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503B Outsourcing Facility: What the Statute Requires

By Benn Bluestein-Veyra, M.Sc. Organic Chemistry · Updated 7 November 2026

A 503B outsourcing facility is a compounder that has elected to register with FDA under section 503B of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 353b, and that compounds drugs by or under the direct supervision of a licensed pharmacist in compliance with current good manufacturing practice. The statute defines it as "a facility at one geographic location or address that (i) is engaged in the compounding of sterile drugs; (ii) has elected to register as an outsourcing facility; and (iii) complies with all of the requirements of this section."^[1] When every condition in section 503B(a) is met, the drug is exempt from premarket approval, from the adequate-directions-for-use labeling requirement and from the drug supply chain security provisions, and the facility may distribute it without a prescription for an identified individual patient.^[1][2]

That last point is why the category matters to a clinical practice. A practice that wants compounded stock on the shelf for in-office administration obtains it from a registered 503B facility or buys an approved product, because a 503A pharmacy must hold a patient-specific prescription before a preparation leaves the building.^[3] This page sets out the statutory conditions in order, then the registration, CGMP, bulk substance, labeling, adverse event, inspection and fee obligations that follow from them.^[1]

Section 503B lists eleven conditions, and the exemption depends on all of them

Section 503B(a) provides that sections 352(f)(1), 355 and 360eee-1 of title 21 "shall not apply to a drug compounded by or under the direct supervision of a licensed pharmacist in a facility that elects to register as an outsourcing facility if each of the following conditions is met".^[1] The eleven conditions are the operating rules of the sector:^[1]

• Registration and reporting: the facility complies with subsection (b), meaning annual registration and twice-yearly product reports.
• Bulk drug substances: the facility compounds from a bulk substance only if it "appears on a list established by the Secretary identifying bulk drug substances for which there is a clinical need" or the compounded drug is on the drug shortage list; the substance meets any applicable monograph, comes from an establishment registered under section 510, and is "accompanied by a valid certificate of analysis".
• Other ingredients comply with the applicable USP or NF monograph, if one exists.
• The drug does not appear on the list of drugs withdrawn or removed from the market because they were found "unsafe or not effective".
• The drug "is not essentially a copy of one or more approved drugs".
• The drug is not on the list of drugs presenting "demonstrable difficulties for compounding", or is compounded under the conditions that list specifies.
• Where the drug derives from a product with a REMS with elements to assure safe use, the facility demonstrates comparable controls before compounding.
• Prohibition on wholesaling: the drug "will not be sold or transferred by an entity other than the outsourcing facility that compounded such drug", a paragraph that "does not prohibit administration of a drug in a health care setting or dispensing a drug pursuant to a prescription".
• The facility has paid all fees owed under section 744K.
• The label carries the statutory elements, beginning with "This is a compounded drug."
• Compounding in the facility occurs only in accordance with section 503B.

Two definitional sentences complete the picture. "An outsourcing facility is not required to be a licensed pharmacy", and "An outsourcing facility may or may not obtain prescriptions for identified individual patients."^[1] Registration is open only to facilities engaged in sterile compounding, a term the statute defines to include drugs "intended for parenteral administration".^[1]

Registration is annual, public and paired with product reporting

A facility registers "upon electing" and then "during the period beginning on October 1 and ending on December 31 of each year thereafter", supplying its name, place of business, unique facility identifier and a point of contact, and stating whether it intends to compound drugs on the shortage list.^[1] FDA must publish "a list of the name of each facility registered under this subsection as an outsourcing facility, the State in which each such facility is located, whether the facility compounds from bulk drug substances, and whether any such compounding from bulk drug substances is for sterile or nonsterile drugs."^[1]

That list is the Registered Outsourcing Facilities table on FDA’s website. The version read for this page was updated as of October 29, 2026, listed 100 facilities, and for each gave the initial and most recent registration dates, the last inspection date, whether a Form 483 was issued, whether a recall was conducted, and the action based on the last inspection.^[4] A facility shown as "Not yet inspected" is registered but has no FDA inspection on record, while others carry a response letter, a regulatory meeting, an untitled letter or a warning letter with its date.^[4] Registration also triggers product reporting: each June and December the facility reports the drugs it compounded in the previous six months, with active ingredient, source, strength, dosage form and units produced.^[1] An entity that does not pay the establishment fee "will not be considered registered as an outsourcing facility under section 503B of the FD&C Act for that fiscal year."^[5]

CGMP applies through 21 CFR parts 210 and 211

The exemption in section 503B(a) does not reach section 501(a)(2)(B), the adulteration provision that requires drugs to be manufactured under current good manufacturing practice. FDA’s fee page states the consequence directly: "Drugs compounded in outsourcing facilities are not exempt from the requirements of section 501(a)(2)(B) of the FD&C Act (21 U.S.C. 351(a)(2)(B)) (concerning current good manufacturing practice for drugs)."^[5]

