DEPARTMENT OF HEALTH AJ~D HUMAN SERVICES 
OFFICE OF INSPECTOR GENERAL 
WASI-IINGTON, DC  2020 1 
APR 10 2013 
TO: 	 Margaret A. Hamburg, M.D. 
Commissioner of Food and Drugs 
FROM:  Stuart Wright 
Deputy Inspector General 
for Evaluation and Inspections 
SUBJECT: 	 Memorandum Report:  High-Risk Compounded Sterile Preparations and 
Outsourcing by Hospitals That Use Them, OEI-01-13-00150 
This memorandum report provides information about the extent to which acute-care 
hospitals used compounded sterile preparations (CSPs) and purchased them from outside 
sources in 2012.  It also describes the steps that hospitals take to ensure the quality of 
CSPs. 
SUMMARY 
We surveyed a nationally representative sample of acute-care hospitals that participated 
in Medicare in 2012.  This survey focused on hospital use ofcompounded sterile 
preparations (CSPs)  CSPs are sterile compounded drugs that are generally administered 
to patients via injection or infusion.  We found that in 2012, 92 percent ofhospitals used 
CSPs.  Of those hospitals that used CSPs, 92 percent used sterile-to-sterile products and 
only 25 percent used higher risk nonsterile-to-sterile products.  Nonsterile-to-sterile 
products composed less than 1 percent ofCSPs used in 2012.  Ofthe hospitals that used 
nonsterile-to-sterile CSPs, 85 percent outsourced at least some of these products (i.e., 
purchased them from outside pharmacies). 
Ensuring an adequate supply of CSPs was very important to hospitals when determining 
whether to outsource CSPs.  Many hospitals cited shortages of commercial products 
(68 percent), the availability of CSPs with extended shelf lives (62 percent), and CSP 
stability (69 percent) as very important factors when deciding whether to outsource CSPs. 
Also, hospitals took limited steps to ensure the quality ofoutsourced CSPs but had few 
problems with the quality ofproducts from outside pharmacies.  Few hospitals (11 of 236 
hospitals in our sample) reported problems with product contamination; however, as 
shown by the meningitis outbreak in the fall of2012, any instance ofproduct 
contamination has the potential for serious consequences.  Finally, we found that 
56 percent ofhospitals made changes or planned to make changes to CSP sourcing 
practices in response to that meningitis outbreak.  Page 2  Margaret A. Hamburg, M.D. 
 
BACKGROUND 
 
A recent nationwide meningitis outbreak caused by contaminated injections, which were 
compounded by the New England Compounding Center (NECC), raised major concerns 
about the use of compounded drugs supplied by outside pharmacies.1  The meningitis 
outbreak and its aftermath revealed a gap in information about hospitals use of drugs 
supplied by such pharmacies.  Hospitals may have outsourcing arrangements with 
multiple outside pharmacies and may also compound drugs within their own pharmacies.   
Pharmaceutical compounding is the creation of a prescription drug tailored to meet the 
needs of an individual patient.  For example, a compounding pharmacist may produce a 
version of a drug without an ingredient to which a patient may be allergic, or the 
pharmacist might create a liquid form of a drug for a patient who is unable to swallow a 
pill.  Traditionally, pharmacies compounded a drug upon receipt of a prescription for an 
individual patient.  However, recent trends in drug compounding have included the 
large-scale production of certain drugs to help ease shortages of drugs approved by the 
Food and Drug Administration (FDA) and to meet the sourcing needs of some hospitals.2  
Compounded Drugs 
There are two broad categories of compounded drugs:  nonsterile preparations and sterile 
preparations.  (In this report, we refer to the latter as compounded sterile preparations, or 
CSPs.)  Nonsterile preparations, such as ointments applied to the skin or capsules or pills 
that a patient takes orally, are lower risk products.  Their production is subject to less 
stringent standards than those for sterile preparations. 
CSPs are higher risk products that are generally administered to patients via injection or 
infusion.  Preparation of CSPs requires more expertise and more extensive safety 
measures.  Risks associated with CSP preparation include the use of the wrong medium 
or the wrong concentration for mixture, contamination with pathogens, and human error.  
CSPs may be divided into two types based on their components and the method of 
preparation: 
  Sterile-to-sterile CSPs are prepared from sterile products, which a pharmacist 
constitutes.  Sterile-to-sterile products are considered to carry a high risk of 
contamination in their preparation.   
  Nonsterile-to-sterile CSPs carry the highest risk of contamination.  These 
products are prepared from one or more nonsterile ingredients that must be mixed 
together and then sterilized.  The products from NECC that led to the outbreak 
fell into this category.  Nonsterile-to-sterile compounding requires extensive 
safety precautions, including specialized staff training, positive and negative flow 
sterile rooms, sterile laminar hoods, and daily cleaning and disinfection. 
 
                                                 
1 In this report, the term outside pharmacy refers to any outside compounding pharmacy from which a 
hospital or medical center purchases compounded drugs. 
2 S. Tavernise, FDA Chief Seeks Expanded Authority to Improve Safety of Drug Compounders, The New 
York Times, November 14, 2012. 
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 3  Margaret A. Hamburg, M.D. 
 
