The New Federal Compounding Law: What We Know and What We Don’t

 In Practice Building

Mike Corrado

In August 2014, I was asked to review the provisions of the Drug Quality and Security Act (DQSA) for the readers of NDNR. I have been asked once again to describe what has taken place since the passage of DQSA and how it may affect your practice and your patients.

FDA Guidance for 503A Pharmacies

In October 2015, the FDA released Guidance for Section 503A (“traditional”) compounding pharmacies.1 This document describes how the US Food & Drug Administration (FDA) will enforce Section 503A of the Federal Food, Drug & Cosmetic (FD&C) Act, which was reaffirmed with the passage of DQSA. The guidance is of particular importance to naturopathic physicians who administer IV supplementation to their patients in their office.

The guidance states that compounds are exempt from certain portions of the FD&C Act if certain conditions are met, including the following:

The drug product is compounded in compliance with the United States Pharmacopoeia (USP) chapters on pharmacy compounding using bulk drug substances, as defined in 21 CFR 207.3(a)(4), that comply with the standards of an applicable USP or National Formulary (NF) monograph, if one exists.

The FDA makes no distinction between “pharmacy” compounding and “physician” compounding done in an office setting. Any physician mixing 3 or more ingredients together that will be administered in an IV (eg, Myers’ cocktail) must abide by the applicable USP standard. USP 797 describes the guidelines, procedures and compliance requirements for compounding sterile preparations and sets the standards that apply to all settings in which sterile preparations are compounded.

If you are mixing 3 or more ingredients together (whether they are already sterile or not), you will have to do so in an enclosed, positive-pressure environment. The easiest, least expensive way to do so would be to purchase a small laminar-flow hood for use in your office. Practitioners who “compound” 3 or more ingredients together for use in an IV should familiarize themselves with USP 797.

 You can view the Final Guidance For 503A Pharmacies here. 

Interstate Shipping: Memorandum of Understanding (MOU)

In February 2015, the FDA issued Draft Guidance to address the interstate shipping of “inordinate” amounts of compounded medications.2 Known as an MOU, this letter will be sent to each state for approval by the state legislature. There will be restrictions on interstate shipping of compounds regardless of whether a state signs the MOU or not. Each state will be responsible for making sure that compounding pharmacies are compliant, whether that state signs the MOU or not.

If a state signs the MOU…

a pharmacist, pharmacy, or physician has distributed an inordinate amount of compounded human drug products interstate if the number of units of compounded human drug products distributed interstate during any calendar month is equal to or greater than 30 percent of the number of units of compounded and non-compounded drug products distributed or dispensed both intrastate and interstate by such pharmacist, pharmacy, or physician during that month.

If a state declines to sign an MOU…

the licensed pharmacist, licensed pharmacy, or licensed physician distributes (or causes to be distributed) compounded human drug products out of the State in which they are compounded in quantities that do not exceed 5 percent of the total prescription orders dispensed or distributed by such pharmacy or physician.

Aside from the obvious disruption in obtaining medications from an out-of-state pharmacy, this Draft MOU creates many problems. First, it creates an unfunded mandate requiring taxpayers to foot the bill for enforcing the MOU, whether the state signs it or not. Many state Boards of Pharmacy simply do not have the resources to enforce this mandate, and may recommend that it not be signed. Second, the FDA combines the definitions of “dispensing” and “distribution” for the purposes of this MOU, when previous Federal legislation has described these as separate transactions; this results in greater confusion for compounding pharmacies. Lastly, the FDA has provided no definitions as to what a “unit” will be. Is 1 capsule considered a “unit”? Is 1 vial considered a “unit”? Or, will a “unit” be something completely different?

The definitions used by the FDA to describe “inordinate” are not based on any demonstrable scientific evidence that indicates that this will somehow enhance patient safety. On the contrary, it could be argued that these restrictions will actually hurt patients rather than protect them. For example, let’s assume that a pharmacy is engaged in interstate shipping in a state that has signed the MOU and that the pharmacy has already shipped 29% of their total “units” across state lines. It receives another 5 prescriptions to ship interstate, but will exceed 30% should it fill all 5 prescriptions. How does this pharmacy choose which patients it can ship to? Does that mean you, as the provider, will now have to research another compounding pharmacy that can fill this prescription?

You can view the Draft MOU here.

Office-use Compounding

Office-use compounding is the term used to describe the ability of a compounding pharmacy to prepare a compound in advance of a patient prescription, to be used by a practitioner for administration in an office setting. Despite numerous statements from the House and Senate, on record in the Federal Register, the lack of any language specifically prohibiting office-use compounding in DQSA, and the fact that over 40 states allow office-use compounding, the FDA has steadfastly prohibited office-use compounding by 503A pharmacies since DQSA was signed into law. This especially impacts naturopathic physicians who need to keep compounds on hand to administer to patients without being able to provide a prescription in advance.

In a letter to Congress received on March 7, 2014, the FDA reaffirmed its position that only 503B pharmacies (outsourcing facilities) have the ability to perform office-use compounding. In addition, the FDA states that it will continue to exercise its authority to protect the public by labeling any compounds prepared for office-use by a 503A pharmacy as “adulterated” and “misbranded” and in violation of Federal law.

“Fix The DQSA” Legislation

Senator David Vitter (R-LA) introduced S. 1406, entitled the Saving Access To Compounded Medications For Special Needs Patients Act. This law would “fix” certain portions of the DQSA, including allowing office-use compounding and replacing language in the MOU. This legislation currently has been referred to the Senate HELP (Health, Education, Labor and Pensions) Committee but has not yet been brought to the floor of the Senate for a vote. It currently has no co-sponsors. 

