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503B Outsourced Compounding Facilities & Services Q&A | Gregory Burger and Fred Massoomi, Visante

Q: What are the different types of outsourcing entities for compounded products?

It is worth reiterating and detailing the different models we have in the United States. 503A relates to patient specific compounding practices traditionally seen in pharmacies, clinics, and hospitals, while 503B covers the outsourcing facilities. Under Section 503A of the Food, Drug, and Cosmetic Act, a pharmacy may engage in traditional pharmacy compounding provided that it (1) limits its compounding to prescriptions for identified individual patients and makes no more than limited quantities of compounded drugs in advance of receiving prescriptions, (2) does not make drugs (either regularly or in inordinate amounts) that are essentially copies of commercially available drugs, and (3) uses permissible ingredients. Products must not be contaminated or prepared under insanitary conditions; the drugs must be the correct strength and purity; and the drugs’ labeling, advertising, and promotion must not be false or misleading.

Under Section 503B of the FD&C Act, so-called “outsourcing manufacturers” may compound drugs in unlimited quantities (without first receiving prescriptions) if they are compounding drugs for which there is a drug shortage, or compounding drugs using specific ingredients, as identified on a list published by FDA, for which there is a clinical need. In addition, outsourcing facilities, similar to traditional pharmacy compounders operating under Section 503A, cannot compound drugs that are essentially a copy of one or more approved drugs. Outsourcing facilities must also, among other things: (1) 'voluntarily' register with FDA; (2) comply with FDA’s stringent cGMP regulations; (3) open its operations to FDA inspections; (4) report adverse events to FDA; (5) provide FDA with detailed information about the products they compound; and (6) in some instance comply with state specific requirements.

It is important to emphasize that the FDA regulates drug compounding under Sections 503A and 503B of the FD&C Act; which covers all types of compounding of drugs for patients including what happens in hospitals and clinics.

Q: What is the current outsourcing manufacturing landscape?

Since the approval of the 2013 Drug Quality and Security Act and the introduction of the 503B outsourcing manufacturers category, we have seen a considerable amount of activity. As of October 2019, there were 76 FDA registered facilities. This number continues to fluctuate as FDA has made good on its promise to protect the public by holding 503B facilities to the higher compounding standards outlined in current Good Manufacturing Practices (cGMP). The current landscape has stabilized, and 503B facilities better understand FDA expectations and strive to meet and exceed them. The one area that the 503Bs have been unable to meet is the immediate demands for addressing emergent drug shortages in a timely manner. cGMP is a complexity of processes that requires a multitude of validations and absolute control of the compounding processes and it does not lend itself to addressing emergent drug shortages. The one assurance and peace of mind is FDA has oversight of the outsource manufacturing process.

Q: How should an organization decide if there is a need to outsource the compounding of medications?

There are many factors to take into account when deciding to outsource: staffing, availability of drugs on extended shortage, ready-to-use products, extended beyond use dates, and increased regulations.

In the U.S., there has been an increasing trend of turnover and vacancies amongst hospital pharmacy supportive staff, i.e., compounding staff. This has resulted in a gap in consistent and competent staff to compound medications. With the estimated onboarding and training on sterile compounding principles taking approximately six weeks beyond the training for pharmacy services, outsourcing offers a means to filling the hospital compounding staff gap.

FDA has acknowledged that outsource manufacturers provide an important channel to some drugs on shortage. In some situations, the outsourcers may become the primary source for critical medications. The use of outsourcers could start out as episodic due to a shortage, potentially transitioning into an integral part of a healthcare facility’s operations.

Outsourcers have created some unique compounded products to gain market share: ready-to-use anesthesia syringes; patient-controlled analgesia (PCA) preparations; cardioplegia solutions; total parenteral nutrition; tamper-evident controlled substances products; hazardous drug doses with integrated closed system transfer devices; concentrated drug systems for dilution; and drug filled reservoir devices. These systems offer an enhanced era of the most ‘ready-to-use’ products, thus minimizing risks to patients through the manipulation of products.

Hospitals and health-systems have had USP recently update and introduce standards surrounding pharmaceutical compounding of non-sterile and sterile preparations. With the recent announcement by USP to delay the doom-and-gloom-like deadline of December 1, 2019, for expected compliance, sites have a slight reprieve to strive towards compliance. For sites choosing not to move forward with full compliance or choosing to not establish a cleanroom suite for maximum BUDs, outsource manufacturers offer a solution for bridging dating gaps.

Q: What steps should we take to start reviewing outsource manufactures?

The responsibility of choosing drugs to use in patients resides with each hospital and health-system, and more specifically on pharmacy leadership.

The diligence spent choosing a formulary candidate and a wholesaler needs to be applied to choosing an outsourcer for medications. The American Society of Health-System Pharmacists (ASHP) Foundation has developed the Outsourcing Sterile Products Preparation: Contractor Assessment Tool as a resource. This toolkit provides sites with a starting point by providing a comprehensive and organized process to assess vendors based on criteria for regulatory compliance and more importantly patient safety measures.

A review of state and FDA inspection reports should be part of assessment process. Reading through these reports gives a glimpse into how a company operates.

If an outsource manufacturer provides hazardous drugs, sites will want to make sure aspects of the 2004 NIOSH Alert Preventing Occupational Exposures to Antineoplastic and Other Hazardous Drugs in Healthcare Settings and the finalized USP <800> Hazardous Drugs – Handling in Healthcare Settings standards are in place and documented.