Because of CSPs greater risk, this study focuses on hospital use of both kinds of CSPs, 
rather than the lower risk nonsterile preparations, such as ointments and capsules. 
United States Pharmacopoeia   
The United States Pharmacopoeia (USP) is an official compendium of drug standards in 
the United States.3  The USP chapter 797 (USP 797) provides product safety and quality 
standards for preparing CSPs.4  Pharmacies have widely adopted USP 797 standards.5  
FDA has limited authority to inspect pharmacies and enforce compliance with current 
standards for good manufacturing practices; therefore, it largely defers to the States for 
regulating and inspecting pharmacies.6   
 
METHODOLOGY 
 
We identified 4,867 acute-care hospitals operating in 2012 that participated in Medicare.7  
From this population we selected a simple random sample of 300 hospitals.  After we 
eliminated 2 ineligible hospitals, the sample consisted of 298 acute-care hospitals.  We 
developed and used an online questionnaire to determine the extent and nature of hospital 
use of CSPs and outsourcing, including the extent to which hospitals outsource versus 
prepare onsite, and challenges in outsourcing and preparing CSPs.  In January 2013, we 
mailed a letter to the director of pharmacy services for each sampled hospital requesting 
that he/she complete the online questionnaire.8  We followed up with each nonrespondent 
with a reminder letter and telephone calls.  We received responses from 236 hospitals, an 
overall response rate of 79 percent. 
In addition, we interviewed stakeholders, including four practicing hospital pharmacists 
and officials of the trade association that represents hospital pharmacists.    
Appendix A contains the sample sizes, point estimates, and 95-percent confidence 
intervals for all statistics in this report, as well as other data gathered in the survey. 
Limitations 
All data in this report are self-reported, and we did not independently verify them. 
 
   
                                                 
3 The Federal Food, Drug, and Cosmetic Act  201(j) and (g)(1)(A) (21 U.S.C.  321(j) and (g)(1)(A)) 
(defining the terms official compendium and drug). 
4 The United States Pharmacopeial Convention.  USP-NF General Chapter 797 Pharmaceutical 
CompoundingSterile Preparations. The United States Pharmacopoeia and the National Formulary, 
ch. 797 (copyright 2011). 
5 American Society of Health-System Pharmacists (ASHP), The ASHP Discussion Guide on USP 
Chapter 797 for Compounding Sterile Preparations.  Accessed at www.ashp.org on December 13, 2012. 
6 FDA, Compliance Policy Guidance for FDA Staff and Industry, Section 460.200 Pharmacy Compounding 
(reissued May 29, 2002).  Accessed at www.fda.gov on December 13, 2012. 
7 Pursuant to Section 1861 of the Social Security Act, to participate in Medicare, hospitals must 
demonstrate that they meet the Medicare Conditions of Participation during onsite inspections conducted 
by State survey and certification agencies and hospital accreditors with Medicare deeming authority. 
8 Because of a law enforcement request, we did not contact six acute-care hospitals. 
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 4  Margaret A. Hamburg, M.D. 
 
Standards 
This study was conducted in accordance with the Quality Standards for Inspection and 
Evaluation issued by the Council of the Inspectors General on Integrity and Efficiency. 
 
RESULTS 
  
In 2012, only one-quarter of hospitals used higher risk nonsterile-to-sterile CSPs, 
whereas almost all hospitals used sterile-to-sterile products 
Overall, 92 percent of hospitals used CSPs in 2012.  Hospitals of all sizes used CSPs and 
some used them extensively (Table 1).  For example, we interviewed a pharmacy director 
of a large teaching hospital who reported that his hospital uses around 2,500 doses of 
CSPs per day.  Ninety-two percent of hospitals used sterile-to-sterile CSPs.  Twenty-five 
percent of hospitals used higher risk nonsterile-to-sterile CSPs.   
 
 Table 1:  Use of Compounded Sterile Preparations by Hospital Size, 2012 
Number of Doses of CSPs  Number of Doses of  Number of Doses of 
Administered in Hospitals  Nonsterile-to-Sterile CSPs  Sterile-to-Sterile CSPs 
Hospital Size  Mean   Administered in Hospitals  Administered in Hospitals 
(95% Confidence Interval  Mean   Mean  
(CI))  (95% CI)  (95% CI) 
Fewer Than 50 Beds  3,065   67   2,947  
(n=81)  (1,8784,252)  (10124)  (1,7664,127) 
5099 Beds  18,008   *   18,001  
(n=40)  (6,93029,086)    (6,92529,077) 
100299 Beds  45,378   158   45,222  
(n=69)  (33,80356,952)  (43273)  (33,65856,785) 
300 Beds and Above  206,086   666   205,421  
(n=43)  (111,647300,526)  (3101,021)  (111,080299,761) 
Source:  Office of Inspector General survey of acute-care hospitals participating in Medicare, 2013.   
*We were unable to project an estimate for this data field  because we did not have a valid 95-percent confidence interval. 
 
Nonsterile-to-sterile preparations composed less than 1 percent of CSPs used in hospitals 
in 2012.  Only 16 percent of hospitals with fewer than 50 beds used these products.                 
Nonsterile-to-sterile CSPs have a higher risk of contamination than other CSPs because 
pharmacists prepare them from nonsterile components that must be sterilized prior to 
administration.  When we asked hospitals which kinds of nonsterile-to-sterile CSPs they 
commonly used, they named both product types and modes of administration.  Hospitals 
in our sample commonly used nonsterile-to-sterile opioids, steroids, electrolytes, and 
diuretics.  Hospitals in our sample also reported using nonsterile-to-sterile CSPs for 
intrathecal pain pumps and epidurals. 
 
