The FDA issued three draft guidance documents applying to compounding pharmacies, hospitals, and outsourcing facilities. The guidance aims to clarify prescription requirements, how 503A applies to hospital pharmacies, and the definition of "facility" in 503B. Stakeholders have 90 days to provide feedback. The guidance restricts compounding pharmacies to filling individual prescriptions but allows in-house hospital pharmacies to distribute without prescriptions within 1 mile. It also narrows the definition of "facility" to mean a single operation within one building. Proposed legislation could contradict the FDA's policies by allowing compounding without individual prescriptions.

1. FISHERBROYLES.COM
THE NEXT GE N ER AT IO N LA W FI R M ®
FDA Issues Draft Guidance for Compounding Operations
PRACTICE AREA / INDUSTRY: HEALTHCARE
Brian E. Dickerson Anthony J. Calamunci
brian.dickerson@fisherbroyles.com anthony.calamunci@fisherbroyles.com
202.570.0248 419.376.1776
Nicole Hughes Waid
nicole.waid@fisherbroyles.com
202.906.9572
April 25, 2016
On April 15, the U.S. Food and Drug Administration (“FDA”) issued three draft guidance documents that apply
to pharmacies, hospitals and outsourcing facilities who compound drugs for human use. The FDA intends
for the proposed policies to clarify the prescription requirement in section 503A of the FD&C Act; how the
agency intends to apply 503A to hospitals/health systems; and further defines the term “facility” in 503B.
Stakeholders will have 90 days to provide written feedback to the FDA. Click here to view the draft guidance.
Draft Guidance: Prescription Requirement Under Section 503A of the Federal Food, Drug and
Cosmetic Act
Currently to meet the prescription requirement under 503A, a prescription must identify the patient for whom
the drug has been prescribed. Compounding pharmacies may only compound medicines to fill an individual
prescription or in limited quantities in anticipation of the receipt of a prescription.
The new policy regarding a valid prescription order requires physicians to make written notations in a patient
chart, whether the patient is inpatient or in the office setting. The FDA recommends the following statement:
“Per [type of communication] with [name of prescriber] on [date], [name of prescriber] has advised that
compounded [name of drug] is necessary for the treatment of [name of patient].”

2. FISHERBROYLES.COM
THE NEXT GE N ER AT IO N LA W FI R M ®
The FDA also defines “limited quantities” as no more than a 30-day supply to be determined by the number
of prescriptions the pharmacy received for identified individual patients in a 30-day period over the past year.
Pharmacists will be required to keep records of the calculations used to determine a 30-day supply.
Lastly, because pharmacies may only fill prescriptions upon receipt of a valid prescription order, they are
prohibited from dispensing office stock/office use products to hospitals, physicians, and clinics. Only
outsourcing facilities registered under section 503B can compound and distribute sterile and non-sterile, non-
patient-specific drug products to hospitals, clinics, and health care practitioners for office use.
Draft Guidance: Hospital and Health System Compounding Under the Federal Food, Drug, and
Cosmetic Act
Some hospital pharmacies or standalone pharmacies that are part of a health system may be registered with
the FDA as outsourcing facilities under 503B and others are state-licensed pharmacies under 503A. This
guidance sets out how the FDA intends to apply section 503A to drugs compounded in state-licensed hospital
or health system pharmacies for use within the hospital or health system.
Contradictory to the guidance above which does not permit 503A pharmacies from distributing to hospitals,
clinics and physicians, the FDA makes a concession for state-licensed pharmacies under 503A that are
owned by a hospital or health system that allows for the distribution of compounded medicines without a valid
individual prescription. The caveat is the drugs may only be distributed within the hospital or health system
and the distributing pharmacy must be within a 1-mile radius of the hospital or health system. Pharmacies
owned by a hospital or health system that are located more than a mile away must use a 503B licensed
outsourcing facility or apply for its own outsourcing facility permit.
Facility Definition Under Section 503B of the Federal Food, Drug, and Cosmetic Act
Section 503B defines an outsourcing facility as “a facility at one geographic location or address.” This
guidance is intended to further define the term “facility” and whether multiple suites at a single address
constitutes one or multiple facilities, or whether a single location can be run separate operations under 503A
and 503B.
In this new policy, the FDA has narrowed its interpretation of “facility” to mean a business under one
management and engaged in human drug compounding at a single location. The agency considers all
activities, equipment and materials as part of the facility and notes that all drugs compounded in an
outsourcing facility are regulated under 503B and subject to CGMP requirements. These standards cannot
be avoided by subdividing or segregating operations within an outsourcing facility. What this makes clear is
that a hospital or health system cannot locate 503A and 503B operations in the same building or in close

3. FISHERBROYLES.COM
THE NEXT GE N ER AT IO N LA W FI R M ®
proximity to each other unless the 503A pharmacy complies with CGMP and 503B. Given that this is a costly
measure, most hospitals and health systems are unlikely to do so.
Proposed Legislation Could Bring More Controversy to Compounding Pharmacies
As the FDA attempts to solidify their positon on compounding drugs, the House Appropriations Committee is
proposing an amendment to a spending bill that would allow pharmacists to compound medicines without a
prescription for an individual patient which is directly opposite of the proposed FDA policy. The International
Academy of Compounding Pharmacists (“IACP”) are thoroughly reviewing the guidelines and are expected
to provide public comment shortly. IACP posted the following on its website:
“…Based on what we've analyzed to date, IACP is disappointed, once again, that the FDA is ignoring
Congressional intent in regards to office-use compounding with the publication of these drafts. It is clear the
FDA believes that non-hospital owned 503A pharmacies cannot participate in office-use compounding while
in the same breath, allowing hospital-owned pharmacies (which are still under the jurisdiction of 503A) CAN
participate in office-use compounding as long as certain restrictions are met. Statutorily, this makes absolutely
no sense – how can one “type” of 503A pharmacy perform office-use while another may not? In addition,
FDA’s draft guidance on anticipatory compounding is confusing at best and may ignore the clear language of
the bill when it comes to defining this practice.”
The FisherBroyles Health and Pharmacy Law team is closely following this subject and can answer questions
regarding the draft guidance and assist with preparing and submitting comments to the FDA. Please contact
one of the following partners.
Brian E. Dickerson
brian.dickerson@fisherbroyles.com
202.570.0248
Nicole Hughes Waid
nicole.waid@fisherbroyles.com
202.906.9572
Anthony J. Calamunci
anthony.calamunci@fisherbroyles.com
419.376.1776