Pharmacy Compounding: 503A and 503B
US law gives compounders two routes. Under section 503A of the FD&C Act, a licensed pharmacist or physician compounds for an identified patient on a valid prescription, under state pharmacy oversight and the USP compounding chapters, and is exempt from cGMP, new drug approval and the adequate-directions labelling rule. Under section 503B, a facility that compounds sterile drugs may register with FDA as an outsourcing facility. It may then compound without patient-specific prescriptions, but it must meet cGMP, report what it makes, report adverse events and accept risk-based FDA inspection.
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Section 503A: Patient-Specific Compounding
A drug compounded under 503A is exempt from section 501(a)(2)(B) (cGMP), 502(f)(1) (adequate directions for use) and 505 (new drug approval) if it meets the section’s conditions. It must be compounded for an identified individual patient on a valid prescription, or in limited quantities in anticipation of one where there is a history of such prescriptions. The compounder must be a licensed pharmacist in a state-licensed pharmacy or federal facility, or a licensed physician.
Bulk drug substances must comply with a USP or NF monograph where one exists, or be components of FDA-approved drugs, or appear on FDA’s 503A bulks list. They must come from an FDA-registered establishment and carry a valid certificate of analysis. Other ingredients must meet applicable monographs and the USP chapter on pharmacy compounding.
A 503A compounder may not compound drugs withdrawn for safety or effectiveness reasons, or regularly or in inordinate amounts compound essentially copies of commercially available drugs, unless the prescriber determines a change makes a significant difference for the patient. Interstate distribution is limited to 5 percent of total prescription orders unless the state has entered FDA’s memorandum of understanding on interstate distribution.
Section 503B: Outsourcing Facilities
An outsourcing facility is a facility at one location that compounds sterile drugs, has elected to register with FDA, and complies with all of section 503B. It need not be a licensed pharmacy and may or may not obtain patient-specific prescriptions. Compounding is by or under the direct supervision of a licensed pharmacist.
Its drugs are exempt from 502(f)(1), 505 and 582 — the DSCSA tracing requirements — but not from cGMP. Bulk drug substances must be on FDA’s 503B list of substances with a clinical need, or be used to make a drug on the drug shortage list. The facility may not compound drugs that are essentially copies of approved drugs, except during a shortage.
What a 503B Facility Owes FDA
An outsourcing facility registers each year between 1 October and 31 December and pays the annual establishment fee. On first registering, and every June and December, it reports the drugs it compounded in the previous six months, with each active ingredient and its source, strength, dosage form, route and package. It submits adverse event reports in line with 21 CFR 310.305. It is inspected on a risk-based schedule and is not eligible for the pharmacy exemption from inspection.
Labels must state “This is a compounded drug” or an equivalent, the facility’s name and contact details, lot number, established name, dosage form and strength, compounding and expiration dates, storage instructions, and “Not for resale”. Container labelling also carries the MedWatch reporting details and directions for use.
USP Chapters and State Law
For 503A compounders, the operating standards are the USP compounding chapters as adopted by state boards of pharmacy: <795> for nonsterile and <797> for sterile preparations. The revised versions of both chapters became official on 1 November 2023. They set requirements for personnel training, facilities and engineering controls, environmental monitoring, beyond-use dates and release testing.
Outsourcing facilities work to cGMP, so the reference point for sterile operations is aseptic-processing practice under 21 CFR 211 rather than pharmacy compounding precedent. Many outsourcing facilities also hold state licences, and the state fees and rules continue to apply.
FREQUENTLY ASKED
Does cGMP apply to a 503A pharmacy?
No. Section 503A exempts qualifying compounded drugs from section 501(a)(2)(B), the cGMP requirement, as well as from new drug approval and adequate-directions labelling. Quality is governed by the USP compounding chapters as adopted by the state and by state pharmacy law. Other adulteration provisions, such as insanitary conditions, still apply.
Can an outsourcing facility compound without prescriptions?
Yes. Section 503B says an outsourcing facility may or may not obtain prescriptions for identified individual patients. In exchange it must register with FDA, comply with cGMP, report its products every June and December, report adverse events and accept risk-based inspection.
When did the revised USP <795> and <797> take effect?
Both became official on 1 November 2023, according to USP.
Does an outsourcing facility have to be a pharmacy?
No. Section 503B states that an outsourcing facility is not required to be a licensed pharmacy, although many hold state licences and remain subject to state requirements and fees.
The inspection-readiness playbook for this topic
PUT THIS PLAYBOOK TO WORK
- HOW-TO GUIDEHow to Choose Between 503A and 503B Compounding →Decide which federal compounding route a business model needs, and what each route then requires.
- TEMPLATECompounding Route Assessment (503A or 503B) →
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