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 of compounded 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 of hospitals 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 of outsourced CSPs but had few 

problems with the quality of products 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 of product 

contamination has the potential for serious consequences. Finally, we found that 

56 percent of hospitals made changes or planned to make changes to CSP sourcing 

practices in response to that meningitis outbreak. 
Page 2 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

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.
Page 3 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

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 

Compounding—Sterile 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.
Page 4 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

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

Hospital Size

Number of Doses of CSPs

Administered in Hospitals

Mean 

(95% Confidence Interval 

(CI))

Number of Doses of 

Nonsterile-to-Sterile CSPs

Administered in Hospitals

Mean 

(95% CI)

Number of Doses of 

Sterile-to-Sterile CSPs

Administered in Hospitals

Mean 

(95% CI)

Fewer Than 50 Beds

(n=81)

3,065 

(1,878–4,252) 

67 

(10–124) 

2,947 

(1,766–4,127) 

50–99 Beds

(n=40)

18,008 

(6,930–29,086) 

* 18,001 

(6,925–29,077) 

100–299 Beds

(n=69)

45,378 

(33,803–56,952) 

158 

(43–273) 

45,222 

(33,658–56,785)

300 Beds and Above

(n=43)

206,086 

(111,647–300,526) 

666 

(310–1,021) 

205,421 

(111,080–299,761) 

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. 
Page 5 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

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

Product Type Percentage of Hospitals 

That Outsourced

Percentage of Hospitals 

That Prepared Onsite

Percentage of Hospitals 

That Both Outsourced And 

Prepared Onsite

All CSPs

(n=218 Hospitals That Used 

CSPs) 

79.4% 

(74.1%−84.6%)

95.0% 

(92.1%−97.8%)

74.7% 

(69.2%−80.4%)

Nonsterile-to-Sterile CSPs

(n=59 Hospitals That Used 

Nonsterile-to-Sterile CSPs) 

84.7% 

(75.8%−93.7%)

35.6% 

(23.7%−47.5%)

20.3% 

(10.3%−30.3%)

Sterile-to-Sterile CSPs

(n=216 Hospitals That Used 

Sterile-to-Sterile CSPs)

76.9% 

(71.4%−82.3%)

95.4% 

(92.6%−98.1%)

72.2% 

(66.4%−78.0%)

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.
Page 6 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

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 pharmacy’s 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. 
Page 7 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

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

Quality Step

Percentage of Hospitals That Reported 

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.
Page 8 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

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 products—those involving preparation of sterile 

products from nonsterile components—is 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 pharmacy’s 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. 
Page 9 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

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 
Page 10 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

Table A1: Hospital Demographic Information, 2012

Sample Size

Percentage of Hospitals

(95% Confidence Interval (CI))

Hospital Size 233

 Fewer Than 50 Beds

34.8%

(28.8%−40.7%)

 50–99 Beds

17.2%

(12.5%−21.9%)

 100–299 Beds

29.6%

(23.9%−35.3%)

 300 Beds and Above

18.5%

(13.6%−23.3%)

Operating Room in Hospital 235

91.5%

(88.0%−95.0%)

Intensive Care Unit in Hospital 234

72.6%

(67.1%−78.2%)

Dialysis Performed at Hospital 235

47.7%

(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

Sample Size

Hospitals That Used 

Compounded Sterile 

Preparations (CSPs) 

Percentage

(95% CI)

Hospitals That Used 

Nonsterile-to-Sterile 

CSPs

Percentage

(95% CI)

Hospitals That Used 

Sterile-to-Sterile CSPs

Percentage

(95% CI)

All Hospitals 236

92.4% 

(89.1%−95.7%)

25.1%* 

(19.7%−30.5%)

91.5% 

(88.1%−95.0%)

Hospitals by Size

 Fewer Than 50 Beds 81

81.5% 

(73.2%−89.7%)

16.0% 

(8.8%−25.9%)

