Develop an Outsourced Compounding Strategy

February 2020 - Vol.17 No. 2 - Page #2
Category: Outsourced Compounding Services (503B)

It is common practice for hospital pharmacies to utilize the services of an outsourced compounder. According to Pharmacy Purchasing & Products’ 2019 State of Pharmacy Compounding survey, reliance on outsourced compounding services is widespread among facilities of all sizes, and is particularly strong in facilities with more than 100 beds (see FIGURE 1).1 Outsourcing can certainly be a useful tool, but it does require an up front investment of time to vet the various vendors in order to identify the best fit for your operation. Developing a comprehensive strategy to acquire medications is critical to ensure that patient needs are met.

Establishing a Drug Acquisition Strategy

University of Kentucky (UK) HealthCare, a 945-bed hospital in Lexington, Kentucky, performs a mix of in-house and outsourced compounding. The volume of medications outsourced is determined by patient needs, which are monitored via historical usage data trends over time. To safeguard against a possible supply disruption, we may split the volume purchased between two outsourced compounders, assuming the cost is similar.

The volume of product quantities outsourced is managed in a similar manner to our method for managing drug purchases from our wholesaler, although
it is important to note that the lead time may be significantly longer to obtain an outsourced product. For example, we cannot order and expect to receive an outsourced product the next day, as it typically requires anywhere from a few days to 2 weeks to arrive. In addition, some contracts may require that a minimum quantity for certain products be purchased at specific intervals. When this is the case, we order up to our PAR levels, taking into account average daily use and the time required to receive the product.

Oversight of Outsourced Compounding

At UK HealthCare, oversight of outsourced compounding is a shared responsibility between pharmacy operations leadership and pharmacy supply chain leadership. Pharmacy operations leadership is accountable for compliance with regulatory requirements, including observing the compounder’s operation and reviewing records during a site visit, as well as reviewing any Form 483s and the outsourcer’s response to the 483.

Medications Outsourced at UK

The decision to outsource the compounding of a medication is usually contingent on the product’s cost and formulation availability, including dose, bag size, syringe size, and concentration. The following are selected examples of medications we have previously or currently outsource:

  • Phenylephrine syringes
  • Labetalol syringes
  • Neostigmine syringes
  • Fentanyl/bupivacaine premix bags for epidurals
  • Ketamine syringes
  • Vasopressin bags

Over time, we have increased the volume of fentanyl/bupivacaine premix bags for epidurals that we outsource, as they have longer dating when purchased from an outsourcer. We also look to increase our outsourced volume of batched syringes, particularly for products that are only offered in vial formulation from the manufacturer.

Several factors must be considered when determining which products to outsource. For example, note that outsourcing facilities are permitted to compound copies of FDA-approved products that are on the shortage list, and as such, these may be good candidates for outsourcing. Next, consider outsourcing medications that historically have been produced in-house. Medications that are typically good candidates for outsourcing include compounds that are used in standard doses (eg, vancomycin 1.5 g IV piggyback). Although these products are frequently batched in a hospital, outsourced products can offer significant operational improvements. For example, with longer dating, IV bags can simply be loaded into an ADC to be pulled as needed, precluding interruptions in the cleanroom for on-demand production. Syringes are another strong candidate for outsourcing, especially those used in anesthesia. Consider the amount of time dedicated to batch compounding these in the cleanroom as part of any cost analysis.

When new products become available from outsourcers, we evaluate them on a case-by-case basis to determine the best acquisition strategy. If we need a product that is not available, we discuss this with the outsourcer; they occasionally have introduced new products at our recommendation.

Effects of Drug Shortages

Outsourcing can be helpful during a shortage, depending on the availability of active ingredients and/or container closure systems. UK’s outsourcing has increased as a result of shortages. Because outsourced vendors are permitted to compound a product if it is on the shortage list, outsourcing is often a potential solution for addressing product shortages (see FIGURE 2).

Shortages may necessitate changes in the EHR. If the outsourcer’s product is essentially the same as the manufactured product (ie, same formulation, dose, strength, etc), then the process is relatively simple, and may be handled similarly to adding a new product from a generic manufacturer to the EHR. If the product is a new formulation, size, or concentration, then it may require a new configuration build in the EHR.


A comprehensive strategy to acquire medications may include purchasing drugs from traditional manufacturers, as well as in-house and outsourced compounding. Looking to the future, ubiquitous drug shortages may continue to impact the availability of medications. Outsourcing is one method of minimizing the effect of these shortages on our patients.

While outsourcing can be a useful tool in an organization’s medication procurement strategy, careful oversight of the outsourcing program, including thorough review of the outsourcer’s Form 483s, is critical to ensuring the availability of safe, effective medications.


  1. Outsourced Compounding. Pharm Purch Prod. 2019;16(4):S54,S56,S57. 

Ryan W. Naseman, PharmD, MS, BCPS, is the senior director of acute care pharmacy services at University of Kentucky HealthCare, where he is responsible for all hospital-based pharmacy operations and clinical pharmacy programs. He received his PharmD from Ohio Northern University, as well as an MS in health-system pharmacy administration from the Ohio State University while completing a combined PGY1/PGY2 residency in health-system pharmacy administration at the OSU Wexner Medical Center.


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