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  6. Compounding Quality Center of Excellence | Cross-Sector Stakeholder Group
  1. Compounding Quality Center of Excellence

Compounding Quality Center of Excellence | Cross-Sector Stakeholder Group

FDA’s Compounding Quality Center of Excellence created small stakeholder group to discuss issues that affect outsourcing facilities, health care providers that purchase their products and industry partners. This group meets several times a year, allowing individuals to share perspectives on compounded drug quality, production, demand and clinical use. The following information highlights key topics discussed in this group:

Becoming and Sustaining and Outsourcing Facility (April 2024)
Drug Compendia Databases (January 2024)
State of Outsourcing Facility Industry (October 2023)
Drug Approval Pathways (July 2023)
Drug Shortages (May 2023)
Future Focus of the Cross-Sector Stakeholder Group (March 2023)
Future Role of Outsourcing Facilities (December 2022)
Compounding Quality in Outsourcing Facilities (October 2022)
Educating Stakeholders About the Outsourcing Facility Industry (July 2022)
Drug Shortages (May 2022)
Goals of the Cross-Sector Stakeholder Group (March 2022)

Becoming and Sustaining and Outsourcing Facility (April 2024)

Roundtable discussions on the experience of becoming and sustaining an outsourcing facility, including:

  • motivations to enter the market
  • barriers to becoming and sustaining an outsourcing facility
  • the importance of current good manufacturing practice requirements for sterile drug production to help assure patient safety and challenges with securing investors
  • hiring an experienced quality unit

Drug Compendia Databases (January 2024)

Participants shared their perspectives on public and private drug compendia databases and the benefits and challenges of submitting outsourcing facility drug products to the databases.

State of Outsourcing Facility Industry (October 2023)

The discussion focused on current and future states of the outsourcing facility sector, highlighting business viability, compounding drug quality and patient access to compounded drugs. Additionally, participants shared their views on outsourcing facilities’:

  • top business challenges and growth opportunities
  • quality culture
  • quality practices across the industry
  • barriers to meeting customer demands

Drug Approval Pathways (July 2023)

The discussion focused on FDA’s abbreviated drug approval pathways, with an emphasis on abbreviated new drug applications (ANDAs) and approvals under section 505(b)(2) of the Federal Food, Drug and Cosmetic Act. Participants also heard a brief overview of the new drug application (NDA) approval pathway for comparison.

Participants shared updates and discussed their progress on individual activities:

  • Two participants are developing a resource that lists state licensure requirements for outsourcing facilities in a single document. They are compiling the information for this resource.
  • Another participant is developing a “matchmaker tool” that links potential purchasers with outsourcing facilities nationwide based on specific product needs. A framework for the tool has been developed and is being populated with data.
  • An additional project involves identifying and documenting long-duration or frequent FDA shortage drugs to inform production decisions for outsourcing facilities.

Drug Shortages (May 2023)

The meeting focused on trends in drug shortages. Participants discussed the causes of drug shortages, including manufacturing issues, regulatory challenges at the state and federal level, increased demand and disruptions in the supply chain. Participants raised questions:

  • What changes can we envision that would address shortages and reduce public health crises caused by them? More specifically, how can outsourcing facilities help?
  • Does more work around education, communication, guidance and regulatory change need to be done to distance current good manufacturing practice (CGMP) requirements from US Pharmacopeia (USP) standards to make the distinction clear?
  • What needs to change to make outsourcing facilities a more significant answer to the ongoing drug supply chain issues in the U.S.?

Future Focus of the Cross-Sector Stakeholder Group (March 2023)

The meeting focused on how the group can be used to support change across the outsourcing facility industry. Participants noted the cross-sector stakeholder group has been a helpful way to engage with others across the outsourcing facility and health care industry and FDA. The group discussed ideas from previous meetings for future consideration. These ideas fell within four areas:

  • activities that focused on outsourcing facility interest in developing drugs that have been in shortage for a long time and linking purchasers to outsourcing facilities offering specific, desired drugs. Participants expressed interest in developing a tool that matches customers with outsourcing facilities that produce needed drugs.
  • activities to bridge knowledge and communication gaps across the outsourcing facility industry for key stakeholders, including states and potential customers, on commonly misunderstood topics, such as the distinction between compounding pharmacies and outsourcing facilities and state licensure requirements.
  • the desirability of outsourcing facilities establishing industry norms around quality, as well as future convening of stakeholders to continue discussing issues, solutions and future goals for the industry.
  • interest in developing quality tools for customers’ use, encouraging pre-operational audits as an industry practice and educational tools on current good manufacturing practices (CGMP) requirements for outsourcing facilities and other stakeholders to understand the impact of CGMP on quality.

Future Role of Outsourcing Facilities (December 2022)

Participants discussed the benefits and challenges of using outsourcing facilities, including provide hospitals and health systems with key products, such as admixtures or parenteral medications not commercially available or experiencing a shortage, sterile and non-sterile and topical formulations (often for dermatologic use).

