Compounding and Retail Pharmacies: What's the Difference?

A compounding pharmacy prepares a medication from individual ingredients on a prescriber's written order, instead of dispensing a product that arrived from a manufacturer already finished. A retail pharmacy dispenses those manufactured products. Bayview Pharmacy in Warwick, Rhode Island has worked as a compounding pharmacy since 2006, and this page explains what compounding is, what the law allows a compounding pharmacy to make, and where the line sits between the two kinds of pharmacy.

What is a compounding pharmacy?

Compounding is the preparation of a medication for one patient, in the strength, dose form and ingredient list the prescriber specified. A pharmacist starts with pharmaceutical grade ingredients, prepares the finished item in the pharmacy, and labels it for that named patient. Our overview of what a compounding pharmacy is and how the process works walks through each of those steps.

Every compounded preparation begins with a prescription. There is no shelf of finished compounded products waiting for a walk-in customer, because a preparation made against one person's prescription cannot be handed to someone else. To see the range of preparations Bayview keeps formulas for, start with the searchable catalog of compounded medications, which is organized by therapeutic category.

Compounded medications are not FDA-approved. FDA approves manufactured drug products after reviewing a manufacturer's data, and a preparation made one prescription at a time does not go through that review. Compounding is regulated instead through state boards of pharmacy, federal law, and United States Pharmacopeia standards.

How is a compounding pharmacy different from a retail pharmacy?

Both hold a state pharmacy license, both require a valid prescription for prescription drugs, and both are staffed by licensed pharmacists. The difference is what happens after the prescription arrives.

A retail pharmacy selects a manufactured product, labels it and counsels the patient. The tablet, capsule or cream left the factory finished, and nothing about it changes at the counter. A compounding pharmacy receives an order no manufactured product matches, and prepares it from components.

Neither model replaces the other. Most people who use a compounding pharmacy still fill the rest of their prescriptions at a retail counter, and a compounded preparation is appropriate only when the prescriber decides that no manufactured product fits the patient.

What does 503A mean, and how is it different from 503B?

Section 503A of the Federal Food, Drug, and Cosmetic Act describes traditional pharmacy compounding: a licensed pharmacist prepares a medication for an identified individual patient on receipt of a valid prescription. Bayview is a 503A pharmacy. Section 503B, added by the Drug Quality and Security Act of 2013, created a separate category called an outsourcing facility.

A 503B outsourcing facility registers with FDA, may prepare batches without a patient-specific prescription, and is required to follow current good manufacturing practice. Hospitals and clinics that stock prefilled syringes or bags for office use generally buy from a 503B. A patient holding a prescription for a personalized preparation is dealing with a 503A.

The distinction matters when you read about compounding online, because rules written for outsourcing facilities are often quoted as though they governed prescription pharmacies. A side by side comparison of 503A pharmacies and 503B outsourcing facilities sets out the prescription, oversight and standards rules for each.

Why would a prescriber order a compounded medication?

The reasons are variations on one problem: the manufactured product does not fit the patient sitting in front of the prescriber. Five situations account for most compounded prescriptions.

• The strength is not made. The prescriber wants a dose that falls between marketed strengths, or far below the lowest one.
• The dose form does not suit the patient. A patient may not be able to swallow a capsule, or may need the drug delivered to skin, mouth, nose, eye or rectum instead of by mouth.
• An ingredient has to come out. Dyes, lactose, gluten, alcohol, preservatives and specific flavorings can be excluded from a compounded preparation.
• The manufactured product is discontinued or in shortage. A compounding pharmacy can prepare an alternative while the commercial supply is unavailable.
• The patient is an animal. Species and body weight often make human dose forms unusable.

Dose form is the most common trigger. A patient who cannot swallow a capsule may instead be prescribed a liquid, and a custom oral suspension can be prepared at the concentration the prescriber specifies, including for administration through a feeding tube.

Route is the second. A drug manufactured only as a tablet can sometimes be prescribed as a cream, a rinse or a suppository when the prescriber wants it delivered where the problem is rather than through the whole body. Magic mouthwash is a familiar example of a preparation built around the route rather than the molecule.

Sublingual and buccal forms sit in the same category, and dissolve in the mouth rather than being swallowed. Our post on compounding sublingual medications goes through how troches and rapid dissolve tablets are put together.

Strength is the third. Low dose naltrexone is prepared at a small fraction of the 50 mg strength that is manufactured commercially, which is a dose no marketed tablet provides. Published work on low dose naltrexone is limited to small trials and case series, and whether it is appropriate is a prescriber's decision.

Dermatology is where several of these reasons meet at once, because a prescriber may want two or three actives in one base, at strengths chosen for the patient's skin. Compounded tacrolimus preparations can be prepared for the ear, scalp, skin or rectum, routes for which no commercial product exists.

The rest of Bayview's skin formulas sit under dermatology and skin compounding in the catalog, including acne, rosacea, pigment and hair loss bases.

If you want a longer treatment of when a dermatology prescriber reaches for a compounded base and when a commercial product is the better answer, read our introduction to dermatology compounding.

