Maximizing Outsourcing Options for Compounded Preparations

July 2009 : Repackaging - Vol.6 No. 7

Recent world events have created enormous pressures throughout the US economy with the health care industry being particularly hard hit. As the nation pulls itself out of the most significant economic downturn since the Great Depression, many new challenges for health care providers have arisen. The newly unemployed and growing underinsured are the most notable population segments taxing an already stretched system. Health system administrators and pharmacists are now challenged to provide the same high level of care for all patients while balancing the need to provide these services as economically as possible.

Increasing Budgetary Pressures
Since the initial release of USP <797> in 2004, compounders of sterile preparations have been seeking a balance between ably providing CSPs and safeguarding public health. Pharmacy’s increased focus  on compliance efforts has led to increases in pharmacy budgetary spending in the following
key areas1:

  • Cleanroom equipment and components
  • Cleanroom supplies and disposables
  • Ready-to-use or frozen intravenous dosage forms
  • Proprietary vial and bag systems
  • Labor spending on pharmacy staff

Along with these direct increases in budgetary allocations, there are also associated costs in addressing compliance with specific quality domains within USP <797> such as environmental monitoring, sterility testing, and personnel training.2
In today’s atmosphere of cost containment and fiscal responsibility, these documented areas of increased spending are coming under intense scrutiny as health system leaders search for innovative ways to control costs.

Outsourcing for Cost Control
Given the time, costs, and resources required to fulfill all of the elements outlined within USP <797>, many pharmacies have opted to employ outside contractors to compound preparations rather than incur the increased costs of achieving compliance. Recent hospital survey data indicates that 30% of all hospitals and 55% of hospitals with 400 or more beds outsource some compounding activities.3 Some of the drivers for outsourcing include reduced capital investments, drug stock and supply costs, and quality and environmental testing costs. Outsourcing can also provide the ability to reallocate pharmacists to direct patient care functions and offer expanded clinical services.
With mounting pressures on pharmacy to operate in a more lean
fashion, and given the availability of national and regional providers of these services, it would be remiss for any organization not to examine the feasibility of outsourcing.

When to Outsource
It is important to note that outsourcing a pharmacy service is not a short-term decision. There are many factors that need to be considered to maximize  outside resources while building a safe and solid service model within your organization.
The first step is to determine your pharmacy’s baseline of operations. The baseline can be defined by conducting a two-pronged analysis: First, determine your current readiness to comply with USP <797>. This can be accomplished in several ways, and there are many tools available to assist in identifying your “gaps” to USP <797> compliance. In addition to determining regulatory compliance, consideration should be given to economies of scale that have not been reached because of low or inconsistent CSP volumes and any recent reductions in staffing or redeployment of staff to other departmental tasks or programs.4
The second part of the analysis should include an honest, introspective look at your current operation and its service philosophy. Start with the following questions:

  • What are your operation’s core goals and competencies?
  • What services does your organization offer that are not part of these core competencies or goals?
  • Can your current processes be improved or automated so that outsourcing is not necessary?
  • Which current services can be better provided by an outside vendor?

Because each organization’s goals, objectives, and mission are unique, there is no simple formula to determine when outsourcing is the best approach.

Identify the Best Approach

All internal CSP costs must be identified and analyzed to determine which products are suitable for outsourcing. Use the following algorithm to sort your organization’s CSPs into four major categories:
1. Ready-to-use, proprietary vial systems and other commercially available FDA products

2. Outsourced institutional fixed formulations

3. Internally (“insourced”) batch compounded CSPs

4. Patient-specific, single-dose compounded CSPs

 The goal of this approach is to arrive at category four with very few products requiring patient-specific, single-dose compounding. This will also assist you in developing your global USP <797> compliance plan.

It should also be noted that no single outsourcing vendor can totally replace your compounding operation. The limited number of compounded solutions, shorter hours of operation, proximity to your facility, and other program service limits of these providers make them unsuitable for a total replacement of your compounding operation.

So, what can a proper outsourcing partner do for you? That question is best answered by looking at the vendor’s offerings. In general, preparations that are best suited for outsourcing are ones that are of fixed formulation or dosing, have sufficient chemical stability for shipping and have a “useable life,” and are used in sufficient quantities to generate a reasonable turnover.