79.0% 

(68.5%−87.3%)

 50−99 Beds 40

95.0% 

(88.4%−100.0%)

5.0% 

(0.6%−16.9%)

95.0% 

(83.1%−99.4%)

 100−299 Beds 69

98.6% 

(95.8%−100.0%)

25.0% 

(15.3%−37.0%)

98.6% 

(92.2%−100.0%)

 300 Beds and Above 43

100.0% 

(91.8%−100.0%)

60.5% 

(46.2%−74.7%)

100.0% 

(91.8%−100.0%)

Source: OIG survey of acute-care hospitals participating in Medicare, 2013.

*The sample size for this estimate is 235.
Page 11 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

Table A3: Total Doses of Compounded Sterile Preparations 

Used in 2012

Percentage of Total CSPs

(95% CI)

Total Doses of CSPs (n=236)

 Nonsterile-to-Sterile CSPs (n=235)

0.34%

(0.2%−0.5%)

 Sterile-to-Sterile CSPs (n=236) 99.6%

(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

Number of Outside Pharmacies Used Sample Size

Hospitals That Outsourced Nonsterile-to-Sterile CSPs

Percentage

(95% CI)

All Outside Pharmacies 49

 1 63.3% 

(50.1%−76.4%)

 2 20.4% 

(9.4%−31.4%)

 3 16.3%

(6.2%−26.4%)

Out-of-State Pharmacies 49

 0 32.7% 

(19.9%−45.4%)

 1 51.0% 

(37.4%−64.7%)

 2 14.3% 

(5.9%−27.2%)

 3 2.0% 

(0.1%−10.9%)

Source: OIG survey of acute-care hospitals participating in Medicare, 2013.
Page 12 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

Table A5: Use of Outside Pharmacies by Hospitals Outsourcing 

Sterile-to-Sterile Compounded Sterile Preparations in 2012

Number of Outside Pharmacies Used Sample Size

Hospitals That Outsourced Sterile-to-Sterile CSPs

Percentage

(95% CI)

All Outside Pharmacies 165 

 1 40.6% 

(33.3%−47.9%)

 2 36.4% 

(29.2%−43.5%)

 3 13.9% 

(8.8%−19.1%)

 4 6.7%

(3.0%−10.4%)

 5 2.4% 

(0.1%−4.7%)

Out-of-State Pharmacies 163

 0 11.0% 

(6.4%−15.7%)

 1 44.8% 

(37.3%−52.2%)

 2 33.1% 

(26.1%−40.2%)

 3 8.0% 

(3.9%−12.0%)

 4 1.8% 

(0.4%−5.3%)

 5 1.2% 

(0.1%−4.4%)

Source: OIG survey of acute-care hospitals participating in Medicare, 2013.
Page 13 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

Table A6: Factors Important to Hospitals When Deciding Whether To Outsource 

Compounded Sterile Preparations 

Factor Sample 

Size

Very Important

Percentage

(95% CI)

Somewhat 

Important

Percentage

(95% CI)

Not Important

Percentage

(95% CI)

Stability of CSP 226

68.6%

(62.7%−74.5%)

19.9%

(14.8%−25.0%)

11.5%

(7.5%−15.6%)

Shortages of Commercial Products 229

68.1%

(62.2%−74.0%)

22.7%

(17.4%−28.0%)

9.2%

(5.5%−12.8%)

Need for Ready-to-Administer Form of CSP 227

67.0%

(61.0%−72.9%) 

20.7%

(15.6%−25.8%)

12.3%

(8.2%−16.5%)

Need for Product With Extended Shelf Life 226

61.9%

(55.8%−68.1%)

23.5%

(18.1%−28.8%)

14.6%

(10.1%−19.1%)

Product-Testing Requirements 228

61.4%

(55.2%−67.6%)

23.2%

(17.9%−28.6%)

15.4%

(10.8%−19.9%)