FDA has described how it intends to apply CGMP to outsourcing facilities in a draft guidance, first issued in 2014 and reissued as Revision 2 in January 2020. The draft states that FDA’s CGMP regulations "have been established in 21 CFR parts 210 and 211", that FDA "intends to promulgate more specific CGMP regulations for outsourcing facilities", and that "Until these final regulations are promulgated, outsourcing facilities are subject to the CGMP requirements in parts 210 and 211."^[6] Its stated focus is on "those aspects of part 211 that relate to sterility assurance of sterile drug products and the safety of both sterile and non-sterile compounded drug products more generally, including with respect to strength (e.g., subpotency, superpotency), and labeling".^[6]

The practical difference from a 503A pharmacy is the standard that governs the room, the process and the release of each batch: a manufacturing regulation for the outsourcing facility, the USP compounding chapters for the pharmacy.^[3][6] FDA’s published record for the sector consists largely of Form 483 observations under part 211 and the letters that followed.^[7]

Office-use compounding is lawful only under section 503B

FDA explains the office-use distinction in its 503A prescription guidance. Outsourcing facilities, "which are subject to CGMP requirements, FDA inspections according to a risk-based schedule, specific adverse event reporting requirements, and other conditions that provide greater assurance of the quality of their compounded drug products, may, but need not, obtain prescriptions for identified individual patients prior to distribution of compounded drug products".^[3] It continues: "Therefore, outsourcing facilities can compound and distribute sterile and non-sterile non-patient-specific drug products to hospitals, clinics, and health care practitioners for office use."^[3]

The same guidance settles the 503A side: prescriptions that do not include individual patient names "do not meet the requirement of a patient-specific prescription in section 503A. Under section 503B, outsourcing facilities can fill such prescriptions if they meet the requirements of applicable state and Federal laws."^[3] A footnote adds a limit on the 503B side: because drugs from outsourcing facilities "remain subject to the requirements in section 503(b) of the FD&C Act", an outsourcing facility "cannot dispense a prescription drug to a patient without a prescription."^[3] Office stock therefore goes to the practitioner for administration in the office, and under section 503B(a)(8) it may not be sold or transferred onward by anyone other than the facility that compounded it.^[1]

Bulk substances must be on the 503B bulks list or in shortage, with an interim policy in between

Section 503B(a)(2) permits compounding from a bulk drug substance only where the substance is on a list FDA has established "identifying bulk drug substances for which there is a clinical need", built through a Federal Register proposal, a comment period of at least 60 days and a Federal Register designation, or where the compounded drug is on the shortage list at the time of compounding, distribution and dispensing.^[1] FDA’s 503B bulks page adds that bulk substances "must be accompanied by a valid certificate of analysis and must have been manufactured by an establishment registered with FDA under section 510 of the FD&C Act."^[2]

Because the clinical-need list is still being built, FDA operates an interim policy, finalized in January 2025, that sorts nominated substances into three categories.^[8] Category 1 substances "may be eligible for inclusion on the 503B bulks list, were nominated with sufficient supporting information for FDA to evaluate them, and do not appear on any other list", and FDA "does not intend to take action against an outsourcing facility for compounding drugs using bulk drug substances identified in category 1 provided that the conditions described in the guidance document are met."^[2] Category 2 substances were adequately nominated but FDA "has identified significant safety risks relating to the use of these substances in compounding pending further evaluation"; category 3 substances "were nominated with insufficient supporting information for FDA to evaluate them"; neither is within the category 1 policy.^[2]

The January 2025 revision drew a line in time. It "does not change FDA’s policy with respect to bulk drug substances that were nominated for inclusion on the 503B bulks list before the publication date of this guidance, January 7, 2025", while "bulk drug substances that are nominated on or after the date of publication of this guidance are not within the scope of the policy".^[8] The category document, updated March 21, 2025 as of this page’s review, lists the substances in each category and records moves between them.^[9]

The label must say "This is a compounded drug."