Outsourcing partners also can add expanded capabilities to a hospital or health system—such as special dosage forms or packaging, specialized labeling capabilities, more advanced bar coding, and additional documented beyond-use dating (BUD) not available to the in-house pharmacy operation. The most commonly outsourced CSPs currently include:

  • Institutional-specific fixed formulations:

    •Standard (“vanilla”) TPN formulations

  • Specialized dosage forms:

    •Prefilled syringes (OR, anesthesia, or pain management)
    •Medication cassettes, elastometric devices, or pump reservoirs
    •Unit dose packaging otherwise unavailable

Vendor Selection
Because of the complexity involved in selecting a suitable outsourcing provider, careful consideration must be given to the following areas:

 Licensure n Is the provider licensed as a pharmacy in the state(s) where it is located?

  • Is the provider registered with the FDA as a drug manufacturer or establishment?
  • Is the provider licensed within the state(s) it is located as a

wholesaler and/or distributor?

  • Does the provider hold an out-of-state wholesale and/or distributor license (where applicable) for the states it ships to?


  • Does the provider maintain out-of-state special pharmacy licenses or sterile compounding licenses as required?

    Environmental Standards

  • Do the provider’s cleanrooms meet or exceed <797> requirements?
  • Does the provider only use FDA-approved sterile components?
  • Does the provider have standard operating procedures for all production, monitoring, and sanitation processes?


  • Does this provider have special credentials or experience that

indicates expertise in the area of CSP compounding?

  • Does the provider have robust staff training and competency-based education programs?


  • Will the provider supply you with a list of client references so that you can independently interview them?

    Controlled Processes

  • Does the provider follow this guideline: “A written description of specific training, and a performance evaluation program for individuals involved in the use of aseptic techniques for the preparation of sterile products must be developed for each site.”5
  • Are controlled processes based upon best practices that have been analyzed using a failures mode analysis methodology? They should not be based upon oral history or perceived “Secundum Artum.”


  • Review the provider’s current licensure, such as FDA, state board of pharmacy, DEA, etc.; liability insurance; and the staff’s current licensure.
  • Check the organization’s SOP manual for compounding processes, cleaning and sanitization, BUD determination, sterility testing, and recalls and variances.
  • Review training materials and various examples of quality reports, including daily cleaning logs, QA testing logs, stability references, and BUD data.
  • Finally, request samples of  the standard reports regularly provided to all customers, as well as the standard service contract, and ask to see any current recalls or incident reports.

Complete Due Diligence
Since outsourcing CSPs does not release you from your responsibilities under USP and state board of pharmacy statutes, rules, or regulations, it is critical that you review each potential outsourcing vendor using a formalized inspection or review tool and an organizationally developed request for proposal (RFP) document. This also will assure that each potential vendor is evaluated equally and fairly and that all of the health system’s needs are addressed.

Use a multi-disciplinary team to assist in the review process. Nurses, technicians, administrators, and pharmacists can have strikingly different perspectives on the materials and services proposed by vendors. Additionally, it is wise to have this team conduct both announced and unannounced site visits to verify the information and services claimed by the outsourcing provider.

Preparation of CSPs in modern health care is a complex process. The decision to purchase CSPs from off-site vendors cannot be taken lightly. Before entering into a business relationship with any vendor, health system leadership must carefully examine a potential vendor’s CSP portfolio, quality standards, service capabilities, customization opportunities, delivery methods, and pricing. Furthermore, they must assess the vendor’s willingness to provide comprehensive and meaningful quality data. It is critical to ensure that any off-site vendor is following or exceeding the same quality control and quality assurance standards required by USP <797>, current pharmacy practice standards, and prevailing state board of pharmacy statutes, rules, and regulations that apply to CSPs compounded within your own cleanrooms. Organizations must hold any outsourcing partners to the same or higher levels of accountability for the preparations they purchase.6


Lou Diorio, RPh, is a principal of LDT Health Solutions, Inc, a quality management consulting company and a graduate of Long Island University’s Schwartz College of Pharmacy, where he is also an adjunct professor of pharmacy practice and preceptor of pharmacy students. Lou has practiced in and managed pharmacies in hospital, home care, and retail settings and can be reached at


David Thomas, RPh, MBA, is a principal of LDT Health Solutions, Inc. Dave previously served as the director of information technology operations for SoluNet, LLC. He also has served as the manager of implementation and technology development for Baxter Healthcare and as the technology systems manager for Baxter’s COMPASS Group. Before his 15-year tenure with Baxter, Dave held hospital practice and management positions for five years. He­ is a graduate of St. Louis College of Pharmacy and can be reached at


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