Overseeing Outsourced Compounding during Shortages

June 2012 - Vol.9 No. 6 - Page #34
Category: Outsourced Compounding Services (503B)

A variety of reasons prompt hospital pharmacists to outsource their medication compounding, including having insufficient staff to meet production needs, streamlining workflow, reallocating staff to patient-centered activities, and simplifying the record keeping process. Moreover, clinicians often seek improved regulatory compliance, as well as a reduction in preparation errors and reduced waste through longer beyond-use dating.1 While reasons for outsourcing compounding vary, at our facility—Scott and White Memorial Hospital (SWMH)—the primary driver is the occurrence of recent, critical drug shortages; secondary factors include the added convenience outsourcing provides and the ability to reduce the volume of internal preparations that are time-consuming or difficult to prepare in-house. 

The nonprofit Scott and White Healthcare System in central Texas comprises 12 hospitals and 65 clinics, serving a 29,000 square mile area and employing more than 12,000 people. SWMH, the main campus, is a 636-bed specialty care and teaching hospital with a Level I trauma center. Pharmacy leadership at each of the 12 hospitals is responsible for making individual outsourced compounding decisions, and in recent years SWMH has chosen to outsource compounding of a number of products to approximately three vendors. 

Motives for Outsourcing Compounding 
The frequent, enduring drug shortages every hospital currently must manage compel pharmacists to explore every avenue to obtain necessary patient medications. Instances have occurred at SWMH when a shorted drug has been  unavailable to us through the wholesaler or directly from the manufacturer, but one of our outsourced compounders has been able to provide it. Utilizing the services of outsourced compounders has allowed access to drugs on shortage that we would not been able to obtain through other means.

A second driver for outsourcing compounding is convenience; for instance, we prefer to outsource medications such as prefilled syringes rather than prepare them in-house. Certain other drugs, such as specific narcotics and other controlled substances, are also good candidates for outsourcing; for example, some of the medications required for intrathecal pain pump use can be made by an outsourced compounder in concentrated strengths that are not always available from the manufacturer. 

Ensuring Outsourcing Quality
Although outsourcing medications can reduce the impact of drug shortages, it is critical to carefully vet the quality of your outsourcer. SWMH utilizes information from our group purchasing organization (GPO) to help identify quality outsourcers based on safety and cost considerations, which improves our certainty that the selected outsourcers are following compliant compounding practices. Pharmacy leadership or a representative from our GPO may perform a site visit to ensure outsourcers are following appropriate procedures and maintaining compliance with USP General Chapter <797>. Additionally, the pharmacy department reviews the ASHP guidelines on outsourcing sterile compounding services to obtain direction on the process of purchasing outsourced products.

We use various criteria to evaluate outsourcing vendors and ensure we are receiving quality products, including:

Vendor Reputation—Has the vendor had recalls, FDA actions, or errors? Have they supplied a product that was mislabeled or had the wrong concentration? Have other health care facilities provided a positive review of their products and services?

Quality Control Reports—Can the vendor supply the appropriate paperwork indicating sterility testing and pyrogen testing?

Stability Data—Can the vendor supply stability data on their product? Do they perform the testing themselves or do they have an outside facility perform the testing? Can they provide documents of the validation process? 

Safety Culture—What level of involvement does the pharmacist have in the compounding process? Do they perform double- or triple-checks for accuracy? Are any types of electronic checks performed? Are their compounding techniques compliant with USP Chapter <797> and other regulatory requirements?

Price—Can the vendor provide competitive pricing? While not the only determinant in choosing an outsourcing vendor, clearly cost is important.

Be cognizant that it is pharmacy’s job to ensure safety. Vetting the quality of an outsourced vendor and continually monitoring product quality are vital to ensuring patients receive high quality, safe medications. The magnitude of recent drug shortages and the resultant higher demand for products have significantly increased the workloads of outsourced vendors; consequently, pharmacy leadership must intensify scrutiny of vendors’ processes to ensure safety.

Contracting with Multiple Vendors
An optimal contract may be negotiated with a single vendor in many cases, and this option may be preferable to using multiple vendors. However, at SWMH, we have found that there are several reasons to utilize multiple vendors. For example, one outsourced compounder may not supply every item needed for a particular hospital. A facility also may choose to use multiple vendors because one vendor offers longer beyond use dating for the same product, or a feature on their labeling may fit a specific need for that hospital. Labeling that meets the facility’s bar coding needs currently plays a significant role in outsourcing decision-making, as patient safety is clearly of primary importance. 

Contracting with a vendor may be facilitated by, and can possibly be less expensive, if a hospital is part of a GPO. The GPO can negotiate directly with vendors, and purchasing through this coalition allows the hospital to benefit from the market share of the combined membership and thus take advantage of lower pricing. 

Recall Procedure 
Having a recall procedure in place is vital to effectively triaging and implementing the necessary steps when a product must be recalled. At SWMH, we have developed and implemented a recall procedure for all medications, including outsourced medications (visit www.pppmag.com/recallprocedure to view SWMH’s recall procedure).

Pros and Cons of Outsourced Compounding
While the obvious benefits of outsourced compounding include both improved access to hard-to-find drugs and greater convenience, this approach to drug procurement requires a regular cost-benefit analysis. With the intense pressure most pharmacies are under to address shortages—we currently dedicate up to 10  hours per day to this task—it is not uncommon to focus solely on obtaining product rather than analyzing volume, usage, and cost data. Devoting resources to drug shortage management and expending increased dollars on the cost of drugs that are on the shortage list can be a drain on the pharmacy budget. Therefore, it is vital to maximize the best contracts with outsourcing companies.

A regular review of any outsourced low-risk compounding may result in moving those products to more cost-effective, in-house production. Even so, other products, such as very concentrated epidurals or controlled substances used in neurosurgery, may be more efficiently produced by an outsourcer. 

Utilizing outsourced compounding services may provide hospitals access to hard-to-find medications in a timely manner. While the services of outsourced compounders provide several important benefits, careful cost, product quality, and safety analyses are required when vetting outsourcers. Belonging to a buying group or a pharmacy coalition should be considered, as these organizations assist in vetting outsourced vendor quality and membership may allow facilities access to the most competitive pricing.


  1. Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: dispensing and administration—2008. Am J Health Syst Pharm. 2009;66(10):926-946.


Tricia Meyer, PharmD, MS, FASHP, is the director of pharmacy at Scott and White Memorial Hospital in Temple, Texas.


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