What Is a Compounding Pharmacy?

Medically Reviewed by Brunilda Nazario, MD on May 22, 2023
5 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 — one specifically made for your needs. 

About 1% to 3% of prescriptions in the U.S. are for compounded drugs.

These medicines may be free of certain allergens or have a dosage that’s different than the preset dosages available. They may change the formula for an existing medicine to meet your specific needs.

The risks of compounded medicines are different so the laws that govern compounding pharmacies and compounded drugs differ from a traditional drug manufacturer or pharmacy. 


Compounding pharmacies sell custom-made medicines. Retail or hospital pharmacies (also known as community pharmacies) sell medicines made by manufacturers, but they can still offer certain compounded drugs. They just may not offer all the exact mixtures you need, especially if what you need must be made in a special setting to ensure safety. In that case, you may need to go to a compounding pharmacy, specifically. 

There are about 56,000 community-based pharmacies in the U.S. Of them, about 7,500 pharmacies offer compounding services. Some estimates say that more than 32,000 pharmacies in the country offer some kind of compounding. About 40% of people who can compound drugs work in pharmacies that solely compound drugs.

There are two kinds of medicines made at compounding pharmacies.  

  • Sterile compounds are drugs that are injected into your tissue or blood, or put into your eyes. They have a higher risk for contamination than traditional pharmacies.
  • Non-sterile compounds come in capsules, creams, and ointments.

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

There are differences in how compound and traditional drugs are labeled, too. Compounded medicine labels don’t follow a format like FDA-approved drugs do. They aren’t regulated the same, either. 


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’t be done by someone under supervision of a pharmacist. They’re mostly managed by the states.

503B compounding pharmacies. These are outsourcing facilities, which can make a medicine based off a prescription. They can also create large amounts of medicines and sell them to medical offices. The FDA manages most of these. They have stricter labeling rules than 503A pharmacies in an effort to avoid confusion.


Although the FDA has approved the medicines used in a compounding pharmacy, it doesn’t approve compounded drugs like they do with traditional prescription drugs, such as the dosages The FDA can’t confirm if a compounded drug is safe or effective the way that they do with manufactured drugs.

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

Compounded drugs have to follow industry standards, and the United States Pharmacopeia (USP) Convention sets those. If they’re made in an outsourcing facility, they have to follow good manufacturing practice (CGMP) rules that cover how they’re made, processed, and packed.  

In addition to licensed doctors, a licensed pharmacist, or someone supervised by one, can create a compounded drug. 

They can be made in a pharmacy or outsourcing facility. The FDA and state pharmacy boards can inspect those facilities.

Pharmacists learn how to make their own versions of medicines in pharmacy school. Many states test how well they can compound before they get their license.

Many that work in compounding pharmacies have advanced training in compounding. States don’t require specific training, though. There’s no national specialty in drug compounding.

For example, pharmacists can earn a designation as a board-certified sterile compounding pharmacist (BCSCP). This means they meet standards for safety when preparing sterile compounded medications.



If the medicine you need isn’t available in a premade form from a manufacturer, your health care professional might prescribe a compounded drug.

Pharmacists can mix a drug to:

  • Customize the dosage 
  • Add flavor (for a child or pet)
  • Change the form (perhaps from pill to liquid)
  • Remove allergens or non-essential ingredients

If you’re concerned about taking a compounded drug, talk to your doctor. They may be able to tell if you’re better off on a compounded drug or if a traditional prescription will benefit you. This conversation could be important because a traditional drug may be just as effective -- and it'll probably be cheaper, too.

Some drugs are more commonly prescribed in compounded form. These include medicines for:

  • Pain: Like baclofen, bupivacaine, cyclobenzaprine, diclofenac, flurbiprofen, gabapentin, ketamine, and lidocaine.
  • Hormone replacement: Including, estradiol, estriol, progesterone, and testosterone.
  • Dermatology: Doctors often combine different drugs to treat skin-related conditions.
  • Animals: It’s common for doctors to prescribe compounded medications for animals and pets.

Compounding pharmacies can be handy when there are drug shortages as well. The pharmacists can essentially make the same formulations as a manufactured drug.


Some compounding pharmacies and drug preparers may make misleading statements about the safety or efficacy of compounded drugs. They may not follow standards as with traditional, FDA-approved drugs.

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

Be aware about purchasing something from out of state because some states don't have rules that are as strict as others in terms of quality.

There’s limited data to show price differences between compounded drugs compared to traditional, manufactured drugs. 

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.

Check with your insurance plan to see how they may cover a compounded drug. They may cover it differently compared to manufactured drug. And you may want to know what they'll pay before you fill the prescription to avoid any unexpected costs.


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 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.