PCAC / Bulk Drug Substances

As required in DQSA, the FDA has created a Pharmacy Compounding Advisory Committee (PCAC) that will provide advice on scientific, technical, and medical issues concerning drug compounding. The composition of the PCAC includes 14 voting and non-voting members from the pharmaceutical industry, medicine, government, and consumer advocate groups.

As you may recall, the DQSA required Section 503A compounding pharmacies to only use bulk drug substances that:

  • were part of an FDA-approved drug


  • had a USP monograph


  • appeared on a list established by PCAC

PCAC Regulations

The PCAC is primarily responsible for reviewing and approving nominations to the bulk drug substances (Positives) list, the “difficult to compound” list, and the “do not compound” (Negatives) list for both 503A and 503B pharmacies. Over 2000 bulk drug substances were submitted for review by PCAC for inclusion on the “Positives” list by stakeholders.

The PCAC met 3 times in 2015, and a number of important regulations were approved. Please note that all decisions of the PCAC are finalized only after approval by the Secretary of Health and Human Services and subsequent publishing in the Federal Register.

  1. The FDA will not recognize USP Dietary Supplement monographs as being applicable for compounding, and are therefore prohibited from being used as bulk drug substances.
  2. Several of the bulk drug substances nominated by naturopathic physicians were already voted to be prohibited from future use in compounding. These include germanium sesquioxide, rubidium chloride, curcumin, and glycyrrhizin.
  3. A total of 71 bulk substances and formulations have been nominated for the “difficult to compound” list. These are substances and formulations that present a demonstrable difficulty in compounding that reasonably demonstrate an adverse effect on the safety or effectiveness of the drug product. Most of the nominations were made by the pharmaceutical industry; they include hCG, progesterone, testosterone, estriol, estradiol, bioidentical pellets, sustained-release formulations, and transdermal delivery systems.
  4. In October of last year, the FDA issued new guidance for the use of bulk drug substances used in compounding for 503A and 503B pharmacies The document acknowledged that some patients might be unable to obtain certain compounds and that the FDA would not penalize pharmacies that continued to use these bulk substances while a “Positives” list was being developed.

This new guidance created 4 separate lists3:

  • List 1 – Bulk Drug Substances Under Evaluation
  • List 2 – Bulk Drug Substances That Raise Safety Concerns
  • List 3 – Bulk Drug Substances Nominated Without Adequate Support
  • List 4 – Bulk Drug Substances That May Not Be Used In Compounding

According to this guidance, the FDA allowed additional information to be presented in support of bulk substances on List 3 to be submitted until the end of December 2015.

The New Lists for 503A pharmacies can be found here.

Recent Developments

There was some very encouraging news this past December from Congress, included in an Omnibus Appropriations bill that would help fund the government through next fall.4 The House Appropriations Committee expressed concern that the FDA had exceeded its authority under DQSA. First, the committee rejected the FDA’s request for additional funding to implement parts of DQSA, and took action recommended by stakeholders. Second, Congress mandated the FDA to release new guidance within 90 days that will once again allow office-use compounding for 503A pharmacies. Third, Congress has asked the FDA to re-issue a new Memorandum of Understanding that does not attempt to combine the separate transactions of “dispensing” and “distribution.” Lastly, the FDA has 90 days to tell Congress when it expects the entire “Positives” list to be completed.

The Appropriations Committee Bill can be found here.

What Can You Do?

The recent positive developments from Congress are the result of countless hours of lobbying and reams of correspondence from a large consortium of stakeholders on behalf of compounding pharmacies. A diverse group of organizations, such as the American Association of Naturopathic Physicians, International Academy of Compounding Pharmacists, and the Alliance For Natural Health, have joined forces with the American Academy of Dermatology, the American Academy of Ophthalmology, and state pharmacy associations to protect the rights of patients to obtain compounded medications. They all agree that much work still needs to be done. Here are a few suggestions for how you can help:

  • Empower your patients taking hormone replacement to contact their US congressman and senators to ask why the FDA is seeking to prohibit them from obtaining compounded hormone replacement
  • Contact your senators and ask them to co-sponsor S.1406
  • Stay informed! Sign-up for newsletters from organizations like Alliance for Natural Health. Be sure to visit the websites for the International Academy of Compounding Pharmacists and the AANP.
  • Be prepared to help. If you have documented clinical experience using a compounded medication, your information could be useful in getting that substance approved for future use. Make sure you share this information with one of the organizations mentioned above.

Mike Corrado is a marketing consultant for Civic Center Pharmacy in Scottsdale, AZ. A graduate of New York Institute of Technology, with degrees in business and marketing, Mike has worked as a sales and marketing representative for the pharmacy for over 10 years, and is a member of the International Academy of Compounding Pharmacists (IACP). He can be reached at



  1. US Food & Drug Administration. Pharmacy Compounding of Human Drug Products Under Section 503A of the Federal Food, Drug, & Cosmetic Act: Guidance. October 2015. Available at: Accessed January 1, 2016.
  2. US Food & Drug Administration. Draft Memorandum of Understanding Addressing Certain Distributions of Compounded Human Drug Products Between the State of [insert state] and the U.S. Food and Drug Administration. February 2015. Available at: Accessed January 1, 2016.
  3. US Food & Drug Administration. Bulk Drug Substances Nominated for Use in Compounding Under Section 503A of the Federal Food, Drug, and Cosmetic Act. October 2015. Available at: Accessed January 1, 2016.
  4. House of Representatives. Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill, 2016. 114th Congress Report. Available at: Accessed January 1 2016.
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