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Drug shortage balancing act: Compounding pharmacies, legislation, and quality control in healthcare

Week of August 27 - September 2, 2023
3 minutes
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Drug shortages are a persistent challenge in healthcare, and compounding pharmacies are playing an increasingly prominent role in addressing this issue. Known as “outsourcing facilities,” compounding pharmacies create custom versions of essential medicines without individual prescriptions, filling the demand for drugs such as pain medications, anesthetics, and respiratory treatments.  

According to a recent survey by the American Society of Health-System Pharmacists, more than half of their members have increased purchases from large compounders in the past year due to the severity of drug shortages. In 2022, members of Premier, a major group-purchaser for U.S. hospitals, purchased 41% more products from outsourcing facilities than they did in 2021. This growing reliance on compounding pharmacies has led to a surge in the bulk compounding market—as high as $4.6 billion in 2021 according to U.S. Food and Drug Administration (FDA) estimates, which were up from the Graphical Research estimate of $3 billion in 2019. This surge reflects compounding pharmacies’ growing importance in healthcare, especially during times of crisis, like the COVID-19 pandemic.  

Compounding pharmacies became particularly prominent during the pandemic when outsourcing facilities were allowed by temporary guidance to prepare 13 essential drugs to meet hospitals' urgent needs. This guidance made a wider range of medications more readily available by allowing the compounding of drugs beyond the drug shortage list while also relaxing certain provisions related to stability testing (how the quality of a drug varies with time and environmental factors) and expiration dates.  

HR 167, a bill introduced in the House of Representatives in January 2023, aims to make this temporary guidance permanent, thereby expanding the role of traditional compounders. In addition to adult medications, compounding pharmacies have also been instrumental in addressing children's medication shortages, offering compounded versions of essential drugs like Tylenol and Motrin.  

Why It Matters

As the demand for these specialized services grows, more healthcare providers are turning to outsourcing facilities to source widely used medications. Outsourcing facilities have become indispensable for hospitals, providing not only customized, flexible, and precise dosing but also serving as a lifeline during national drug shortages for both adult and pediatric populations. However, the reliance on compounders is not without controversy. Serious illnesses and deaths, such as the 2012 New England Compounding Center tragedy in which more than 100 people were killed by compounded drugs contaminated with fungal meningitis, highlight the risks involved. Additionally, sourcing drugs from compounding pharmacies often comes at a higher cost, a burden that may be passed on to patients. 

In May 2023, the FDA issued a warning about compounded versions of Semaglutide, a medication used for diabetes and weight loss that is in high demand. The warning was prompted by reports of adverse events among patients who used the compounded drug, and concerns about variations in the active ingredients in some compounded versions. This warning highlighted ongoing concerns about safety and quality of compounded drugs.  

There can be great benefit to compounding, such as tailoring doses to individual patient needs and filling an essential role during national drug shortages. However, there is a balancing act between leveraging these advantages, maintaining rigorous standards of safety and quality, and managing the increased costs that may be passed on to patients, all of which  healthcare organizations will have to navigate successfully. 


Wall Street Journal:Drug Shortages Are a Boon to One Industry: Compounding Pharmacies

ABC News: Why We’re Seeing Shortages of Children’s Over-the-Counter Medicine

Everyday Health: FDA Warns of Safety Issues With Compounded Forms of Semaglutide

Editorial advisor: Roger Ray, MD, Chief Physician Executive.


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