Product Is High Risk or Problem Prone To 

Prepare 229

53.7%

(47.4%−60.0%)

27.5%

(21.9%−33.1%)

18.8%

(13.8%−23.7%)

Inability of Hospital Pharmacy To Produce 

CSPs in Quantity Needed 228

46.9%

(40.6%−53.2%)

27.2%

(21.6%−32.8%)

25.9%

(20.3%−31.4%)

CSP Requires Nonsterile-to-Sterile 

Preparation 227

47.1%

(40.8%−53.5%)

18.1%

(13.2%−22.9%)

34.8%

(28.8%−40.8%)

Need for Specialized Products 228

45.6%

(39.3%−51.9%)

30.7%

(24.9%−36.5%)

23.7%

(18.3%−29.1%)

Lack of Necessary Equipment To Prepare 

CSP in-House 229

38.9%

(32.7%−45.0%)

23.6%

(18.2%−28.9%)

37.6%

(31.4%−43.7%)

Amount of Time Needed To Produce CSP 

in-House 229

39.3%

(33.1%−45.5%)

36.7%

(30.6%−42.8%)

24.0%

(18.6%−29.4%)

Predictability of Demand for CSP 229

35.4%

(29.3%−41.4%)

45.0%

(38.7%−51.3%)

19.7%

(14.6%−24.7%)

Lack of Physical Facilities To Prepare CSP 

in-House 227

34.8%

(28.8%−40.8%)

26.9%

(21.3%−32.5%)

38.3%

(32.2%−44.5%)

Workflow Management 229

33.6%

(27.7%−39.6%)

38.4%

(32.3%−44.6%)

27.9%

(22.3%−33.6%)

Prior Problems With Outsourced CSPs 223

27.8%

(22.1%−33.5%)

22.0%

(16.7%−27.3%)

50.2%

(43.8%−56.6%)

Cost of Producing Product in-House 229

27.5%

(21.9%−33.1%)

49.8%

(43.5%−56.1%)

22.7%

(17.4%−28.0%)

Shortage of Staff Trained to Prepare CSP 228

26.8%

(21.2%−32.4%)

33.8%

(27.8%−39.8%)

39.5%

(33.3%−45.7%)

Prior Problems Preparing CSP in-House 225

20.0%

(14.9%−25.1%)

21.8%

(16.5%−27.0%)

58.2%

(51.9%−64.5%

Source: OIG survey of acute-care hospitals participating in Medicare, 2013.
Page 14 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

Table A7: Factors Important to Hospitals When Selecting a Particular Outside Pharmacy

Factor Sample 

Size

Very Important

Percentage

(95% CI)

Somewhat 

Important

Percentage

(95% CI)

Not Important

Percentage

(95% CI)

Quality of Product 228

88.6%

(84.6%−92.6%)

3.1%

(0.9%−5.3%)

8.3%

(4.8%−11.8)

Pharmacy Expertise in Preparing Product 228

87.3% 

(83.1%−91.5%)

5.3% 

(2.4%−8.1%)

7.5% 

(4.1%−10.8%)

Pharmacy Reputation 229

83.8 %

(79.2%−88.5%)

9.6%

(5.9%−13.3%)

6.6%

(3.4%−9.7%)

Pharmacy Accreditation 229

79.0%

(73.9%−84.2%)

13.5%

(9.2%−17.9%)

7.4%

(4.1%−10.7%)

Inspection History With State Board of 

Pharmacy 227

77.5%

(72.2%−82.8%)

13.2%

(8.9%−17.5%)

9.3% 

(5.6%−12.9%)

Product Availability 229

75.5%

(70.1%−81.0%)

17.0%

(12.3%−21.8%)

7.4%

(4.1%−10.7%)

Pharmacy’s Ability To Provide Products With 

Extended Shelf Life 228

71.1%

(65.3%−76.8%)

18.9%

(13.9%−23.8%)

10.1%

(6.3%−13.9%)

