1Where the two categories come from.
Both are sections of the Federal Food, Drug, and Cosmetic Act. Section 503A, codified at 21 U.S.C. 353a, was added by the Food and Drug Administration Modernization Act of 1997, enacted on 21 November 1997.¹² Section 503B, at 21 U.S.C. 353b, was added by the Drug Quality and Security Act (DQSA), enacted on 27 November 2013.³⁴
Congress passed the DQSA after the 2012 fungal meningitis outbreak, in which contaminated drugs compounded by a Massachusetts pharmacy led to more than 750 infections and more than 60 deaths in 20 states. The DQSA removed the advertising provisions of section 503A that had been found unconstitutional, left the rest of 503A intact, and created outsourcing facilities as “a new, voluntary category of compounders”.⁴
Under either section, compounded drugs are not FDA approved: FDA “does not review their safety, effectiveness or quality before they are marketed”.⁵
2What each section exempts, and what it doesn’t.
A drug compounded under section 503A is exempt from three parts of the Act: the CGMP provision in section 501(a)(2)(B), the requirement for adequate directions for use in section 502(f)(1), and new drug approval under section 505.¹² A drug compounded by an outsourcing facility under section 503B is exempt from section 502(f)(1), from section 505 and from the drug supply chain security requirements of section 582, but not from CGMP.³⁶
Neither section exempts a drug from section 501(a)(2)(A). A drug “prepared, packed, or held under insanitary conditions” is adulterated whether or not it qualifies under 503A or 503B.⁷
| Section 503A pharmacy | Section 503B outsourcing facility | |
|---|---|---|
| Who compounds | A licensed pharmacist in a state-licensed pharmacy or federal facility, or a licensed physician¹ | A facility at one location that elects to register; compounding is by or under the direct supervision of a licensed pharmacist, and it need not be a licensed pharmacy³ |
| Prescriptions | For an identified individual patient on a valid prescription, or in limited quantities ahead of one based on a history of such prescriptions¹ | May or may not obtain prescriptions for identified patients; can supply office stock to providers such as hospitals³⁴ |
| Sterile drugs | Section 503A sets no condition | Must compound sterile drugs, and may also compound non-sterile drugs³⁸ |
| CGMP | Exempt from section 501(a)(2)(B)² | Required; 21 CFR parts 210 and 211 apply⁶ |
| FDA registration | None under section 503A | Annually between 1 October and 31 December, with a fee³⁸ |
| Inspection | Primarily overseen by the states; FDA generally does not inspect routinely⁷ | FDA inspects on a risk-based schedule³ |
| Reports to FDA | None under section 503A | Products compounded, every June and December; adverse events³ |
| Distribution | Out-of-state limit of 5 percent of prescriptions unless the state has signed an MOU with FDA¹ | No wholesaling: only the outsourcing facility may sell or transfer the drug³ |
3What CGMP means for an outsourcing facility.
FDA intends to write CGMP regulations specific to outsourcing facilities. “Until these final regulations are promulgated, outsourcing facilities are subject to the CGMP requirements in parts 210 and 211”, the drug CGMP regulations.⁶ FDA’s revised draft guidance of January 2020 (Revision 2) describes how it applies them: quality assurance, facility design, environmental and personnel monitoring, equipment, containers and closures, components, production controls and sterilisation, release testing, laboratory controls, stability and beyond-use dating, packaging and labels, reserve samples and complaints. Its appendices set conditions under which FDA generally does not intend to take action on certain release testing and stability testing requirements. It is a draft, marked “Not for Implementation”.⁶
Registration is not approval. FDA says it “means only that FDA has received the information required to register the facility” and does not mean the facility complies with CGMP.⁸ Depending on the number of registrants and its other priorities, FDA expects to inspect a newly registered facility that has not been inspected before within two months of its first registration, and it inspects each facility individually, even under common ownership.⁸ FDA’s list of registered outsourcing facilities shows each one’s last inspection, whether a Form FDA 483 was issued and the action based on that inspection.⁹
Section 503B also sets the label. Among other items, it must say “This is a compounded drug.” or a comparable statement, and give the facility’s name and contact details, the lot or batch number, the date compounded, the expiration date and the statement “Not for resale”, with “Office Use Only” when the drug is not dispensed on a prescription for an identified patient.³
4Bulk drug substances, copies and GLP-1 drugs.
