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FDA Guidance on 503B Provides Leeway

Outsourcing Facilities Can Be Co-Located With 503A Pharmacies
Stephen Barlas

Last May, Fairview Health Services, the Minnesota company with 13 hospitals and 36 pharmacy locations spread across the state, opened its new 503B outsourcing facility. IntegraDose, as the new, affiliated company is called, is housed in the same building as its 503A pharmacy but the two are completely segregated by a wall. The 503B facility has a separate address, separate entrance, and separate passcodes. Fairview began considering opening a 503B facility three years ago when the Minnesota Pharmacy Board told the company it would not renew the 503A’s manufacturing license. That license essentially allowed Fairview’s 503A “retail” compounding pharmacy to manufacture compounded medications and send them in bulk to outlying Fairview facilities without first receiving individual prescriptions.

Minnesota was acting informally in concert with the Food and Drug Administration (FDA), which has cracked down on bulk shipments from 503A, state-regulated pharmacies in the wake of its implementation of a new law, which created 503B outsourcing pharmacies. Fortunately for IntegraDose, its new 503B outsourcing facility complies in every respect with the final guidance the FDA released in May 2018. The final guidance Facility Definition Under Section 503B of the Federal Food, Drug, and Cosmetic Act lays out how 503A and 503B must be “completely segregated” if located in the same physical facility. The guidance is intended to encourage hospitals and health systems to establish 503B facilities.

Very few health systems have established 503B outsourcing facilities as Fairview has. It is not clear whether the new guidance will be easier to comply with, allowing more health systems to set up 503B facilities, which can ship bulk, compounded drugs anywhere without first receiving an individual prescription. That is important for health systems with multiple hospitals, clinics, and pharmacies, spread over a wide area. Fairview was lucky. The former chemical company building it uses already had infrastructure in place. That reduced Fairview’s cost for setting up IntegraDose, which is a separate company from Fairview Pharmacy Services, the 503A pharmacy. Kyle Skiermont, PharmD, Chief Operating Officer, Fairview Pharmacy Services, says it is possible that Fairview didn’t need to set IntegraDose up as a separate company based on the final guidance. But other than that, its 503B facility is fully compliant.

Rather than build 503B outsourcing facilities, most health systems and hospitals would rather have the FDA give them the flexibility to send bulk, non-individual prescriptions from their 503A pharmacies to their emergency departments and surgical suites to have on hand in the event of an emergency. However, a second draft guidance published in April 2016 limits hospital and health system 503A pharmacies to a one-mile limit in terms of sending compounded drugs dispensed without an individual prescription. That draft was Hospital and Health System Compounding Under the Federal Food, Drug, and Cosmetic Act. It has not been finalized.

The new Facilities guidance potentially makes it easier for hospitals and health systems to co-locate 503A and 503B facilities. Mark Sullivan, PharmD, MBA, BCPS, Director for Inpatient Pharmacy Services at Vanderbilt University Hospital in Nashville, says, “The guidance will be helpful to groups like ours looking to build 503B facilities in space adjacent to existing 503A operations. We are preparing our sterile compounding facilities plan anticipating that the final guidance from FDA will have some requirements for anticipatory compounding and distance limits for dispensing from a 503A setting that will require the adoption of 503B in order to serve patients.”

The final guidance does not require separate buildings for 503A pharmacies and 503B outsourcing facilities, as Fairview has done. It allows for “co-location” as long as the two facilities are “completely segregated.” When deciding whether a section 503A facility and an outsourcing facility are completely segregated, the FDA intends to proceed on a case-by-case basis. The FDA provides some indicia of complete segregation:

  • The outsourcing facility and section 503A establishment do not share any rooms.
  • The outsourcing facility and section 503A establishment do not share any fixed equipment or supplies for use in compounding.
  • The outsourcing facility and section 503A establishment have a separate entrance and exit, do not share an internal pass-through opening, and are separated by permanent physical barriers. For example, it should not be necessary to go through the outsourcing facility to reach any part of the section 503A establishment.

The guidance rules out subdividing the rooms of the outsourcing facility with a temporary barrier such as a curtain, or by limiting the compounding of patient-specific prescription compounding within the facility to certain periods of time.

One other piece of the FDA 503B puzzle has to fall into place before hospitals jump with both feet into new facilities, according to Fred Massoomi, Senior director, Visante, Inc. “The next piece everyone is waiting for is final guidance on cGMPs for outsourcing facilities,” he says. “The FDA is using PhRMA cGMPs now. Hospitals will say ‘yea or nay’ when they see 503B cGMP guidelines.”

Author bio: 
Mr. Barlas is a freelance writer in Washington, D.C., who covers issues inside the Beltway. Send ideas for topics and your comments to