Effective Date

Date of Origin 

1/1/2024

Clinical Rationale

Pharmaceutical compounding is defined as the process by which a pharmacist or physician combines, mixes, or alters ingredients to create a medication tailored to an individual patient’s needs. The FDA recognizes pharmacists or physicians have traditionally engaged in extemporaneous drug compounding of reasonable quantities of drugs in response to and upon receipt of a valid prescription for an individually identified patient.(1-3)

By definition, pharmacy compounding involves making a new drug for which safety and efficacy have not been demonstrated with the data the FDA requires to approve a new drug.(3) Mixing or reconstituting a commercially available product in accordance with the manufacturers FDA approved labeling typically does not constitute compounding a medication.(1,2)

The Compounding Quality Act divides compounding under two laws. Compounding facilities may register under 503B to become a registered outsourcing facility. All other facilities are captured under 503A. A drug compounded under 503A must meet the following requirements:(1)

• The drug product is compounded for an identified individual patient based on the receipt of a valid prescription order, or a notation, approved by the prescribing practitioner, on the prescription order that a compounded product is necessary for the identified patient
• The compounding of the drug product is performed:
  • By a licensed pharmacist in a state licensed pharmacy or a Federal facility, or by a licensed physician on the prescription order for an individual patient made by a licensed physician or other licensed practitioner authorized by state law to prescribe drugs; or
  • By a licensed pharmacist or licensed physician in limited quantities before the receipt of a valid prescription order for such individual patient and 
    • is based on a history of the licensed pharmacist or licensed physician receiving valid prescription orders for the compounding of the human drug product; and
    • those orders have been generated solely within an established relationship between the licensed pharmacist or licensed physician and either such patient for whom the prescription order will be provided or the physician or other licensed practitioner who will write such prescription order
  • The drug product is compounded in compliance with the United States Pharmacopoeia (USP) chapters on pharmacy compounding using bulk drug substances, as defined in 21 CFR 207.3(a)(4), that comply with the standards of an applicable USP or National Formulary (NF) monograph, if one exists. If such a monograph does not exist, the drug substance(s) must be a component of an FDA-approved human drug product. If a monograph does not exist and the drug substance is not a component of an FDA-approved human drug product, it must appear on a list of bulk drug substances for use in compounding developed by FDA through regulation o The drug product is compounded using bulk drug substances that are manufactured by an establishment that is registered under section 510 of the FD&C Act
  • The drug product is compounded using bulk drug substances that are accompanied by valid certificates of analysis for each bulk drug substance
  • The drug product is compounded using ingredients (other than bulk drug substances) that comply with the standards of an applicable USP or NF monograph, if one exists, and the USP chapters on pharmacy compounding
  • The drug product does not appear on the list, published at 21 CFR 216.24, that includes drug products that have been withdrawn or removed from the market because such drug products or components of such drug products have been found to be unsafe or not effective
  • The licensed pharmacist or licensed physician does not compound regularly or in inordinate amounts any drug products that are essentially copies of commercially available drug products
  • The drug product is not a drug product identified by FDA by regulation as a drug product that presents demonstrable difficulties for compounding that reasonably demonstrate an adverse effect on the safety or effectiveness of that drug product
  • The drug product is compounded in a state that has entered into a memorandum of understanding (MOU) with FDA that addresses the distribution of inordinate amounts of compounded drug products interstate and provides for appropriate investigation by a state agency of complaints relating to compounded drug products distributed outside such state; or, in states that have not entered into such an MOU with FDA, the licensed pharmacist, licensed pharmacy, or licensed physician does not distribute, or cause to be distributed, compounded drug products out of the state in which they are compounded, more than 5% of the total prescription orders dispensed or distributed by such pharmacy or physician