Sterile-to-sterile preparations composed over 99 percent of CSPs used by hospitals in 
2012.  When asked about commonly used sterile-to-sterile CSPs, hospitals in our sample 
reported using antibiotics, opioids, epidurals, oxytocics, total parenteral nutrition, and 
cardioplegic solutions. 
 
   
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 5  Margaret A. Hamburg, M.D. 
 
Of the hospitals that used higher risk CSPs in 2012, 85 percent purchased at least 
some of these products from outside sources 
Of the hospitals that used nonsterile-to-sterile CSPs in 2012, only 36 percent prepared 
any of these products onsite (Table 2).  USP 797 standards for preparing 
nonsterile-to-sterile CSPs are more stringent than those for sterile-to-sterile CSPs, and a 
few hospitals in our sample (5 out of 236) reported that they cannot make these products 
onsite because their facilities do not meet USP 797 standards.  Overall, most hospitals 
(75 percent) that used any CSPs used a combination of outsourcing and onsite 
preparation to obtain these products. 
 
  Table 2:  Hospital Sourcing of Compounded Sterile Preparations, 2012 
Percentage of Hospitals 
Percentage of Hospitals  Percentage of Hospitals 
Product Type  That Both Outsourced And 
That Outsourced  That Prepared Onsite 
Prepared Onsite 
All CSPs  
  79.4%  95.0%  74.7% 
(n=218 Hospitals That Used  (74.1%84.6%)  (92.1%97.8%)  (69.2%80.4%) 
CSPs) 
Nonsterile-to-Sterile CSPs 
84.7%  35.6%  20.3% 
(n=59 Hospitals That Used 
(75.8%93.7%)  (23.7%47.5%)  (10.3%30.3%) 
Nonsterile-to-Sterile CSPs) 
Sterile-to-Sterile CSPs 
76.9%  95.4%  72.2% 
(n=216 Hospitals That Used 
(71.4%82.3%)  (92.6%98.1%)  (66.4%78.0%) 
Sterile-to-Sterile CSPs) 
Source:   Office of Inspector General (OIG) survey of acute-care hospitals participating in Medicare, 2013. 
 
Of the hospitals that purchased nonsterile-to-sterile CSPs from outside pharmacies, 
63 percent contracted with one pharmacy, 20 percent contracted with two, and 16 percent 
with three (see Table A4 in Appendix A).9  Most hospitals (67 percent) that purchased 
nonsterile-to-sterile CSPs from outside pharmacies used at least one pharmacy located in 
another State.10   
 
For those hospitals that used sterile-to-sterile CSPs, 77 percent purchased sterile-to-sterile 
products from at least one outside pharmacy.  Of these hospitals that purchased               
sterile-to-sterile CSPs from outside pharmacies, 41 percent contracted with one outside 
pharmacy, 50 percent contracted with two or three pharmacies, and 9 percent contracted 
with four or five pharmacies (see Table A5 in Appendix A).  As with nonsterile-to-sterile 
products, most of these hospitals purchased sterile-to-sterile CSPs from at least one 
out-of-State pharmacy:  45 percent used one out-of-State pharmacy, 41 percent used two 
or three out-of-State pharmacies, and 3 percent used four or five out-of-State pharmacies. 
 
                                                 
9 The 95-percent confidence intervals for these three percentage estimates are 50.1 to 76.4 percent, 9.4 to 
31.4 percent, and 6.2 to 26.4 percent, respectively. 
10 The 95-percent confidence interval for the 67-percent estimate is 54.6 to 80.1 percent. 
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 6  Margaret A. Hamburg, M.D. 
 
Hospitals consider factors related to ensuring an adequate supply of CSPs as very 
important when determining whether to outsource CSPs 
Hospitals cited shortages of commercial products as a very important factor when 
deciding whether to outsource CSPs (see Table A6 in Appendix A).  Outsourcing CSPs 
may be necessary to ensure the ready availability of products during such shortages.  A 
few hospitals in our sample (15 of 236) indicated that they outsource CSPs only when 
commercial products are unavailable because of a shortage and the cost of producing the 
CSP onsite would be prohibitive.  One pharmacy director stated that his hospital had 
outsourced more CSPs in 2012 than in previous years because of growing shortages of 
commercially available products.   
 
When asked how an abrupt shortage of CSPs from outside pharmacies would affect 
delivery of care and risk to patients, 48 percent of hospitals stated that a shortage of 
outsourced CSPs would have a non-life-threatening but great impact on delivery of care 
in their hospitals (see Table A8 in Appendix A).  An additional 11 percent responded that 
such a shortage would cause life-threatening, major disruptions. 
 
Hospitals also regarded CSP stability11 and the need for CSPs with extended shelf lives as 
very important factors when deciding whether to outsource CSPs.  A pharmacys ability 
to provide products with extended shelf lives was also important to hospitals when 
selecting a particular outside pharmacy (see Table A7 in Appendix A).  This suggests that 
hospitals rely on outsourcing to provide commonly used products for which the exact 
demand may be unpredictable.  According to pharmacists with whom we spoke, CSPs 
prepared onsite often have limited shelf lives or must be refrigerated.  In many cases, 
outside pharmacies can provide products that have undergone stability testing and have 
extended shelf lives.  Outsourcing these CSPs enables hospitals to have product on hand 
when needed with less waste.  A few hospitals in our sample (6 out of 236) noted that the 
option of outsourcing CSPs with extended shelf lives is particularly important because 
they do not have pharmacies that operate 24 hours a day. 
 