Pharmacy Responsiveness 228

66.7%

(60.7%−72.6%)

25.0%

(19.5%−30.5%)

8.3%

(4.8%−11.8%)

Pharmacy’s Delivery Schedule 229

50.7%

(44.3%−57.0%)

37.6%

(31.4%−43.7%)

11.8%

(7.7%−15.9%)

Product Cost 227

37.4%

(31.3%−43.6%)

48.5%

(42.1%−54.8%)

14.1%

(9.7%−18.5%)

Hospital’s Own Site Inspection of Pharmacy 226

23.5%

(18.1%−28.8%)

39.8%

(33.6%−46.0%)

36.7%

(30.6%−42.8%)

Medical Staff Preference 228

3.5% 

(1.2%−5.8%)

31.1%

(25.3%−37.0%)

65.4%

(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)

Perceived Level of Risk to Patients and Disruption of Care

Percentage of Hospitals

(95% CI)

Life-Threatening, Major Disruptions

11.5%

(7.5%−15.5%)

Not Life-Threatening, But Still Great Impact

48.1%

(41.9%−54.3%) 

Little Impact, an Inconvenience

16.6%

(12.0%−21.2%) 

No Impact at All

23.8%

(18.5%−29.1%) 

Source: OIG survey of acute-care hospitals participating in Medicare, 2013.
Page 15 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

Table A9: Steps That Hospitals Outsourcing Compounded Sterile Preparations

To Ensure Quality in 2012

Quality Step Sample 

Size

Performed 

Quality Step for 

All Outside 

Pharmacies

Percentage

(95% CI)

Performed 

Quality Step for 

Some Outside 

Pharmacies

Percentage

(95% CI)

Did Not Perform 

Quality Step

Percentage

(95% CI)

Not Applicable

Percentage

(95% CI)

Required Compliance With 

USP 797 172

76.7%

(70.6%−82.9%)

6.4%

(2.8%−10.0%)

14.0%

(8.9%−19.0%)

2.9%

(0.5%−5.4%)

Reviewed Quality Reports 

Provided by Outside 

Pharmacy

171 48.5%

(41.2%−-55.8%)

22.8%

(16.7%−28.9%)

26.3%

(19.9%−32.7%)

2.3%

(0.1%−4.5%)

Reviewed Quality Reports 

Provided by Third Party 170 16.5%

(11.0%−21.9%)

10.0%

(5.6%−14.4%)

67.6%

(60.8%−74.5%)

5.9%

(2.4%−9.3%)

Conducted Onsite Visits at 

Outside Pharmacy 172 7.0%

(3.3%−10.7%)

15.1%

(9.9%−20.3%)

72.7%

(66.2%−79.2%)

5.2%

(2.0%−8.5%)

Tested CSPs Provided by 

Outside Pharmacy 171 5.8%

(2.4%−-9.3%)

3.5%

(0.8%−6.2%)

86.0%

(80.9%−91.0%)

4.7%

(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)

Level of Confidence

Percentage of Hospitals

(95% CI)

Very Confident

41.6%

(35.3%−48.0%)

Somewhat Confident

46.6%

(40.2%−53.0%)

Not at All Confident

11.8%

(7.6%−15.9%)

Source: OIG survey of acute-care hospitals participating in Medicare, 2013.
Page 16 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

Table A11: Hospitals That Outsourced Compounded Sterile Preparations and Had Problems 

or Concerns With Outside Pharmacies in 2012

Problems or Concerns

Sample Size Had Problem or 

Concern

Percentage

(95% CI)

Did Not Have 

Problem or Concern

Percentage

(95% CI)

Any Problem or Concern With Outside 

Compounding Pharmacies 171

35.7%

(28.7%−42.7%)

64.3%

(57.3%−71.3%)

 Lack of Product Availability 62

72.6%

(61.8%−83.4%) 

27.4%

(16.6%−38.2%)

