such a difference.   
 
A compounded drug that is identical,  or nearly identical,  to an approved drug is not 
considered essentially a copy if the approved drug is in shortage at the time of 
compounding,  distribution,  and dispensing.16   In such a case, the outsourcing facility  can 
compound the drug provided that it complies with the other conditions  of 503B.  It is 
important to patients and prescribers that compounded drugs prepared to address a 
shortage closely resemble the drug in shortage, and for that reason, the statute seeks to 
allow compounders to compound drugs that are as close as possible to the drug in 
shortage.17  
 
A compounded drug product with the characteristics described in our policy would be the 
same as the approved drug in several important respects.  The active ingredient is the 
substance in a drug product that is intended to furnish pharmacological  activity or other 
direct effect in the diagnosis,  cure, mitigation,  treatment, or prevention of disease or to 
affect the structure or function of the body.  Dosage form is the way of identifying  the 
drug in its physical form, and route of administration  describes the way a drug is 
administered to the body.  Inactive ingredients (also known as excipients) may include 
preservatives, dyes, and flavorings.  The dosage strength of a drug product indicates the 
amount of the active ingredient that is present in each dosage. 
 
If the outsourcing facility  compounds a product that differs on one or more of these 
characteristics, we generally would not consider the product to be identical or nearly 
identical to the approved drug.  As described below, if the compounded drug product is 
not considered identical or nearly identical under section 503B(d)(2)(A), it would then be 
evaluated under section 503B(d)(2)(B). 
 
Outsourcing facilities seeking to compound drugs under this provision  should also take 
note that other provisions  of the FD&C Act contain requirements for drug product 
                                              
16 For the purposes of this guidance, distribution means that a compounded human drug product has left the facility 
in which the drug was compounded.  Distribution includes delivery or shipment to a physicians office, hospital, or 
other health care setting for administration and dispensing to an agent of a patient or to a patient for the patients 
own use.  
17 See footnote 11.  
7       Contains Nonbinding Recommendations 
 
formulation  and packaging that are important for patient safety.  In particular, drug 
products compounded  in accordance with section 503B remain subject to adulteration 
and misbranding  provisions  of the FD&C Act including,  but not limited  to, section 
501(b) (concerning drug products that are recognized in an official compendium  and 
whose strength differs from, or whose quality or purity falls below, the standards set forth 
in such compendium)  and section 502(g) (concerning drug products that are recognized 
in an official compendium  and that are not packaged and labeled as prescribed therein).   
 
ii.  Compounded  drugs that are identical or nearly identical to an approved 
drug on FDAs drug shortage list after the shortage is resolved (Appendix 
A, box 2) 
 
As explained above, under section 503B (d)(2)(A), a compounded drug is not essentially 
a copy of an approved drug if the approved drug appears on FDAs drug shortage list at 
the time of compounding,  distribution,  and dispensing.  However, FDA recognizes that 
there may be circumstances in which a drug product is in shortage when the outsourcing 
facility compounds the drug, but the shortage is resolved before the outsourcing  facility 
distributes it.  FDA does not intend to take action against an outsourcing facility for 
filling  orders that it received for a compounded drug that is identical,  or nearly identical, 
to an approved drug that was on FDAs drug shortage list at the time that the outsourcing 
facility received the order, provided the drug also appeared on the FDA drug shortage list 
within 60 days of the outsourcing  facility distributing  or dispensing  the drug.18   
 
b.  Compounded  drugs that contain a bulk drug substance that is a component of an 
approved drug (see Appendix A, boxes 3 and 4) 
 
Under section 503B(d)(2)(B), a compounded drug product is essentially a copy of an 
approved drug if a component of the compounded drug product is a bulk drug substance19 
that is also a component of an approved drug, unless there is a change that produces, for 
an individual  patient, a clinical  difference, as determined by the prescribing practitioner, 
between the compounded drug and the comparable approved drug.  
 
i.  Using the same bulk drug substance (Appendix A, box 3) 
                                              
18 An outsourcing facility may not be able to predict when a drug shortage will be resolved, and the facility may 
have orders for a compounded drug in-house that were in progress when the drug was removed from FDAs drug 
shortage list (e.g., the outsourcing facility may have compounded a drug while it was in shortage, but the shortage 
ended while the outsourcing facility awaited the results of sterility testing before release).  This policy provides 
some regulatory flexibility when an outsourcing facility fills orders that it received for a compounded drug while the 
drug was in shortage.  FDA may take regulatory action, however, if an outsourcing facility continues to fill new 
orders for the compounded drug after the approved drug is removed from FDAs drug shortage list, or if it continues 
to fill orders more than 60 days after the drug has been removed from FDAs drug shortage list.  
19 Title 21, section 207.1 and 207.3 of the Code of Federal Regulations define the term bulk drug substance to mean 
any substance that is intended for incorporation into a finished drug product and is intended to furnish 
pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease, 
or to affect the structure or any function of the body. [It] does not include intermediates used in the synthesis of the 
substance.  
 