Drug manufacturers are required to meet good manufacturing practice (GMP) regulations, which are federal statues put in place to govern the production and testing of pharmaceutical materials. Compounded medications are exempt from these regulations and testing to assess product quality is inconsistent. Some pharmacies engage in activities that extend beyond the boundaries of traditional pharmacy compounding, such as large-scale production of compounded medications without individual patient prescriptions, compounding drugs that have not been approved for use in the US and creating copies of FDA-approved drugs. Compounding drugs in the absence of GMPs increases the potential for preparation errors. Published reports of independent testing by the FDA, state agencies, and others consistently show that compounded drugs fail to meet specifications at a considerably higher rate than FDA-approved drugs.(3)

A 2018 report by the FDA noted that since 1990 the FDA had become aware of more than 55 product quality problems associated with compounded products, many of which resulted in recalls. In this survey 29 products made by 12 compounding pharmacies were collected and evaluated. Five different dosage forms (i.e. sterile injectables, ophthalmic products, pellet implants, inhalation products, and oral dosage forms) were sampled. Ten (34%) of the 29 evaluated compounds failed one or more standard quality tests performed. Nine of the ten products with failed results did so in potency. Potency analyses indicated sub-potent results ranging from 59 percent to 89 percent of expected potency (as indicated on the product’s label). None of the compounded products failed identity testing and of those subject to sterility testing (sterile injectables, pellet implants, and ophthalmic products) or microbial limits (inhalation product) no compounds failed. As a comparison, of the more than 3,000 drug products from commercial manufacturers that had been analyzed at the time of this study, less than 2 percent had a failure rate, though the sample size of this study was small.(2)

For a compounded drug product to qualify for the exemptions under section 503A of the FD&C Act the product must be compounded by a licensed pharmacist or a licensed physician that does not compound regularly or in inordinate amounts any drug products that are essentially copies of a commercially available drug product. The FDA defines commercially available drug product as marketed drug products. Drug products are not considered commercially available if the drug product has been discontinued and is no longer marketed or if the drug product appears on the FDA drug shortage database as currently in shortage status.(4)

The FDA defines essentially a copy as a compounded drug product that has the same active pharmaceutical ingredient(s) (API) and is identical or nearly identically as the commercially available drug product.(4,5) Additionally, the APIs have the same, similar, or an easily substitutable dosage strength, and the commercially available drug product can be used by the same route of administration as prescribed for the compounded drug unless the prescriber determines that there is a change, made for an identified individual patient, which produces, for that patient, a significant difference from the commercially available drug product.(4)

Definitions

Medical Necessity or Medically Necessary – services or supplies which are necessary to treat an illness, injury, or symptoms. To be medically necessary, services or supplies must be determined by Blue Cross and Blue Shield to be:

• Appropriate and necessary for the symptoms, diagnosis, or treatment of the medical condition;
• Provided for the diagnosis or direct care and treatment of the medical condition;
• In accordance with standards of good medical practice accepted by the organized medical community;
• Not primarily for the convenience and/or comfort of the patient, the family, the physician, or another provider of services;
• Not investigational;
• Performed in the least costly setting required by the medical condition.

Drug compounding for the purpose of convenience is not considered medically necessary.

Bulk chemicals/powders/products are not FDA approved entities which have established necessity and therefore do not meet the definition of medical necessity.

Investigational – any treatment, procedure, facility, equipment, drugs, drug usage, or supplies that either Blue Cross and Blue Shield does not recognize as having scientifically established medical values or does not meet generally accepted standards of medical practice.

Medical and Scientific Evidence – any one of the following: 

• Peer-reviewed scientific studies published in or accepted for publication by medical journals that meet nationally recognized requirements for scientific manuscripts and that submit most of their published articles for review by experts who are not part of the editorial staff.
• Peer-reviewed literature, biomedical compendia, and other medical literature that meet the criteria of the National Institute of Health’s National Library of Medicine for indexing in Index Medicus, Excerpta Medica (EMBASE), PubMed, MEDLINE, or MEDLARS database. 
• Medical journals recognized by the Secretary of Health and Human Services, under Section 1861(t)(2) of the Social Security Act (42 U.S.C. 1395x). 
• The following standard reference compendia: 
  • The American Hospital Formulary Service Drug Information (AHFS-DI) 
  • Micromedex’s DrugDex 
  • Clinical Pharmacology 
  • National Comprehensive Cancer Network (NCCN) Drug & Biological Compendia. 
• Findings, studies, or research conducted by or under the auspices of federal government agencies and nationally recognized federal research institutes including the: 
  • Agency for Healthcare Research and Quality, 
  • National Institutes of Health, 
  • National Cancer Institute, 
  • National Academy of Sciences, 
  • Center for Medicare and Medicaid Services, and 
  • Any national board recognized by the National Institutes of Health for the purpose of evaluating the medical value of health services. 
• Peer-reviewed abstracts for presentation at major medical association meetings.