  • Key challenges that hospitals and health systems face when using outsourcing facilities include cost of outsourced drugs (compared with the material costs of compounding the drugs in house), as well as managing unplanned interruptions of supply from outsourcing facilities driven by production issues, quality issues, vendor supply chain issues and pending FDA regulatory actions (e.g., 483 observations, warning letters, recalls).
  • Participants noted a common desire for the outsourcing facility industry to serve customers during drug shortages. They expressed the view that outsourcing facilities are constrained in producing shortage products for a variety of reasons, including the high cost of startup (e.g., stability testing) and uncertainties surrounding the time of onset and length of some shortages.
  • Participants discussed the economic challenges of production in specialized practice areas such as dermatology and ophthalmology in which there is no drug standardization, and the batch size is generally smaller than what is required by hospitals and health systems.

Compounding Quality in Outsourcing Facilities (October 2022)

Participants proposed as a framework for discussion the outsourcing facility ecosystem can be characterized by four types of understanding of compounding quality:

  1. compounding veterans who understand compounding quality as contingent upon CGMP compliance
  2. compounding veterans who believe compounding quality is not contingent upon CGMP compliance and seek greater regulatory flexibility
  3. compounding novices who are largely unfamiliar with CGMP compliance as a necessity for compounding quality
  4. compounding novices who understand compounding quality as contingent upon CGMP compliance

Participants discussed:

  • customers seek greater transparency and insight into the quality of each outsourcing facility to allow for benchmarking. However, participants highlighted that there is currently no standardized means of quality transparency for outsourcing facilities to meet customer demand.
  • the challenge of maintaining a profitable business with quality (e.g., greater investments in quality can lead to increased costs).
  • automation in compounding as one way to reduce costs associated with human error as well as product standardization to reduce development costs of multiple products and enable agility in production.

Educating Stakeholders about the Outsourcing Facility Industry (July 2022)

The meeting included a discussion on educating stakeholders and communicating information about the outsourcing facility industry.

  • The group discussed the importance that customers understand the critical differences between compounding pharmacies and outsourcing facilities, including compounding pharmacies are primarily managed by a pharmacist whereas outsourcing facilities are primarily managed by quality systems.
  • Participants highlighted that compounding pharmacies, such as those located within a hospital, compound drugs for more immediate consumption whereas outsourcing facilities produce compounded drugs over a longer term, necessitating different regulations.

Drug Shortages (May 2022)

Participants were provided data on the impact of drug shortages and staff issues, with a focus on recent data and historical trends. Participants discussed:

  • how the prevalent shortages of low-cost sterile injectable generic drugs could be related to their diminishing profitability and manufacturer exits from these markets as manufacturers increasingly shift production to newer, more profitable drugs.
  • considerations that affect purchaser decision-making, such as reimbursement and budget, and those that impact outsourcing facility decision-making, such as the time required for process development and stability testing.

Participants from hospital systems described:

  • the impact of acute drug shortages on their operations, including their need for daily internal meetings to discuss strategies to preserve patient care with a limited supply of certain drugs.
  • their supply chain decision-making process, including their need to consider the impact and duration of the shortage and then determine whether they have the capacity to compound in-house or if a compounding pharmacy or outsourcing facility has the capacity to meet their needs.

Participants from outsourcing facilities described:

  • the factors that influence whether a drug in shortage is a good fit for their production. Drugs that were identified as potentially viable included small molecule, injectable or older generic drugs. Low-margin products like IV fluids and saline flushes that can be produced in greater volumes by contract manufacturers or generic drug companies were identified to be less ideal for outsourcing facility production.
  • the financial and time commitment required to conduct stability studies and the risk of having to cease production after a short tail period when a drug in shortage becomes available from the manufacturer as key factors in their decision-making.


  • Participants also discussed situations in which non-profit foundations have collaborated with outsourcing facilities to enable their production of certain drugs predicted to be in shortage by funding stability studies.
  • Hospital and health system participants stated they are less able to fund stability studies or commit to purchasing a certain volume of drugs in shortage produced by outsourcing facilities due to financial constraints.

Goals of the Cross-Sector Stakeholder Group (March 2022)

One goal of the cross-sector stakeholder group is to foster an improved understanding of the outsourcing facility sector, including how the industry serves health care providers and patients.

  • Outsourcing facility representatives mentioned their hope is to share best practices with each other, such as strategies to better understand and meet demand and lessons learned from deploying automation or other quality manufacturing practices at outsourcing facilities.
  • Participants discussed ongoing problems affecting the industry including drug and workforce shortages, lack of public awareness of the industry and lack of transparency.
  • The hospital and clinical representatives mentioned their hope is to raise awareness about the impact of drug shortages, to learn more about the manufacturing side of the industry and to have a more streamlined process for finding, evaluating and purchasing drugs produced by outsourcing facilities.


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