8       Contains Nonbinding Recommendations 
 
 
If a component of the compounded drug is a bulk drug substance that is also a component 
of an approved drug, the compounded drug product is essentially a copy of an approved 
drug, and cannot be compounded under section 503B, unless there is a prescriber 
determination  of clinical  difference, as described below.20  This provision  applies to a 
compounded drug whether it was compounded from bulk drug substances or from drugs 
in finished form.   
 
ii.  Prescriber determination  of clinical  difference (Appendix A, box 4) 
 
If an outsourcing facility compounds a drug, the component of which is a bulk drug 
substance that is a component of an approved drug, there must be a change that produces 
a clinical  difference for an individual  patient as determined by the prescribing 
practitioner.  If an outsourcing  facility intends to rely on such a determination  to establish 
that a compounded drug is not essentially a copy of an approved drug, the outsourcing 
facility should ensure that the determination  is noted on the prescription or order (which 
may be a patient-specific prescription or a non-patient specific order) for the compounded 
drug.   
 
FDA is aware that a health care practitioner who orders a compounded drug from an 
outsourcing  facility for office stock will not know the identity  of the individual  patients 
who will receive the compounded drug at the time of the order.  In that case, the 
outsourcing  facility should obtain a statement from the practitioner that specifies the 
change between the compounded drug and the comparable approved drug and indicates 
that the compounded  drug will be administered or dispensed only to a patient for whom 
the change produces a clinical difference, as determined by the prescribing practitioner 
for that patient.  Such assurances should be provided by the health care practitioner or a 
person able to make the representation for the health care practitioner.  
 
For example, a hospital  may need an FDA-approved drug combined with a particular 
diluent in infusion  bags to administer to patients during surgery, and this preparation may 
not be contemplated in the approved product labeling.   The pharmacy manager for the 
hospital could order the compounded drug from an outsourcing  facility and document on 
the order that the compounded drug will only be administered to patients for whom the 
prescriber determines that this formulation  will produce a clinical  difference from the 
comparable approved drug.  Similarly,  a physician who regularly treats patients with an 
allergy to an inactive ingredient  in a particular approved injectable drug product could 
order a compounded version of the drug for office use from an outsourcing  facility 
provided that he or she includes a statement on the order that removing the particular 
inactive ingredient  produces a clinical  difference for his or her individual  patients and 
that he or she will provide the drug only to patients with that particular clinical  need. 
 
                                              
20 FDA expects that if a compounded drug has the same bulk drug substance as an approved drug, the two drugs 
have the same active ingredient. 
 
9       Contains Nonbinding Recommendations 
 
Many outsourcing facilities  compound non-sterile drugs in addition  to sterile drugs.21  All 
drugs compounded by an outsourcing  facility must be compounded in accordance with 
section 503B, including  the prohibition  on compounding  drug products that are 
essentially copies of approved drug products in order for any of them to qualify  for the 
exemptions provided in section 503B.22  For example, a hospice may need a compounded 
liquid  formulation  of a drug that is only approved in capsules to treat elderly patients who 
cannot swallow capsules.  The pharmacy manager for the hospice could order the 
compounded drug from an outsourcing  facility and document on the order that the liquid 
formulation  produces a clinical  difference for hospice patients who are unable to swallow 
capsules and that the compounded  drug will be dispensed only to a patient whose 
prescribing practitioner determines that the liquid  formulation  will produce this clinical 
difference for the patient.   
 