Section 503B(a)(10) specifies the label in detail. It must include "the statement ‘This is a compounded drug.’ or a reasonable comparable alternative statement (as specified by the Secretary) that prominently identifies the drug as a compounded drug"; the name, address and phone number of the facility; and, for the drug, the lot or batch number, established name, dosage form and strength, quantity or volume, the date compounded, the expiration date, storage and handling instructions, the NDC if available, the statement "Not for resale", and, where the drug is distributed other than on a patient-specific prescription, the statement "Office Use Only".^[1] The container from which units are removed must carry the ingredient list if it does not fit on the label, the MedWatch web address and telephone number "to facilitate adverse event reporting", and "directions for use, including, as appropriate, dosage and administration."^[1]

For a practice, the label is the quickest check available: a vial of office stock from a 503B facility should read "This is a compounded drug", "Not for resale" and "Office Use Only", and should name the facility that made it.^[1]

Adverse events are reported to FDA under 21 CFR 310.305

Section 503B(b)(5) requires that outsourcing facilities "submit adverse event reports to the Secretary in accordance with the content and format requirements established through guidance or regulation under section 310.305 of title 21".^[1] FDA’s October 2015 guidance states that the regulation "requires reporting of each adverse drug experience received or otherwise obtained that is both serious and unexpected as soon as possible, but in no case later than 15 calendar days of initial receipt of the information along with a copy of the drug product’s current labeling", with follow-up reports due "within 15 calendar days of receipt of new information about the adverse event, or as requested by FDA."^[10] A practice that observes a serious reaction to 503B stock has two places to send the information: the facility, which carries the statutory obligation, and MedWatch directly, whose contact details the statute requires on the container.^[1][10]

FDA inspects on a risk-based schedule, and the record is public

Outsourcing facilities "shall be subject to inspection pursuant to section 374" and "shall not be eligible for the exemption under section 374(a)(2)(A)" that otherwise applies to pharmacies compounding on prescriptions.^[1] FDA must inspect "in accordance with a risk-based schedule" built on compliance history, recall record, "the inherent risk of the drugs compounded", inspection history over the last 4 years, and whether the facility compounds shortage drugs.^[1]

The inspection history is visible in two places: the registered-facility table, which carries the last inspection date, whether a Form 483 issued and the resulting action,^[4] and the Compounding: Inspections, Recalls, and other Actions page, which lists every facility FDA has acted on, labeled 503A or 503B, with links to the Form 483, warning letter, untitled letter or regulatory meeting record.^[7]

Fees are annual, inflation-adjusted and a condition of the exemption

Section 503B(a)(9) makes payment of fees under section 744K a condition of the exemption.^[1] FDA describes the establishment fee as "equal to the sum of $15,000, multiplied by the inflation adjustment factor, plus the small business adjustment factor", payable on invoice after FDA finds the registration complete, with a separate reinspection fee.^[5] For fiscal year 2026 the page lists an establishment fee of $20,726, a small-business rate of $6,829 and a reinspection fee of $20,486; for fiscal year 2027, published in the Federal Register on July 30, 2026, the figures are $22,074, $7,142 and $21,427, and the registration period runs from October 1 to December 31, 2026.^[5] The statute adds that the federal fee does not relieve a facility of state pharmacy licensing fees, and requires that compounding in the facility occur "only in accordance with this section", so a single site cannot run a 503A line and a 503B line side by side.^[1]

What this means for a practice that wants stock for in-office administration

Compounding law gives a practice two lawful sources for a drug it will keep on hand and administer: an approved product, or a compounded drug from a registered 503B outsourcing facility, labeled for office use. A 503A pharmacy supplies against a prescription for an identified individual patient, with limited anticipatory compounding on the strength of prescription history.^[1][3] The regulatory literature makes the same point, noting that as FDA registrants outsourcing facilities "are able to produce large volumes of clinical supplies without the need for prescriptions for individually named patients", while state labeling and prescription laws can still apply.^[11]

The sector exists because of a documented quality gap: 63 compounding errors identified between 1990 and 2020,^[12] 11 compounding-related outbreaks with 207 infected patients and 17 deaths before 2012,^[13] a final 2012 outbreak count of 751 patients and 64 deaths,^[14] and the potency and sterility failures Gudeman and colleagues set out as Congress acted in 2013.^[15]

• Confirm the facility appears on FDA’s Registered Outsourcing Facilities table and read its inspection row.
• Check the label for "This is a compounded drug.", "Not for resale", "Office Use Only" where applicable, the facility’s name and the MedWatch contact details.
• Ask which basis under section 503B(a)(2) covers each bulk substance: the 503B bulks list, the shortage list, or category 1 of the interim policy.
• Keep the stock for administration in the practice; dispensing to a patient still requires a prescription, and onward sale or transfer is prohibited.
• Report any serious adverse event to the facility and to MedWatch.

ExaVeyra supplies compounded preparations through a licensed 503A pharmacy partner on patient-specific prescriptions, which is the route the statute provides for a named patient. Where a practice needs non-patient-specific stock for in-office administration, the lawful source is a registered 503B facility or an approved product, and the conditions above are the ones to verify. The clinical decision, and the prescription where one is required, remain with the practitioner.^[1][3]

This article summarizes publicly available federal regulation for licensed practitioner education. It is not legal advice, medical advice, or regulatory guidance, and it does not establish that any particular product or practice is compliant. Confirm current federal and state obligations with qualified counsel.