 Problems With Product Delivery 61

42.6%

(30.5%−54.7%)

57.4%

(45.3%−69.5%)

 Product Contamination 61

18.0%

(8.6%−27.4%) 

82.0%

(72.6%−91.4%)

 Problems With Product Potency 61

8.2%

(1.5%−14.9%)

91.8%

(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

Sample Size

Percentage of Hospitals

(95% CI)

Hospitals With a USP 797-Compliant Clean 

Room 235

56.2%

(50.0%−62.4%)

Hospitals With a Barrier Isolator for 

Preparing CSPs 236

54.2%

(48.0%−60.4%)

Hospital Compliance With USP 797 

Requirements for Risk Level of CSPs 

Prepared Onsite

228

 Fully Compliant 59.6%

(53.4% −65.9%)

 Mostly Compliant

29.8%

(24.0% −35.6%)

 Somewhat Compliant 6.1%

(3.1%−9.2%)

 Not at All Compliant

4.4%

(1.8% −7.0%) 

Source: OIG survey of acute-care hospitals participating in Medicare, 2013.
Page 17 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

Table A13: Hospital-Identified Challenges To Meeting Compliance With USP 797 Standards

Sample Size

Major Challenge

Percentage

(95% CI)

Minor Challenge

Percentage

(95% CI)

Not a Challenge

Percentage

(95% CI)

Space Limitations 226

49.1%

(42.8%−55.5%)

27.0%

(21.4%−32.6%)

23.9%

(18.5%−29.3%)

Cost 228

47.4%

(41.1%−53.7%)

30.3%

(24.5%−36.1%)

22.4%

(17.1%−27.6%)

Access to Needed Equipment 228

25.4% 

(19.9%−30.9%)

35.5% 

(29.5%−41.6%)

39.0% 

(32.9%−45.2%)

Number of Staff 228

22.4%

(17.1%−27.6%)

43.4%

(37.2%−49.7%)

34.2% 

(28.2%−40.2%)

Staff Skill Set 228

11.0%

(7.0%−14.9%)

45.6% 

(39.3%−51.9%)

43.4%

(37.2%−49.7%)

Source: OIG survey of acute-care hospitals participating in Medicare, 2013.
Page 18 – Margaret A. Hamburg, M.D. 

High-Risk Compounded Sterile Preparations and Hospital Outsourcing (OEI-01-13-00150) 

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

Sample Size

Percentage of Hospitals

(95% CI)

Hospitals That Either Changed or Plan To Change CSP 

Sourcing Practices 232

56.0%

(49.8%−62.3%)

Hospitals That Changed CSP Sourcing Practices in 2012 233

45.9%

(39.7%−52.2%)

Changes Made

 Decreased Outsourcing of CSPs 106

78.3%

(70.7% −85.9%)

 Requested More Information From Outside Compounding

 Pharmacies on Product Quality 105

61.9%

(52.9%−71.0%)

 Increased Quality Control Mechanisms in Hospital Pharmacy 104

54.8%

(45.5% −64.1%)

 Increased Hospital Capacity To Prepare CSPs Onsite 106

51.9%

(42.6%−61.2%)

 Contracted With Different Outside Pharmacy 105

50.5%

(41.2%−59.8%)

Hospitals That Plan To Change CSP Sourcing Practices in 

2013 234

38.5%

(32.4%−44.5%)

Planned Changes

 Request More Information From Outside Compounding

 Pharmacies on Product Quality 88

84.1%

(76.6%−91.5%)

 Increase Quality Control Mechanisms in Hospital Pharmacy 87

74.7%

(65.8%−83.6%)

 Decrease Outsourcing of CSPs 88

56.8%

(46.7%−66.9%)

 Increase Hospital Capacity To Prepare CSPs Onsite 88

54.5%

(44.4%−64.7%)

 Contract With Different Outside Pharmacy 89

51.7%

(41.6%−61.8%)