A 503A pharmacy may compound from a bulk drug substance that complies with an applicable USP or NF monograph and the USP chapter on pharmacy compounding; where no monograph exists, the substance must be a component of an FDA-approved drug or appear on FDA’s 503A bulks list. It may not compound “regularly or in inordinate amounts” drugs that are essentially copies of a commercially available drug product.¹
An outsourcing facility may compound from a bulk drug substance only if FDA has listed the substance as one for which there is a clinical need, or if the drug is on FDA’s drug shortage list “at the time of compounding, distribution, and dispensing”. Its drug must not be “essentially a copy of one or more approved drugs”.³
That rule is why GLP-1 drugs feature in the question. On 30 April 2026 FDA proposed to exclude semaglutide, tirzepatide and liraglutide from the 503B bulks list, finding no clinical need for outsourcing facilities to compound them from bulk substances. FDA said it would consider comments before making a final determination.¹⁰ On 26 June 2026 it extended the comment period to 30 July 2026.¹¹
5The 5 percent limit and the state MOU.
Section 503A ties interstate distribution to the states. A drug qualifies only if it is compounded in a state that has signed a memorandum of understanding (MOU) with FDA addressing interstate distribution and the investigation of complaints, or, in a state that has not, if the pharmacy’s out-of-state distribution does not exceed 5 percent of the total prescription orders it dispenses or distributes.¹ In October 2022 FDA said it considers its October 2020 standard MOU suspended while it makes a rule, and extended the period before it intends to enforce the 5 percent limit until that rule takes effect and an updated standard MOU is published.¹²
6How it runs in Seal.
For an outsourcing facility, Seal runs 503B compounding, testing and quality as one operation. Batch records, environmental monitoring, beyond-use date rules, testing, training and quality events share one platform, and configured controls such as component scans, qualification checks and hazardous drug room assignment act during execution. Release waits for the required results, and the basis for each beyond-use date stays linked to the product.
Each batch starts from a formula version, and its electronic batch record checks materials, equipment, training, limits and signatures as the work happens. For sterile work, the batch record is linked to environmental conditions, interventions, qualification, equipment state, materials, microbiology and release on one timeline.
References
- 121 U.S.C. 353a, Pharmacy compounding (FD&C Act section 503A), United States Code, 2023 edition, GovInfo. https:/
/ www. govinfo. gov/ content/ pkg/ USCODE- 2023- title21/ html/ USCODE- 2023- title21- chap9- subchapV- partA- sec353a. htm (read 6 November 2026) - 2Pharmacy Compounding of Human Drug Products Under Section 503A of the FD&C Act, guidance, Revision 2, FDA, June 2016. https:/
/ www. fda. gov/ media/ 94393/ download (read 6 November 2026) - 321 U.S.C. 353b, Outsourcing facilities (FD&C Act section 503B), United States Code, 2023 edition, GovInfo. https:/
/ www. govinfo. gov/ content/ pkg/ USCODE- 2023- title21/ html/ USCODE- 2023- title21- chap9- subchapV- partA- sec353b. htm (read 6 November 2026) - 4Human Drug Compounding Laws, FDA, updated 17 December 2024. https:/
/ www. fda. gov/ drugs/ human- drug- compounding/ human- drug- compounding- laws (read 6 November 2026) - 5Human Drug Compounding, FDA, updated 15 June 2026. https:/
/ www. fda. gov/ drugs/ guidance- compliance- regulatory- information/ human- drug- compounding (read 6 November 2026) - 6Current Good Manufacturing Practice, Guidance for Human Drug Compounding Outsourcing Facilities Under Section 503B of the FD&C Act, revised draft guidance, Revision 2, FDA, January 2020. https:/
/ www. fda. gov/ media/ 88905/ download (read 6 November 2026) - 7Insanitary Conditions at Compounding Facilities, guidance, FDA, November 2020. https:/