FDA does not believe that a particular format is needed, provided that an order for office 
stock (i.e., not patient-specific) clearly identifies the relevant change and the clinical 
difference that the change will produce for patient(s), as determined by the prescriber.  
For example, the following  would be sufficient:   
 
  Liquid  form, compounded drug will be prescribed to patients who cant swallow 
tablet (if the comparable drug is a tablet) 
  Dilution  for infusion  solution  to be administered to patients who need this 
formulation  during surgery (if the comparable drug is not available at that 
concentration, pre-mixed with the particular diluent  in an infusion  bag) 
   1 mg, pediatric patients need lower dose (if the comparable drug is only 
available in 25 mg dose) 
 
An order that only identifies  the product formulation,  without more information,  would 
not be sufficient to establish that the determination  described by section 503B(d)(2)(B) 
has been made. 
 
Many outsourcing facilities  also compound drug products based on prescriptions  for 
identified  individual  patients.  The following  are examples of statements on a patient-
specific prescription  that could be used to document the prescribers determination  that a 
compounded drug has a change that produces a clinical  difference for a particular patient: 
 
  No Dye X, patient allergy (if the comparable drug contains the dye) 
  Liquid  form, patient cant swallow tablet (if the comparable drug is a tablet) 
                                              
21 An entity that only compounds non-sterile drugs does not meet the statutory definition of an outsourcing facility in 
section 503B(d)(4) of the FD&C Act.  The definition states, in part, that an outsourcing facility is engaged in the 
compounding of sterile drugs (section 503B(d)(4)(i)).   
22 Under section 503B(a)(11), a compounded drug can qualify for the exemptions from section 503B only if all of 
the facilitys compounded drugs are compounded in accordance with section 503B. 
10       Contains Nonbinding Recommendations 
 
  150 mg drug X in 120 ml cherry-flavored Syrup USP, patient needs alcohol-free 
preparation (if the comparable drug is only available in formulations  that contain 
alcohol)  
 
However, if a prescription identifies  only a patient name and product formulation,  this 
would not be sufficient to establish that the determination  described by section 
503B(d)(2)(B) has been made.  Note also that the clinical  difference identified  on either a 
patient-specific prescription  or order, or non-patient specific order, must be produced by 
the change between the outsourcing  facilitys product and the approved drug (i.e., a 
change in product formulation).   Other factors such as a lower price are not sufficient to 
establish that the compounded product is not essentially a copy of the approved drug. 
 
If a prescription  or order does not make clear that the determination  required by section 
503B(d)(2)(B) has been made, the outsourcing  facility may contact the prescriber or 
health care facility,  and if the prescriber or health care facility contact confirms it, make a 
notation on the prescription or order that the prescriber has determined that the 
compounded product contains a change that produces a clinical  difference for patient(s).  
The notations should be as specific as those described above, and should include the date 
of the conversation with the health care facility contact or prescriber and the name of the 
individual  who provided the determination.23     
 
At this time, FDA generally does not intend to question the determinations  of clinical 
difference that are documented in a prescription or order as described above.  However, 
we do intend to consider whether a prescription or order relied upon by an outsourcing 
facility to establish that a drug is not essentially  a copy documents that the determination 
was made.  
 
iii.  Essentially  a copy of one or more approved drug products 
 
Under section 503B(a)(5), a compounded drug product must not be essentially a copy of 
one or more (emphasis added) approved drug products.  When applying  section 
503B(d)(2)(B), FDA intends to consider a compounded drug product that has bulk drug 
substances that are components of one or more approved drugs to be essentially a copy of 
an approved drug product, unless the prescribing  practitioner determines that there is a 
change that produces a clinical  difference for an individual  patient between the 
compounded drug product and the comparable approved drug.  For example, if there are 
two approved drug products that are tablets, one containing  5 mg of active ingredient A 
and the other containing  10 mg of active ingredient B and the outsourcing  facility 
compounded a tablet that offered both active ingredients in the same dosage strengths, the 
compounded drug would be essentially a copy absent a prescriber determination  of 
clinical  difference.   
 
                                              
23 See section IV of this guidance. 
11       Contains Nonbinding Recommendations 
 
2.  Application of the Essentially a Copy Definition in Section 503B(d)(2) When the 
Compounded Drug Is Compared to a Covered OTC Drug Product (Appendix B) 
 
a.  Compounded  drugs that are identical or nearly identical to a covered OTC drug 
product (section 503B(d)(2)(A)) (Appendix B, box 1) 
 
Under section 503B(d)(2)(A), a compounded drug is not considered essentially a copy of 
an approved drug if it is identical  or nearly identical  to an approved drug that appears on 
FDAs drug shortage list at the time of compounding,  distribution,  and dispensing.   The 
statute does not provide a similar exemption  from the definition  in section 503B(d)(2) if 
the compounded drug is identical  or nearly identical  to a covered OTC drug on FDAs 
drug shortage list.  Therefore, FDA intends to apply the same policy described above in 
section III.A.1.a to OTC monograph drugs, with one exception.   
 