In deciding to outsource, hospitals considered other factors as important in ensuring a 
supply of CSPs.  Hospitals cited the ability to prepare CSPs onsite, such as lack of 
necessary equipment, shortage of trained staff, and lack of physical facilities to prepare 
CSPs as important when deciding whether to outsource CSPs (see Table A6 in Appendix 
A).  In fact, only 56 percent of hospitals had a USP 797-compliant clean room for 
preparing CSPs.  When deciding whether to outsource, hospitals also considered whether 
CSPs were high risk or required nonsterile-to-sterile preparation. 
 
Hospitals took limited steps to ensure the quality of outsourced CSPs, but they also 
rarely had problems with CSP quality 
Most hospitals that outsourced CSPs required that outside pharmacies comply with        
USP 797 (83 percent) and reviewed quality reports provided by outside pharmacies      
(71 percent, Table 3).  Of the hospitals that outsourced CSPs, few conducted their own 
site visits at outside pharmacies (22 percent) or reviewed independent quality 
                                                 
11 The term CSP stability refers to the extent to which the preparation retains the same properties and 
characteristics that it possessed at the time of its preparation throughout its period of storage and use. 
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 7  Margaret A. Hamburg, M.D. 
 
assessments of the outside pharmacies used (27 percent).  Some hospitals in our sample 
(14 out of 236) also reported that they lacked the resources, access, or expertise to assess 
the quality of outside pharmacies and therefore must rely on State Boards of Pharmacy to 
assess them.      
 
Table 3:  Steps That Hospitals That Outsourced Compounded Sterile Preparations Took To 
Ensure Quality in 2012 
Percentage of Hospitals That Reported 
Quality Step  Taking Quality Step for Some or All Outside 
Pharmacies They Contracted With 
Required Compliance With USP 797  83% 
Reviewed Quality Reports Provided by the Outside Pharmacy  71% 
Reviewed Quality Reports Provided by a Third Party  27% 
Conducted Onsite Visits at the Outside Pharmacy  22% 
Tested CSPs Provided by Outside Pharmacy  9% 
Source:  OIG survey of acute-care hospitals participating in Medicare, 2013. 
 
Although hospitals took limited steps to ensure the quality of outsourced CSPs,              
42 percent of hospitals were very confident that the steps taken were adequate.  An 
additional 47 percent were only somewhat confident that these steps were adequate.  
However, 12 percent of hospitals were not at all confident in the quality of products from 
outside pharmacies.12  Most hospitals (64 percent) that outsourced CSPs had no problems 
or concerns with outside pharmacies in 2012, and of those that had problems, many were 
related to product availability (73 percent).13  Few hospitals (11 of 236 hospitals) in our 
sample reported problems with product contamination; however, as shown by the 
meningitis outbreak in fall 2012, any instance of product contamination has the potential 
for serious consequences.    
 
Half of all hospitals made changes or planned to make changes to CSP sourcing 
practices in response to the fall 2012 meningitis outbreak 
Overall, 56 percent of hospitals made changes to CSP sourcing practices in 2012 or plan 
to make changes in 2013.  This includes hospitals that use only sterile-to-sterile products 
and hospitals that use higher risk nonsterile-to-sterile products.  Some changes were 
related to the way in which hospitals outsource CSPs (see Table A14 in Appendix A).  
Outsourcing changes that hospitals made or plan to make included decreasing CSP 
outsourcing, requesting more information on product quality from outside pharmacies, 
and contracting with different outside pharmacies.   
 
Hospitals also made or planned changes to the way they prepare CSPs in-house.  Many 
hospitals increased or plan to increase quality control mechanisms in the hospital 
pharmacies and hospital capacity to prepare CSPs in-house.  Making such changes while 
complying with USP 797 may be resource intensive for hospitals.  About half of hospitals 
ranked cost (47 percent) and space limitations (49 percent) as major challenges to 
                                                 
12 Percentages for hospital confidence in the quality of CSPs purchased from outside sources add up to    
101 percent because of rounding.  See Table A10 in Appendix A for exact percentages. 
13 The 95-percent confidence interval for the 73-percent estimate is 61.8 to 83.4 percent. 
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 8  Margaret A. Hamburg, M.D. 
 
USP 797 compliance.  A few hospitals in our sample (6 out of 236) reported that 
becoming fully compliant with USP 797 would require a building redesign or new 
construction.  
 
CONCLUSION 
 
Our review shows that the use of compounded sterile products is widespread in hospitals, 
although the use of the highest risk productsthose involving preparation of sterile 
products from nonsterile componentsis limited to about one-quarter of hospitals, most 
commonly larger facilities. 
 
Although most hospital pharmacies prepared sterile-to-sterile products onsite, hospitals 
outsource most nonsterile-to-sterile CSPs.  Hospitals tend to rely upon a limited number 
of external pharmacies for these CSPs, especially for nonsterile-to-sterile products.  Often 
these pharmacies are located in other States. 
 
Many factors go into a hospital pharmacys decision to outsource CSPs.  Among these 
are the need to ensure a ready supply of products in the event of shortages and the need 
for products with extended shelf lives, which require sophisticated equipment and testing 
that may not be readily available on the hospital premises. 
 
The meningitis outbreak in the fall of 2012 has spurred hospital pharmacies to make 
some changes, such as seeking additional information from outside pharmacies about 
quality practices, or even expanding their own internal compounding capacity.  For the 
most part, hospitals remain confident about the quality of outsourced CSPs.  
Nevertheless, the meningitis outbreak raises questions about whether this confidence is 
well placed and emphasizes the need to stay vigilant about procedures for compounding 
and outsourcing CSPs. 
 