Pain management is another area where route drives the prescription. A topical pain cream combines actives in a base applied to the affected area, and the prescriber selects which actives and at what strengths. Topical delivery of these agents is off-label for most of the drugs involved.

Related preparations, including suppositories, oral concentrates and creams used in hospice settings, are grouped under pain and palliative care compounding.

Our post on compounded alternatives to opioids covers what prescribers consider when they want to avoid a systemic opioid.

Veterinary compounding is its own category, and every veterinary preparation is prescribed by a veterinarian for a specific animal. Transdermal gels for cats, flavored liquids for dogs and small-dose capsules for exotic species are all in the veterinary compounding section of the catalog.

What is the essentially a copy rule?

Section 503A does not permit a pharmacy to compound a preparation that is essentially a copy of a commercially available drug product. In practice, a pharmacy cannot simply reproduce a marketed tablet at the same strength in the same dose form because a patient would prefer to buy it that way.

The exception is a change made for an identified individual patient that, in the prescriber's determination, produces a significant difference for that patient. A dye-free version for a patient who reacts to the dye, a liquid for a patient who cannot swallow, or a strength between two marketed strengths are the usual examples, and the prescriber notes the reason on the prescription.

Drugs that FDA has placed on its drug shortage list are handled differently while the shortage lasts. Beyond that, three statutory lists shape what may be compounded at all: permitted bulk drug substances, drugs withdrawn or removed from the market for safety reasons, and preparations FDA has identified as demonstrably difficult to compound.

What can a compounding pharmacy not do?

The limits are as defining as the capabilities, and most confusion about compounding starts with assuming a pharmacy can do things it cannot.

• Prepare or sell anything without a prescription written for a named patient.
• Describe a compounded preparation as FDA-approved or as equivalent to a brand product.
• Compound a drug that was withdrawn or removed from the market for safety reasons.
• Stock finished patient preparations for over-the-counter sale.
• Diagnose a condition, or choose a drug or a dose in place of your prescriber.

A pharmacist can talk through dose forms, bases, flavoring and ingredient exclusions with a prescriber, and often does. The decision about whether a drug is appropriate for you, and at what dose, belongs to the prescriber.

What is the difference between USP 795 and USP 797?

United States Pharmacopeia publishes general chapters that set standards for how compounding is carried out. USP 795 non-sterile compounding covers preparations such as capsules, creams, ointments, suspensions and suppositories. USP 797 covers sterile preparations, which are the ones that enter the eye, the bloodstream or another sterile site of the body.

The two categories are prepared under different conditions and by different procedures, and beyond-use dates are assigned differently for each. Sterile preparations at Bayview are compounded in our USP 797 sterile lab.

Ophthalmic preparations are the everyday example of sterile work. Low dose atropine ophthalmic drops are compounded sterile at dilute concentrations that no commercial product provides, and their use for slowing myopia progression in children is off-label and supported by controlled trials of varying size and duration.

How does a prescription reach a compounding pharmacy?

The process starts with your prescriber rather than with the pharmacy. A prescription for a compounded preparation names the active ingredients, the strengths, the dose form and the directions, because each of those is the prescriber's decision to make.

Prescribers send compounded prescriptions the same ways they send any other: electronically, by fax, or by telephone where the item allows it. If your prescriber has not written for a compounded preparation before, the pharmacy can supply a formula name and the details needed on the order.

The pharmacy confirms allergies, other medications and the intended use before preparing the order. Preparations are shipped to patients in the states where Bayview is licensed, and questions about shipping, licensure and ordering are answered on the frequently asked questions page.

What does a compounded prescription cost?

Compounded preparations are generally not billed through insurance. Because the finished preparation is made for one patient rather than assigned a national drug code as a manufactured product, most plans do not process it the way they process a commercial fill, and patients usually pay the pharmacy directly.

Price depends on the ingredients, the strength, the dose form and the quantity ordered. Each formulation page in the catalog shows a starting price, and the pharmacy can quote a specific prescription before preparing it. Many patients submit a paid receipt to a flexible spending or health savings account.

What does Bayview compound?

Bayview prepares non-sterile and sterile items on a prescriber's order across most therapeutic areas. Custom oral suspensions, including preparations intended for feeding tubes, start at $71. Magic mouthwash as an oral rinse starts at $110, low dose naltrexone capsules start at $100, and topical pain creams start at $120.

Tacrolimus preparations for otic, rectal, topical and scalp use start at $122, and atropine ophthalmic drops, compounded sterile, start at $60. Hormone, veterinary, ear nose and throat, and gastrointestinal preparations are made the same way, each in the strength and base named on the order.

Talk to your prescriber

If a manufactured medication is not working out because of the dose, the form, an ingredient in it, or because it has become unavailable, raise it with the person who prescribes for you. Bring the specific problem: what you cannot swallow, what you react to, what strength you were asked to split.

If your prescriber decides a compounded preparation is the right approach, they can send the prescription to Bayview directly, and a pharmacist will contact you before it is prepared.