What is a 503b Outsourcing Facility?

503B Compounding Pharmacy

A compounding pharmacy is a unique facility where medications are specially mixed based on a prescriber’s instructions and formulated for an individual patient. The mixing process is called compounding. Compounding combines a variety of ingredients to make uniquely tailored medications for an individual patient or retail partnerships with healthcare providers. Compounding is necessary when a medication approved by the Food and Drug Administration (FDA) is not available or suited for the management of a specific medical condition or disease.1 Depending on their designation, some compounding facilities may only compound medications strictly for individual patient use with a prescription; other compounding facilities do not need patient prescriptions and may compound drugs in large batches for healthcare facilities and other such type organizations. One important point to note about compounded drugs is that they are not FDA-approved; they have not undergone the strict testing and regulatory processes that FDA-approved drugs undergo. The FDA does not validate the efficacy, quality, and safety of compounded drugs.

Depending on their designation, some compounding pharmacies and facilities may only compound medications for individually prescribed patient use while other compounding facilities may compound drugs in bulk orders for health care facilities, hospitals or clinics. Although compounding facilities may register with the FDA, the compounded medications are not FDA approved because of the wide variety and custom drugs they create. The FDA does not validate the efficacy, quality, or safety of compounded drugs.

Is Empower Pharmacy Registered with the FDA?

Yes, Empower Pharmacy is an FDA registered 503B outsourcing facility that is licensed to manufacture custom pharmaceutical products in large quantities for bulk shipment in all 50 states. Our facility manufactures custom and back-ordered sterile products that can be ordered in large quantities without a prescription. Registration through 503B allows us to work with individual institutions and hospitals that need large quantities of custom formulations. Although compounding pharmacies are not required to register with the FDA, Empower Pharmacy voluntarily does so.


In 2004, the Technical Assistance Bulletin (TAB), published by the American Society of Health-System Pharmacists (ASHP), and the United States Pharmacopoeia (USP) chapter <1206> was used to develop USP General chapter <797> which was the first national standard for drug compounding. This standard, however, was insufficient for large-scale compounding; as a result, there were some drug compounding failures.2

In 2013, the Drug Quality and Security Act (DQSA), was passed into law. These regulations were implemented to create standards around bulk ordered medications. As part of this Act, a new section was added to the existing Federal Food, Drug, and Cosmetic (FD&C) Act called Section 503B. This law helps control the quality and safety requirements at which compounding pharmacies manufacture bulk medication.

What are 503B Outsourcing Facilities

The main hallmark of section 503B that was added to the FD&C Act was the creation of a new category of drug compounding facility known as outsourcing facilities. Under this designation, these facilities do not have to be licensed pharmacies; also, they may or may not obtain prescriptions from individual patients.

For a drug compounder to qualify as a 503B outsourcing facility, they must meet the following requirements:

  • • registration as an official outsourcing facility
  • • engagement in the compounding of sterile drug
  • • adherence to all the requirements of section 503B5

To sign up as a 503B outsourcing facility, drug compounders need to register with the FDA and provide relevant information such as the products it intends to compound and if they will compound in bulk. This registration must be renewed annually. Following registration, an inspection of the facility is completed by the FDA to ensure that the required standards for 503B outsourcing facilities are met; subsequent inspections of the facilities take place regularly.

Although 503B outsourcing facilities must register with the FDA, their compounded drugs do not and are not approved by the FDA. However, 503B outsourcing facilities have uniform standards they are expected to adhere to during the drug compounding process; these standards are known as Current Good Manufacturing Practice (cGMP) requirements6

What is cGMP?

The cGMP requisites for drugs are standards enforced by the FDA to ensure that minimum requirements are reached during manufacturing, processing and packing. These regulations ensure that the drug products meet the recommended quality standards and are safe to use by the general population.78

There are a variety of approaches that 503B outsourcing facilities can adopt to ensure that they are following cGMP guidelines, including:2

1) Receipt and release of non-sterile ingredients and materials

503B outsourcing facilities have a required process when confirming the identity and quality of raw materials used for their drug compounds. This process ensures the received ingredients meet predetermined specifications. Part of this process involves the assessment of the bioburden; the quantity and type of contaminants in the raw material before sterilization. Identifying and assessing the raw materials may vary among 503B outsourcing facilities; this approach is not strictly defined. Failed materials are to be rejected.

2) Receipt and release of sterile ingredients and materials

Some 503B outsourcing facilities prefer to use materials and supplies that have been pre-tested and sterilized by the original manufacturer. If this method is chosen, the 503B facilities have to ensure that the materials have met the recommended levels of sterilization and quality. This information is also included in the certificates of analysis provided by the original manufacturers. Materials that do not meet the required specifications or materials that manufacturers are unable to provide certificates for should be rejected.

3) Autonomous quality unit

A quality unit has the responsibility of making sure that relevant processes are well thought out. This includes ensuring proper approvals are obtained and that a robust monitoring system is in place. A quality unit reviews material records and chooses to accept or reject them. If production errors have occurred, or there are significant deviations from normal processes, the quality unit can initiate and facilitate an error tracing protocol. With a well-established quality unit in place, manufacturing errors and deviation rates drastically decrease.