OIG will pursue additional work to further examine the safety and quality of 
pharmaceutical compounding in hospitals, including work examining Federal oversight 
mechanisms. 
 
This report is being issued directly in final form because it contains no recommendations.  
If you have comments or questions about this report, please provide them within 60 days.  
Please refer to report number OEI-01-13-00150 in all correspondence. 
   
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 9  Margaret A. Hamburg, M.D. 
 
APPENDIX A   
 
Complete Results From Office of Inspector General Survey of Acute-Care Hospitals 
That Participated in Medicare in 2012 
 
Table of Contents 
  Table A1:  Hospital Demographic Information, 2012 ...........................................10 
  Table A2:  Use of Compounded Sterile Preparations by Hospital Size, 2012 .......10 
  Table A3:  Total Doses of Compounded Sterile Preparations Used in 2012 ......... 11 
  Table A4:  Use of Outside Pharmacies by Hospitals Outsourcing 
       Nonsterile-to-Sterile Compounded Sterile Preparations in 2012 ...................... 11 
  Table A5:  Use of Outside Pharmacies by Hospitals Outsourcing 
       Sterile-to-Sterile Compounded Sterile Preparations in 2012 ............................12 
  Table A6:  Factors Important to Hospitals When Deciding Whether  
       To Outsource Compounded Sterile Preparations ..............................................13 
  Table A7:  Factors Important to Hospitals When Selecting a Particular  
       Outside Pharmacy .............................................................................................14 
Table A8:  Hospital Beliefs About the Effect of an Abrupt Shortage or Loss of  
     Supply of Compounded Sterile Preparations From Outside Pharmacies  
     on Risk to Patients and Delivery of Care in the Hospital .................................14 
Table A9:  Steps That Hospitals Outsourcing Compounded Sterile 
     Preparations Took To Ensure Quality  
     in 2012 ..............................................................................................................15 
  Table A10:  Hospital Confidence in Steps Taken To Ensure Quality of  
       Compounded Sterile Preparations Purchased From Outside Pharmacies  
       in 2012 ..............................................................................................................15 
  Table A11:  Hospitals That Outsourced Compounded Sterile Preparations and 
       Had Problems or Concerns With Outside Pharmacies in 2012 .........................16 
  Table A12:  Hospital AbilityTo Prepare Compounded Sterile Preparations  
       Onsite, 2012 ......................................................................................................16 
  Table A13:  Hospital-Identified Challenges To Meeting Compliance  
       With USP 797 Standards ...................................................................................17 
  Table A14:  Hospitals That Have Made or Plan To Make Changes to  
       Sourcing Practices for Compounded Sterile Preparations in Response to the  
       Fall 2012 Meningitis Outbreak .........................................................................18 
   
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 10  Margaret A. Hamburg, M.D. 
 
Table A1:  Hospital Demographic Information, 2012 
Percentage of Hospitals 
  Sample Size   
(95% Confidence Interval (CI)) 
Hospital Size  233   
34.8% 
     Fewer Than 50 Beds   
(28.8%40.7%) 
17.2% 
     5099 Beds   
(12.5%21.9%) 
29.6% 
     100299 Beds   
(23.9%35.3%) 
18.5% 
     300 Beds and Above   
(13.6%23.3%) 
91.5% 
Operating Room in Hospital   235 
(88.0%95.0%) 
72.6% 
Intensive Care Unit in Hospital  234 
(67.1%78.2%) 
47.7% 
Dialysis Performed at Hospital  235 
(41.4%53.9%) 
Source: Office of Inspector General (OIG) survey of acute-care hospitals participating in Medicare, 2013. 
 
Table A2:  Use of Compounded Sterile Preparations by Hospital Size, 2012 
Hospitals That Used 
Hospitals That Used  Hospitals That Used 
Compounded Sterile 
Nonsterile-to-Sterile  Sterile-to-Sterile CSPs 
Preparations (CSPs) 
CSPs   
  Sample Size   
   
 
Percentage  Percentage 
Percentage 
(95% CI)  (95% CI) 
(95% CI) 
92.4%   25.1%*  91.5% 
All Hospitals  236 
(89.1%95.7%)  (19.7%30.5%)  (88.1%95.0%) 
Hospitals by Size         
81.5%  16.0%  79.0% 
     Fewer Than 50 Beds  81 
(73.2%89.7%)  (8.8%25.9%)  (68.5%87.3%) 
95.0%  5.0%  95.0% 
     5099 Beds  40 
(88.4%100.0%)  (0.6%16.9%)  (83.1%99.4%) 
98.6%  25.0%  98.6% 
     100299 Beds  69 
(95.8%100.0%)  (15.3%37.0%)  (92.2%100.0%) 
100.0%  60.5%  100.0% 
     300 Beds and Above  43 
(91.8%100.0%)  (46.2%74.7%)  (91.8%100.0%) 
Source: OIG survey of acute-care hospitals participating in Medicare, 2013. 
*The sample size for this estimate is 235. 
 
   
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 11  Margaret A. Hamburg, M.D. 
 
Table A3:  Total Doses of Compounded Sterile Preparations  
Used in 2012 
Percentage of Total CSPs 
   
(95% CI) 
Total Doses of CSPs (n=236)   
0.34% 
     Nonsterile-to-Sterile CSPs (n=235) 
(0.2%0.5%) 
99.6% 
     Sterile-to-Sterile CSPs (n=236) 
(99.5%99.8%) 
Source: OIG survey of acute-care hospitals participating in Medicare, 2013. 
 