/ www. fda. gov/ media/ 124948/ download (read 6 November 2026) - 8Questions and Answers: Outsourcing Facility Registration, FDA. https:/
/ www. fda. gov/ drugs/ compounding/ questions- and- answers- outsourcing- facility- registration (read 6 November 2026) - 9Registered Outsourcing Facilities, FDA, updated 29 October 2026. https:/
/ www. fda. gov/ drugs/ human- drug- compounding/ registered- outsourcing- facilities (read 6 November 2026) - 10FDA Proposes to Exclude Semaglutide, Tirzepatide, and Liraglutide on 503B Bulks List, FDA press announcement, 30 April 2026. https:/
/ www. fda. gov/ news- events/ press- announcements/ fda- proposes- exclude- semaglutide- tirzepatide- and- liraglutide- 503b- bulks- list (read 6 November 2026) - 11List of Bulk Drug Substances for Which There Is a Clinical Need Under Section 503B of the Federal Food, Drug, and Cosmetic Act; Extension of Comment Period, Federal Register, 26 June 2026. https:/
/ www. federalregister. gov/ documents/ 2026/ 06/ 26/ 2026- 12937/ list- of- bulk- drug- substances- for- which- there- is- a- clinical- need- under- section- 503b- of- the- federal (read 6 November 2026) - 12Extension of the Period Before the Food and Drug Administration Intends To Begin Enforcing the Statutory 5 Percent Limit on Out-of-State Distribution of Compounded Human Drug Products, Federal Register, 21 October 2022. https:/
/ www. federalregister. gov/ documents/ 2022/ 10/ 21/ 2022- 22876/ extension- of- the- period- before- the- food- and- drug- administration- intends- to- begin- enforcing- the (read 6 November 2026)
AQuestions and answers
Is a 503B outsourcing facility a drug manufacturer?
It is held to the same CGMP regulations, 21 CFR parts 210 and 211, and FDA inspects it, but its drugs are not FDA-approved. As long as every 503B condition is met, they are exempt from new drug approval, adequate directions for use and drug supply chain security requirements. A facility that stops being registered and keeps making drugs must register under section 510 of the Act and meet all its requirements, including drug approval.
Which is better, a 503A pharmacy or a 503B outsourcing facility?
They meet different needs. A 503A pharmacy prepares a drug for a named patient on a prescription. A 503B facility makes sterile drugs in batches, can supply hospitals and other health care providers without patient-specific prescriptions, and is held to CGMP and FDA inspection. Neither product is FDA-approved, and FDA recommends that practitioners prescribe an FDA-approved drug when a patient can use one.
Does registration as an outsourcing facility mean FDA has approved it?
No. Registration means only that FDA has received the required information. It does not mean the facility complies with CGMP or that its drugs meet the 503B conditions. FDA’s list of registered outsourcing facilities shows each one’s last inspection, whether a Form 483 was issued and the action FDA took.
Can a 503B facility compound semaglutide or tirzepatide?
Only within section 503B’s conditions. An outsourcing facility can compound from a bulk drug substance only if the substance is on FDA’s 503B bulks list or the drug is on FDA’s drug shortage list at the time of compounding, distribution and dispensing. In April 2026 FDA proposed to exclude semaglutide, tirzepatide and liraglutide from the bulks list, finding no clinical need. It later extended the comment period to 30 July 2026 and said it would decide after considering the comments.
What quality rules apply to a 503A pharmacy?
It is exempt from federal CGMP but not from the rest of the Act. A drug made under insanitary conditions is adulterated whatever its exemptions, ingredients must meet applicable USP or NF monographs and the USP chapter on pharmacy compounding, and state boards of pharmacy oversee the practice.
Does a 503B outsourcing facility have to be a licensed pharmacy?
No. It is not required to be a licensed pharmacy, but its compounding must be done by or under the direct supervision of a licensed pharmacist. A facility that is also licensed as a pharmacy still pays any state pharmacy licensing fees on top of FDA’s annual establishment fee.