What Is a Compounding Pharmacy?

Written by Kristen Fischer, Kim Painter
Medically Reviewed by Jabeen Begum, MD on May 08, 2025
7 min read

When you have to go on a medication, your doctor will probably prescribe a premade one that's FDA-approved. But sometimes, they may want you to go on a compounded medicine that's specifically made for your needs. It might be made at your regular drugstore or at a specialized compounding pharmacy. 

"Compounding has been around for a long time," says Joey Mattingly, vice chair of research and associate professor of pharmacotherapy at the University of Utah College of Pharmacy. This was how most medicines were made before the era of FDA approval and mass pharmaceutical manufacturing.

It remains a valuable and usually safe option for people who need something a little different, whether that's added flavoring for a child, a dye-free version for a person with an allergy, or a liquid option for someone who can't swallow pills, he says. 

While exact figures are hard to come by, an estimated 1%-3% of prescriptions in the U.S. are for compounded drugs. Surveys and insurance records suggest the numbers are growing.

 

Compounding pharmacies specialize in custom-made medicines. Retail or hospital pharmacies (also known as community pharmacies) mostly sell medicines made by manufacturers but can do some compounding, too. They just may not offer the exact mixture you need, especially if it must be made in a sterile setting to ensure safety.

There are about 56,000 community-based pharmacies in the U.S. Of them, about 7,500 pharmacies specialize in compounding services, and at least 32,000 offer some kind of compounding.

There are two kinds of medicines made at compounding pharmacies:

Sterile compounds. These drugs are injected into your tissue or blood or put into your eyes. They need to be made in a sterile environment to reduce the risk of contamination.

Non-sterile compounds. These usually come in capsules, creams, and ointments and have less risk of contamination than sterile compounds.

Compounding pharmacies have to use pure, pharmaceutical-grade ingredients when they mix up either type of compounded drug. These ingredients must be made at a facility that's registered with the FDA.

 

 

There are two types of compounding pharmacies:

503A compounding pharmacies. They can create a medication for you based on your doctor's prescription. The compounding can only be done by a licensed pharmacist or a physician. They're mostly regulated by states.

503B compounding pharmacies. These are outsourcing facilities. They can create large amounts of drugs and sell them to medical offices and hospitals treating many people who need special mixtures. In these compounding facilities, workers supervised by pharmacists may do the compounding work. The FDA regulates these pharmacies. They have stricter labeling rules than 503A pharmacies. 

 

Although the FDA has to approve the ingredients used in a compounding pharmacy, it doesn't approve the finished medications as it does with traditional prescription drugs. The FDA can't confirm whether a compounded drug is safe or effective the way it can with manufactured drugs.

State pharmacy boards oversee compounding pharmacies in the U.S. But the FDA oversees the safety of drugs used in compounding. The Drug Enforcement Administration (DEA) can do the same for controlled substances, such as certain painkillers, that are put into compounded drugs. Federal and state authorities can set rules for the labs and equipment used, too.

Compounded drugs have to follow industry standards, and the United States Pharmacopeia (USP) Convention sets those. If these drugs are made in an outsourcing (503B) facility, pharmacy must follow the FDA's current good manufacturing practice (CGMP) rules about how they're made, processed, and packed.

Whether compounded drugs are made in a community compounding pharmacy or outsourcing facility, federal law says they have to be made under clean conditions. The FDA and state pharmacy boards can inspect facilities to make sure sanitation rules are followed.

There are differences in how compound and traditional drugs are labeled, too. Compounded medicine labels don't follow a strict format like FDA-approved drugs do. Their labels don't have to be approved by the FDA, either. 

Every pharmacist gets some training in compounding in pharmacy school, Mattingly says. That's because most will be called upon to customize a medicine at one time or another, no matter where they practice. Many states test how well prospective pharmacists can compound before they get their license.

Training is important because mixing medicines is "an exact science," Mattingly says. A mistake could make a medicine too strong or weak or unsafe or ineffective, he says.

Pharmacists who work in compounding pharmacies often have advanced training in compounding. For example, they can earn a designation as a board-certified sterile compounding pharmacist (BCSCP). This means they know how to meet standards for safety when preparing sterile compounded medications.

 States don't require specific training, though. There's no national specialty in drug compounding.

 

 

If the medicine you need isn't available from a manufacturer, such as if there's a shortage, your doctor might prescribe a compounded drug.