If a compounded drug is identical  or nearly identical  to a covered OTC drug under 
section 503B(d)(2)(A), the compounded drug is essentially a copy of an approved drug, 
and the appearance of the covered OTC drug on FDAs shortage list does not change that 
result; the drug cannot be compounded under section 503B.24  If the compounded drug is 
not identical or nearly identical to a comparable drug, it must be evaluated under section 
503B(d)(2)(B), as described below. 
 
b.  Compounded  drugs that contain a bulk drug substance that is a component of an 
covered OTC drug product (section 503B(d)(2)(B)) (Appendix B, box 2) 
 
Under section 503B(d)(2)(B), a compounded drug product is essentially a copy and 
cannot be compounded under section 503B if a component of the compounded  drug 
product is a bulk drug substance25 that is also a component of a covered OTC drug, 
unless there is a change that produces for an individual  patient a clinical  difference, as 
determined by the prescribing practitioner,  between the compounded drug and the 
comparable approved drug.  A clinical  difference between the compounded drug and an 
unapproved drug (such as a covered OTC drug) does not exempt the compounded drug 
from the definition  in section 503B(d)(2)(B). 
 
c.  Essentially  a copy of one or more approved drug products26 
 
Under section 503B(a)(5), a compounded drug product must not be essentially a copy of 
one or more approved drug products.  When applying  section 503B(d)(2)(B), FDA 
intends to consider a compounded  drug product that has bulk drug substances that are 
components of one or more approved drugs to be essentially a copy of an approved drug 
product unless the prescribing practitioner determines that there is a change that produces 
a clinical  difference for an individual  patient between the compounded drug product and 
                                              
24 The compounded drug would not be essentially a copy if it was also identical or nearly identical to an approved 
drug on FDAs drug shortage list, but this would be a very rare case. 
25 See footnote 19. 
26 This scenario is not depicted in the diagrams in the appendices. 
12       Contains Nonbinding Recommendations 
 
the comparable approved drug.  For example, if there are two approved drug products 
that are tablets, one containing  active ingredient  A and the other containing  active 
ingredient  B, and the outsourcing facility compounded  a tablet that offered both active 
ingredients,  the compounded drug containing  active ingredients  A and B would be 
essentially a copy absent a prescriber determination  of clinical  difference.   
 
If a bulk drug substance is a component of a covered OTC drug and an approved drug, 
the bulk drug substance can be evaluated as a component of an approved drug, as 
described in section III.A.1 of this guidance.   
 
B.  Recordkeeping 
 
Outsourcing facilities should maintain records to demonstrate compliance with the essentially a 
copy provision  in section 503B(a)(5).  For example, where an outsourcing  facility has 
compounded a drug that is evaluated under 503B(d)(2)(B) and a component of the compounded 
drug is a bulk drug substance that is a component of an approved drug, the outsourcing facility 
should maintain prescription or order records of a prescribers determination  of clinical 
difference as described above in section III.A.1.b.ii. 
 
In addition,  if the outsourcing facility  compounded a drug that is identical or nearly identical  to 
an approved drug product that appeared on FDAs drug shortage list, the outsourcing  facility 
should maintain documentation  (e.g., a notation on the order for the compounded drug) regarding 
the status of the drug on FDAs drug shortage list at the time of compounding,  distribution,  and 
dispensing.27 
 
FDA recommends that outsourcing  facilities maintain  the records described above for a period of 
at least three years. 
 
IV. PAPERWORK REDUCTION ACT 
 
This guidance contains information  collection  provisions  that are subject to review by the Office 
of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-3520).  See footnotes 23 and 27.  These provisions  require review and are not in effect until 
they display a currently valid OMB control number.  The information  collection provisions  in 
this guidance have been submitted to OMB for review as required by section 3507(d) of the 
Paperwork Reduction Act of 1995. FDA will publish  a notice in the Federal Register announcing 
OMBs decision regarding the information  collection  provisions  in this guidance.  
                                              
27 See section IV of this guidance. 
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APPENDICES A & B 
 
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15