In some cases, group purchasing organizations (GPOs) have vetted all the noted critical steps on behalf of their members prior to any contracting. However, sites will want to review the summary report of GPO findings, terms of the contract with regards to quality and recalls. Through this process sites may decide the information provided may not be enough to make a decision warranting additional investigation.

Sites may choose to do an on-site inspection of a prospective company to fill gaps not filled in the paper review process. Meeting the key individuals providing products for their patients and visualizing the compounding/manufacturing processes provides a wealth of information beyond the scope of a written report. Obviously, if the site visit does not give folks the "warm-fuzzy" feeling of "I can trust this company with compounding medications for our patients," then that must be taken into account.

Inquiring about a vendor's quality and control program is key to establishing a comfort with their products. Diligence should be spent understanding the staff training programs, product and supply selection processes, accreditations, historical product availability, supporting processes, certification of analysis reports for each batch, and the overall transparency of all documents associated with producing a batch. Creating a true ‘partnership’ with an outsourcing manufacturer is relying on them to provide the highest-quality products for patients with a transparent quality and safety program in return for purchasing their products.

An important note to keep in mind as sites set up a process to assess vendors is that the outsourcing companies are under continuous monitoring by regulatory agencies, and sites should be continuously diligent in monitoring their outsourcer(s) progress.

The burden of selecting the safest drug product for patients lies with organization purchasing the products.

Q: What aspects should be considered when contracting with an outsourcing company?

The contract or business agreement between the outsourcing company and the healthcare organization should require the compounding facility to provide real-time notification of any adverse events or recalls associated with compounded drug products. The business agreement should also require the vendor to promptly share any communications between the facility and FDA and/or state regulators, including inspection reports and warning letters, that relate to the safety, efficacy, or quality of any compounded drugs and not just line items purchased. The business agreement should also include the facility’s commitment to complying with all applicable federal and state requirements, along with all relevant USP chapters, including Chapter <800>.

Q: How are state agencies involved in the process for monitoring 503B outsource manufacturers?

The FDA has full oversight over compounding manufacturers registered as a 503B and is relying on state boards of pharmacy to manage the oversight of 503A compounding pharmacies providing patient specific compounded drugs. In this collaborative approach to enhancing the safety of the commercial compounded drug supply, a sense of stability is starting to happen.

It is important to point out that states vary in the 503B outsourcer oversight process. A few have taken on the onerous process of requiring outsourcers to not only register with the FDA, but also register with various state agencies. Whereas, some states have relied on the FDA process to provide regulatory control over the outsourcers.

Hospitals will want to ensure that proper registrations are in place prior to setting up any contracts. Larger health-systems that may have facilities in multiple states will need to ensure that for each state, the outsourcer(s) meets the regulatory requirements. The burden of regulatory compliance for outsourcers lies with the purchaser of the products.

Q: Should there be concern with all the recalls and notifications from the FDA with regards to the outsource manufacturer products?

It is not surprising to see the activity from FDA as it is the normal process utilized for the pharmaceutical industry for conventionally manufactured products. The activities of FDA is highly visible and transparent. FDA publicizes all activities on 503B’s from registration, to inspection, to warning letters, and to legal activities. FDA utilizes form 483, "Inspectional Observations," to document and communicate concerns discovered during inspections. In most cases, the response to FDA observations are not publicized, and sites may want to request these documents as part of the review process. If a company does not meet FDA expectations, FDA can issue a warning letter to improve processes, or even a cease and desist order to stop manufacturing and distributing products for patient use.

Sites must be diligent with continually monitoring FDA, and in some cases, state regulatory activities of outsourced manufacturers.

Q: Are products from outsourcer manufacturers safe?

Products are safer today through the FDA and state oversight of the compounding processes. However, selecting a product based on the emotional need of having a product with a label versus selecting one based on reviewing the quality of the contents opens the door to potential lapses in screening products.

Sites should establish a formal mechanism for inspecting each outsourced product for product defects and reporting adverse events suspected for outsourced products. Every single dose from outsource manufacturers require the same diligence applied to conventional manufactured products (from pharmaceutical manufacturers) to identify variances from what is expected in a timely manner.

All concerns of product integrity and safety must be reported to the outsource manufacturer and through the FDA MEDWatch program.


Gregory Burger, MS, RPh, FASHP, Senior Vice President, Hospitals & Health Systems Services, Visante

Gregory Burger, MS, RPh, FASHP, is Visante Senior Vice President, Hospitals & Health Systems Services. He provides expertise in hospital pharmacy operations management, standards and compliance, patient safety, key USP chapters (<795>, <797> and <800>), multiple facility redesigns and launches, retail administration, automation, and specialty pharmacy, including the 340B Drug Discount Program to hospital and health systems nationwide and in Canada.


Fred Massoomi, PharmD, FASHP, Senior Director, Visante

Fred Massoomi, PharmD, FASHP, is Visante’s Senior Director and expert in sterile compounding and hazardous drugs. He is a researcher, educator, and crusader for proper hazardous drug management and the safe disposal of pharmaceutical waste. His specialties include hospital pharmacy management, key USP chapters (<795>, <797>, and <800>), NIOSH hazardous drug compliance, pharmaceutical waste regulations, infectious diseases, and pharmacy automation.

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