 
Table A4:  Use of Outside Pharmacies by Hospitals Outsourcing 
Nonsterile-to-Sterile Compounded Sterile Preparations in 2012 
Hospitals That Outsourced Nonsterile-to-Sterile CSPs 
 
Number of Outside Pharmacies Used  Sample Size 
Percentage 
(95% CI) 
All Outside Pharmacies  49   
63.3% 
     1   
(50.1%76.4%) 
20.4% 
     2   
(9.4%31.4%) 
16.3% 
     3   
(6.2%26.4%) 
Out-of-State Pharmacies  49   
32.7% 
     0   
(19.9%45.4%) 
51.0% 
     1   
(37.4%64.7%) 
14.3% 
     2   
(5.9%27.2%) 
2.0% 
     3   
(0.1%10.9%) 
 
Source: OIG survey of acute-care hospitals participating in Medicare, 2013.
 
 
 
 
 
   
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 12  Margaret A. Hamburg, M.D. 
 
Table A5:  Use of Outside Pharmacies by Hospitals Outsourcing  
Sterile-to-Sterile Compounded Sterile Preparations in 2012 
Hospitals That Outsourced Sterile-to-Sterile CSPs 
 
Number of Outside Pharmacies Used  Sample Size 
Percentage 
(95% CI) 
All Outside Pharmacies  165   
40.6% 
     1   
(33.3%47.9%) 
36.4% 
     2   
(29.2%43.5%) 
13.9% 
     3   
(8.8%19.1%) 
6.7% 
     4   
(3.0%10.4%) 
2.4% 
     5   
(0.1%4.7%) 
Out-of-State Pharmacies  163   
11.0% 
     0   
(6.4%15.7%) 
44.8% 
     1   
(37.3%52.2%) 
33.1% 
     2   
(26.1%40.2%) 
8.0% 
     3   
(3.9%12.0%) 
1.8% 
     4   
(0.4%5.3%) 
1.2% 
     5   
(0.1%4.4%) 
 
Source: OIG survey of acute-care hospitals participating in Medicare, 2013.
 
 
 
 
 
 
 
 
 
 
 
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 13  Margaret A. Hamburg, M.D. 
 
Table A6:  Factors Important to Hospitals When Deciding Whether To Outsource 
Compounded Sterile Preparations 
Very Important  Somewhat  Not Important 
  Important   
Sample 
Factor       
Size 
Percentage  Percentage  Percentage 
(95% CI)  (95% CI)  (95% CI) 
68.6%  19.9%  11.5% 
Stability of CSP  226  (62.7%74.5%)  (14.8%25.0%)  (7.5%15.6%) 
68.1%  22.7%  9.2% 
Shortages of Commercial Products  229  (62.2%74.0%)  (17.4%28.0%)  (5.5%12.8%) 
67.0%  20.7%  12.3% 
Need for Ready-to-Administer Form of CSP  227  (61.0%72.9%)  (15.6%25.8%)  (8.2%16.5%) 
61.9%  23.5%  14.6% 
Need for Product With Extended Shelf Life  226  (55.8%68.1%)  (18.1%28.8%)  (10.1%19.1%) 
61.4%  23.2%  15.4% 
Product-Testing Requirements  228  (55.2%67.6%)  (17.9%28.6%)  (10.8%19.9%) 
Product Is High Risk or Problem Prone To  53.7%  27.5%  18.8% 
Prepare  229  (47.4%60.0%)  (21.9%33.1%)  (13.8%23.7%) 
Inability of Hospital Pharmacy To Produce  46.9%  27.2%  25.9% 
CSPs in Quantity Needed  228  (40.6%53.2%)  (21.6%32.8%)  (20.3%31.4%) 
CSP Requires Nonsterile-to-Sterile  47.1%  18.1%  34.8% 
Preparation  227  (40.8%53.5%)  (13.2%22.9%)  (28.8%40.8%) 
45.6%  30.7%  23.7% 
Need for Specialized Products  228  (39.3%51.9%)  (24.9%36.5%)  (18.3%29.1%) 
Lack of Necessary Equipment To Prepare  38.9%  23.6%  37.6% 
CSP in-House  229  (32.7%45.0%)  (18.2%28.9%)  (31.4%43.7%) 
Amount of Time Needed To Produce CSP  39.3%  36.7%  24.0% 
in-House  229  (33.1%45.5%)  (30.6%42.8%)  (18.6%29.4%) 
35.4%  45.0%  19.7% 
Predictability of Demand for CSP  229  (29.3%41.4%)  (38.7%51.3%)  (14.6%24.7%) 
Lack of Physical Facilities To Prepare CSP  34.8%  26.9%  38.3% 
in-House  227  (28.8%40.8%)  (21.3%32.5%)  (32.2%44.5%) 
33.6%  38.4%  27.9% 
Workflow Management  229  (27.7%39.6%)  (32.3%44.6%)  (22.3%33.6%) 
27.8%  22.0%  50.2% 
Prior Problems With Outsourced CSPs  223  (22.1%33.5%)  (16.7%27.3%)  (43.8%56.6%) 
27.5%  49.8%  22.7% 
Cost of Producing Product in-House  229  (21.9%33.1%)  (43.5%56.1%)  (17.4%28.0%) 
26.8%  33.8%  39.5% 
Shortage of Staff Trained to Prepare CSP  228  (21.2%32.4%)  (27.8%39.8%)  (33.3%45.7%) 
20.0%  21.8%  58.2% 
Prior Problems Preparing CSP in-House  225  (14.9%25.1%)  (16.5%27.0%)  (51.9%64.5% 
 
Source: OIG survey of acute-care hospitals participating in Medicare, 2013.
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 14  Margaret A. Hamburg, M.D. 
 