4) Facilities and environmental monitoring

The compounding environment for each drug matters. Production must take place in a suitable environment for the compounded drug to minimize the risks of error and contamination. Some elements that the outsourcing facility should address when establishing its criteria include:

  • • Maintenance of strict sanitary processes in areas where sterile production occurs to prevent cross-contamination
  • • One-way traffic flow of materials and equipment to minimize the risks of processing errors
  • • Maintenance of suitable air quality for the compounded drug product. This also involves testing air quality regularly
  • • Managing a system to document and report any significant variances

5) Personnel Training

One of the major causes of errors as well as cross-contamination during drug compounding is from personnel working in the outsourcing facility. As such, all personnel working involved in the drug compounding process must be highly trained. They are expected to maintain high standards of workplace hygiene. Protective clothing is required to enter the rooms in which sterile drugs are made. The sterile manufacturing personnel is trained regularly to assess their compliance with sterile manufacturing policies and procedures.

6) Standard operating procedures

503B outsourcing facilities are to have routinely consistent methods for compounding their drug products. All personnel is to adhere to these standard operating procedures. This is to create a safer and more reliable system for manufacturing. SOPs provide detailed explanations of all the steps involved in the drug compounding process. Done properly, SOPs eliminate confusion or ambiguity about the steps in the compounding process so trained personnel can efficiently execute their tasks.

7) Process Validations

As stated in the previous section, 503B outsourcing facilities should have SOPs to ensure uniformity and consistency of their processes. However, these processes should undergo regular validation to ensure that they are optimal for the compounded drug. During validation, data is collected from the entire process and acutely analyzed to assess if the quality of the compounded drug products meets the recommended standards. Processes that fail evaluation require re-evaluation and improved process design.

8) Equipment calibration and preventative maintenance 

Drug compounding requires a high degree of precision so that the raw materials in the drug products are in the proper concentrations. Equipment used in the drug compounding process must be calibrated to ensure its measurements are exact. 503B outsourcing facilities must have a calibration program that details the steps needed to assess the precision and accuracy of the equipment used in the drug compounding process. Calibration may be included as part of the SOP.

503A VS 503B

Prior to DQSA, compounding facilities were regulated under section 503A of the Federal Food, Drug, and Cosmetic (FD&C) Act. Following the passage of DQSA, compounding facilities are now categorized as either 503A or 503B. 503A compounding facilities are considered traditional compounders while 503B facilities are also known as outsourcing facilities. While both 503A and 503B compounding facilities generally serve the same purpose, there are some significant differences between both categories:910

  • • 503A facilities are only allowed to compound drugs tailored to individual patients; a prescription is needed before the drug can be compounded or dispensed. In contrast, 503B facilities can compound drugs in bulk for hospitals, doctor offices, or other health care facilities; they do not need a prescription prior to compounding.
  • • The United States Pharmacopoeia (USP) sets the standards that should be maintained by 503A facilities during drug compounding; some of the key standards are USP <797>, which dictates sterile compounding, and USP <795>, which regulates non-sterile compounding. 503B facilities, on the other hand, are dictated by CGMP regulations, which have been discussed at length.
  • • In 503A compounding facilities, only licensed pharmacists or physicians are allowed to compound drugs. In 503B outsourcing facilities, pharmacists are not required to have a hand-on involvement in drug compounding; however, they are required to supervise the entire process to ensure that the required standards are maintained from start to finish.

Overall, 503B outsourcing facilities play an essential role in the health care system. Since they can compound drugs in bulk, their products are generally cheaper and more affordable than drugs compounded for individual patients. In addition, 503B facilities have less restrictions regarding where they can dispense their products when compared to 503A facilities which have more stringent regulations. Furthermore, 503B outsourcing facilities have much higher quality standards that they must meet compared to their 503A counterparts.

  • 1. "Compounding and the FDA: Questions and Answers", U.S. Food & Drug Administrations. Available: https://www.fda.gov/drugs/human-drug-compounding/compounding-and-fda-questions-and-answers 
  • 2. a. b. "Quality Standards for Large Scale Sterile Compounding Facilities", Clinical IQ. Available: https://www.clinicaliq.com/images/stories/clinicaliq_compounding%20quality%20standards.pdf 
  • 5. "Facility Definition Under Section 503B of the Federal Food, Drug, and Cosmetic Act", U.S> Department of Health and Human Services, Food and Drug Administration. Available: https://www.fda.gov/media/97359/download 
  • 6. "Questions and Answers: Outsourcing Facility Registration", U.S. Food & Drug Administration. Available: https://www.fda.gov/drugs/human-drug-compounding/questions-and-answers-outsourcing-facility-registration 
  • 7. "Facts About the Current Good Manufacturing Practices (CGMPs)", U.S. Food & Drug Administration. Available: https://www.fda.gov/drugs/pharmaceutical-quality-resources/facts-about-current-good-manufacturing-practices-cgmps 
  • 8. "Current Good Manufacturing Practice (CGMP) Regulations", U.S. Food & Drug Administration. Available: https://www.fda.gov/drugs/pharmaceutical-quality-resources/current-good-manufacturing-practice-cgmp-regulations#:~:text=The%20CGMP%20regulations%20for%20drugs,strength%20it%20claims%20to%20have. 
  • 9. "What are Compounded Drugs, and How Can They Be Kept Safe", Food & Drug Safety. December 2017. Available: https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2017/12/what-are-compounded-drugs-and-how-can-they-be-kept-safe 
  • 10. Gianturco, S.L., Yoon, S., Yuen, M.V., Mattingly, A.N., "Outsourcing facilities and their place in the U.S. drug supply chain", Journal of the American Pharmacists Association. August 2020. Available: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7453203/#