Pharmacists can also mix drugs to:

  • Customize the dosage 
  • Add flavor (maybe for a child or pet)
  • Change the form (such as from pill to liquid)
  • Remove allergens or nonessential ingredients

If you're concerned about taking a compounded drug, talk to your doctor. In some cases, a traditional drug may be just as effective for you — and it'll probably be cheaper, too.

Some drugs are more likely than others to be prescribed in compounded form. In recent years, commonly compounded drugs have included medicines for: 

  • Pain. This allows for a more tailored approach to pain management.
  • Hormone replacement. Compounded hormone drugs can be helpful for people who need a nonstandard dose or a combination of hormones. 
  • Skin-related conditions. Doctors often combine different drugs to treat them.
  • Pets. Pets may need a size-specific dose or a form that they're willing to swallow.

Compounding pharmacies can be handy when there are drug shortages as well. The pharmacists can essentially make the same formulations as a manufactured drug when the FDA says there's a shortage. That has happened, for example, when natural disasters have closed down plants that make crucial medications. It's also happened when high demand for certain medications, such as weight loss drugs, has caused shortages.

 

Because compounded medications don't have to go through the FDA's approval process, their strength and quality might not be consistent. A compounded drug meant to replace an FDA-approved medication might not have the same active ingredient.

If a drug mixture is contaminated, it could injure or kill people. This happened in 2012 when the New England Compounding Center (NECC) sent out a compounded methylprednisolone acetate solution free of preservatives. It contained fungus that caused 753 infections and 63 deaths.

That incident led to stricter regulation and FDA oversight of such outsourcing facilities under a law called the Drug Quality and Security Act.

Still, new safety concerns sometimes arise. For example, the FDA has gotten reports that some people got the wrong doses of injected weight-loss drugs made by compounders. Some of these drugs are heavily marketed by telehealth companies.

Drug quality may vary from state to state because some states have stricter quality rules. Also, the FDA warns that consumers should never buy any drugs, including compounded drugs, from online pharmacies that don't require a doctor's prescription or don't have licensed pharmacists on staff.

Always to talk to your own doctor, nurse practitioner, or other primary health care provider before you take a compounded drug, Mattingly says.

Also, choose pharmacies that are accredited by the National Association of Boards of Pharmacy (NABP) or Pharmacy Compounding Accreditation Board (PCAB). 

There's limited data to show how the prices of compounded drugs compare to those of traditional manufactured drugs. 

Historically, compounded drugs have been more expensive. In 2012, the average cost for an ingredient in a compounded drug was $308.49, while ingredients in non-compounded drugs were $148.75. There was a 130.3% increase in the average ingredient cost for compounded drugs from 2012 to 2013. On the flip side, costs for non-compounded drug ingredients went up 7.7% during that time.

But sometimes compounded drugs are cheaper. That has happened with mass-produced compounded drugs for weight loss, which have been available when the FDA-approved versions were in short supply.

Check with your insurance plan to see how they cover a compounded drug you've been prescribed. They may cover it differently from a similar manufactured drug.

To find a compounding pharmacy near you (or one that may be able to mail you the prescription if you're in a different state), visit the Alliance for Pharmacy Compounding's search tool. The Pharmacy Compounding Accreditation Board has a search function as well. You can see which compounding pharmacies are accredited by the Pharmacy Compounding Accreditation Board.

A medication from a compounding pharmacy can sometimes be your best or only choice. Ideally, it makes a medication safer or easier for you to take or provides a treatment option that isn't otherwise available. But it can come with trade-offs. The main thing is that compounded drugs aren't thoroughly tested and approved by the FDA. So always talk with your doctor about the best choice for you.

What is an example of a compounded drug?

Just about any drug can be modified in a way that makes it a compounded drug. For example, if you have a painful condition such as arthritis, your doctor might prescribe a cream that contains lidocaine, a widely available medicine, and have a compounder mix it with additional painkillers that they think might boost effectiveness. 

Who benefits from compounding pharmacy?

Compounding is especially useful for people who can't safely or easily take standard manufactured drugs. Children, older adults, and others who might struggle to swallow pills can often get liquid versions from a compounding pharmacy. People with allergies or intolerances to ingredients such as dyes or lactose can get versions without those ingredients. People who need a drug that is in short supply can also benefit.