1

Pharmacy Compounding of Human Drug Products Under Section 503A of the Federal Food, Drug, and Cosmetic Act. August 2018. United States Food and Drug Administration. Available at: https://www.fda.gov/regulatory-information/search-fda-guidance-documents/pharmacy-compounding-human-drug-products-under-section-503a-federal-food-drug-and-cosmetic-act. 

2

Limited FDA Survey of Compounded Drug Products. 2018. United States Food and Drug Administration. Available at: http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCompounding/ucm155725.htm. 

3

Gudeman J, Jozwiakowski M et al. Potential Risks of Pharmacy Compounding. Drugs R D 2013;13(1)1-8.

4

Compounded Drug Products That Are Essentially Copies of a Commercially Available Drug Product Under Section 503A of the Federal Food, Drug, and Cosmetic Act. 2018. United States Food and Drug Administration.

5

Compounded Drug Products That Are Essentially Copies of Approved Drug Products Under Section 503B of the Federal Food, Drug, and Cosmetic Act. January 2018. United States Food and Drug Administration.

Compounded Medications will be approved when BOTH of the following are met:

1. The requested compounded medication does not contain an ingredient considered not medically necessary in a compound. NOTE: Ingredients considered not medically necessary in a compound include, but are not limited to, those with potential safety risks, bulk powders/chemicals/products not FDA approved, controlled substance pain medications and non-covered drug classes (e.g., anorexiants, impotence agents) AND
2. ALL of the following:
   1. The requested compounded medication contains at least one prescription ingredient AND
   2. ALL of the prescription ingredients in the compounded medication are FDA approved for medical use in the United States AND
   3. ALL of the prescription ingredients in the compounded medication are being used for ONE of the following:
      1. An FDA approved indication (including the final route of administration) for each prescription ingredient in the compounded medication OR
      2. An indication (including the final route of administration) supported in compendia for each prescription ingredient in the compounded medication OR
      3. An indication (including the final route of administration) supported by clinical information provided by the prescriber for each prescription ingredient in the compounded medication (e.g., peer-reviewed studies published in a nationally recognized medical journal; documentation required) AND
   4. The requested compounded medication does NOT contain any modified release ingredients AND
   5. ONE of the following:
      1. The compounded medication is not essentially a copy of a commercially available FDA-approved drug product OR
      2. BOTH of the following:
         1. The compounded medication is essentially a copy of a commercially available FDA-approved drug product AND
         2. The commercially available FDA-approved drug product is the subject of a confirmed drug shortage making it unavailable for dispensing OR
      3. BOTH of the following:
         1. The requested compounded medication is similar to a commercially available product, but differs in dosage, dosage form, and/or omission of dye, sweetener, flavoring, or preservative AND
         2. The requested compounded medication is being compounded to meet a specific patient need for which an FDA-approved drug product is not available (e.g., compounding of liquid formulations for patients unable to swallow; compounding for patients with sensitivities to dyes, preservatives or fillers; compounding of therapeutic strengths not commercially available when the dose is not above FDA labeled maximum dose)

Note: Drug compounding for the purpose of convenience or preference is not considered medically necessary.

If the compound contains more than one ingredient listed above, ALL criteria must be met for each individual ingredient in the compound. If any component does not meet the criteria, the entire compound will not be covered.

Compendia Allowed: AHFS, DrugDex 1 or 2a level of evidence, or NCCN 1 or 2a recommended use

Length of Approval: 6 months