Table A7:  Factors Important to Hospitals When Selecting a Particular Outside Pharmacy 
Somewhat 
Very Important  Not Important 
Important 
Sample     
Factor   
Size  Percentage  Percentage 
Percentage 
(95% CI)  (95% CI) 
(95% CI) 
88.6%  3.1%  8.3% 
Quality of Product   228 
(84.6%92.6%)  (0.9%5.3%)  (4.8%11.8) 
87.3%  5.3%  7.5% 
Pharmacy Expertise in Preparing Product  228 
(83.1%91.5%)  (2.4%8.1%)  (4.1%10.8%) 
83.8 %  9.6%  6.6% 
Pharmacy Reputation  229 
(79.2%88.5%)  (5.9%13.3%)  (3.4%9.7%) 
79.0%  13.5%  7.4% 
Pharmacy Accreditation  229 
(73.9%84.2%)  (9.2%17.9%)  (4.1%10.7%) 
Inspection History With State Board of  77.5%  13.2%  9.3% 
Pharmacy  227  (72.2%82.8%)  (8.9%17.5%)  (5.6%12.9%) 
75.5%  17.0%  7.4% 
Product Availability  229 
(70.1%81.0%)  (12.3%21.8%)  (4.1%10.7%) 
Pharmacys Ability To Provide Products With  71.1%  18.9%  10.1% 
Extended Shelf Life  228  (65.3%76.8%)  (13.9%23.8%)  (6.3%13.9%) 
66.7%  25.0%  8.3% 
Pharmacy Responsiveness  228 
(60.7%72.6%)  (19.5%30.5%)  (4.8%11.8%) 
50.7%  37.6%  11.8% 
Pharmacys Delivery Schedule  229 
(44.3%57.0%)  (31.4%43.7%)  (7.7%15.9%) 
37.4%  48.5%  14.1% 
Product Cost  227 
(31.3%43.6%)  (42.1%54.8%)  (9.7%18.5%) 
23.5%  39.8%  36.7% 
Hospitals Own Site Inspection of Pharmacy  226 
(18.1%28.8%)  (33.6%46.0%)  (30.6%42.8%) 
3.5%  31.1%  65.4% 
Medical Staff Preference  228  (1.2%5.8%)  (25.3%37.0%)  (59.3%71.4%) 
 
Source: OIG survey of acute-care hospitals participating in Medicare, 2013.
 
 
Table A8:  Hospital Beliefs About the Effect of an Abrupt Shortage or Loss 
of Supply of Compounded Sterile Preparations From Outside Pharmacies 
on Risk to Patients and Delivery of Care in the Hospital (n=235) 
Percentage of Hospitals 
Perceived Level of Risk to Patients and Disruption of Care   
(95% CI) 
11.5% 
Life-Threatening, Major Disruptions 
(7.5%15.5%) 
48.1% 
Not Life-Threatening, But Still Great Impact 
(41.9%54.3%) 
16.6% 
Little Impact, an Inconvenience 
(12.0%21.2%) 
23.8% 
No Impact at All 
(18.5%29.1%) 
   
Source: OIG survey of acute-care hospitals participating in Medicare, 2013.
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 15  Margaret A. Hamburg, M.D. 
 
Table A9:  Steps That Hospitals Outsourcing Compounded Sterile Preparations 
To Ensure Quality in 2012 
Performed  Performed  Did Not Perform  Not Applicable 
Quality Step for   Quality Step for   Quality Step   
All Outside  Some Outside     
Sample 
Quality Step  Pharmacies  Pharmacies     
Size 
       
Percentage  Percentage  Percentage  Percentage 
(95% CI)  (95% CI)  (95% CI)  (95% CI) 
Required Compliance With  76.7%  6.4%  14.0%  2.9% 
172 
USP 797  (70.6%82.9%)  (2.8%10.0%)  (8.9%19.0%)  (0.5%5.4%) 
Reviewed Quality Reports 
48.5%  22.8%  26.3%  2.3% 
Provided by Outside  171 
Pharmacy  (41.2%-55.8%)  (16.7%28.9%)  (19.9%32.7%)  (0.1%4.5%) 
Reviewed Quality Reports  16.5%  10.0%  67.6%  5.9% 
170 
Provided by Third Party 
(11.0%21.9%)  (5.6%14.4%)  (60.8%74.5%)  (2.4%9.3%) 
Conducted Onsite Visits at  7.0%  15.1%  72.7%  5.2% 
172 
Outside Pharmacy 
(3.3%10.7%)  (9.9%20.3%)  (66.2%79.2%)  (2.0%8.5%) 
Tested CSPs Provided by  5.8%  3.5%  86.0%  4.7% 
171 
Outside Pharmacy 
(2.4%-9.3%)  (0.8%6.2%)  (80.9%91.0%)  (1.6%-7.8%) 
 
Source: OIG survey of acute-care hospitals participating in Medicare, 2013.
 
 
 
Table A10:  Hospital Confidence in Steps Taken To Ensure 
Quality of Compounded Sterile Preparations Purchased From 
Outside Pharmacies in 2012 (n=221) 
Percentage of Hospitals 
Level of Confidence   
(95% CI) 
41.6% 
Very Confident 
(35.3%48.0%) 
46.6% 
Somewhat Confident 
(40.2%53.0%) 
11.8% 
Not at All Confident 
(7.6%15.9%) 
 
Source: OIG survey of acute-care hospitals participating in Medicare, 2013.
 
   
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 16  Margaret A. Hamburg, M.D. 
 
Table A11:  Hospitals That Outsourced Compounded Sterile Preparations and Had Problems 
or Concerns With Outside Pharmacies in 2012 
Sample Size  Had Problem or  Did Not Have 
Concern  Problem or Concern 
Problems or Concerns     
Percentage  Percentage 
(95% CI)  (95% CI) 
Any Problem or Concern With Outside  35.7%  64.3% 
171 
Compounding Pharmacies  (28.7%42.7%)  (57.3%71.3%) 
72.6%  27.4% 
     Lack of Product Availability  62 
(61.8%83.4%)  (16.6%38.2%) 
42.6%  57.4% 
     Problems With Product Delivery  61 
(30.5%54.7%)  (45.3%69.5%) 
18.0%  82.0% 
     Product Contamination  61 
(8.6%27.4%)  (72.6%91.4%) 
8.2%  91.8% 
     Problems With Product Potency  61 
(1.5%14.9%)  (85.1%98.5%) 
Source: OIG survey of acute-care hospitals participating in Medicare, 2013. 
 
 
Table A12:  Hospital Ability to Prepare Compounded Sterile Preparations  
Onsite, 2012 
Percentage of Hospitals 
  Sample Size   
(95% CI) 
Hospitals With a USP 797-Compliant Clean  56.2% 
235 
Room  (50.0%62.4%) 
Hospitals With a Barrier Isolator for  54.2% 
236 
Preparing CSPs  (48.0%60.4%) 
Hospital Compliance With USP 797 
Requirements for Risk Level of CSPs  228   
Prepared Onsite 
59.6% 
     Fully Compliant   
(53.4% 65.9%) 
29.8% 
     Mostly Compliant   
(24.0% 35.6%) 
6.1% 
     Somewhat Compliant   
(3.1%9.2%) 
4.4% 
     Not at All Compliant   
(1.8% 7.0%)  
Source: OIG survey of acute-care hospitals participating in Medicare, 2013. 
 
 
   
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 17  Margaret A. Hamburg, M.D. 
 
 Table A13:  Hospital-Identified Challenges To Meeting Compliance With USP 797 Standards 
Major Challenge  Minor Challenge  Not a Challenge 
     
  Sample Size 
Percentage  Percentage  Percentage 
(95% CI)  (95% CI)  (95% CI) 
49.1%  27.0%  23.9% 
Space Limitations  226 
(42.8%55.5%)  (21.4%32.6%)  (18.5%29.3%) 
47.4%  30.3%  22.4% 
Cost  228 
(41.1%53.7%)  (24.5%36.1%)  (17.1%27.6%) 
25.4%  35.5%  39.0% 
Access to Needed Equipment  228 
(19.9%30.9%)  (29.5%41.6%)  (32.9%45.2%) 
22.4%  43.4%  34.2% 
Number of Staff  228 
(17.1%27.6%)  (37.2%49.7%)  (28.2%40.2%) 
11.0%  45.6%   43.4% 
Staff Skill Set  228 
(7.0%14.9%)  (39.3%51.9%)  (37.2%49.7%) 
Source: OIG survey of acute-care hospitals participating in Medicare, 2013. 
 
   
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)  Page 18  Margaret A. Hamburg, M.D. 
 
Table A14:  Hospitals That Have Made or Plan To Make Changes to Sourcing Practices 
for Compounded Sterile Preparations in Response to the Fall 2012 Meningitis Outbreak 
Percentage of Hospitals 
  Sample Size   
(95% CI) 
Hospitals That Either Changed or Plan To Change CSP  56.0% 
232 
Sourcing Practices  (49.8%62.3%) 
45.9% 
Hospitals That Changed CSP Sourcing Practices in 2012  233 
(39.7%52.2%) 
Changes Made     
78.3% 
     Decreased Outsourcing of CSPs  106 
(70.7% 85.9%) 
     Requested More Information From Outside Compounding  61.9% 
105 
     Pharmacies on Product Quality  (52.9%71.0%) 
54.8% 
     Increased Quality Control Mechanisms in Hospital Pharmacy  104 
(45.5% 64.1%) 
51.9% 
     Increased Hospital Capacity To Prepare CSPs Onsite  106 
(42.6%61.2%) 
50.5% 
     Contracted With Different Outside Pharmacy  105 
(41.2%59.8%) 
Hospitals That Plan To Change CSP Sourcing Practices in  38.5% 
234 
2013  (32.4%44.5%) 
Planned Changes     
     Request More Information From Outside Compounding  84.1% 
88 
     Pharmacies on Product Quality  (76.6%91.5%) 
74.7% 
     Increase Quality Control Mechanisms in Hospital Pharmacy  87 
(65.8%83.6%) 
56.8% 
     Decrease Outsourcing of CSPs  88 
(46.7%66.9%) 
54.5% 
     Increase Hospital Capacity To Prepare CSPs Onsite  88 
(44.4%64.7%) 
51.7% 
     Contract With Different Outside Pharmacy  89 
(41.6%61.8%) 
 
High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150)