In recent years, the drug-compounding industry has embraced United States laws, mandates, and regulatory requirements to ensure reliable, safe, and cost-effective medications to physicians and their patients. The Food and Drug Administration (FDA) has mandated two designations for pharmaceutical compounders that serve to balance patient-specific needs with the increasing demand for high-quality compounded drugs. These specialized entities are categorized as either 503A compounding pharmacies or 503B outsourcing facilities. This article provides a review of important similarities and differences; which will allow hospital systems, ambulatory care centers, and other healthcare organizations to make informed decisions in the interest of patient safety, medication effectiveness, and consumer satisfaction.
Why Compounding? According to the United States Pharmacopoeia (USP), "Millions of medications are compounded each year in the US to meet the unique needs of patients. Compounding provides access to medication for patients who may not be able to use commercially available formulations due to dosing requirements, allergies, or rare diseases." (paragraph 1).  Vulnerable populations such as senior citizens and children may also benefit from slightly altered preparations.  Thus, compounding facilities offer multiple personalized options for the unique needs of a diverse patient population.
503A vs 503B FDA Designations
A major element of excellent pharmacy practice has long been the "art and science" of compounding medicines to meet the unique needs of patients. Advances in pharmaceutical research have in turn led to increased consumer demand for these specialized drug products. 
In recent decades, the drug compounding sectors have been tasked with scaling up production while still assuring access, effectiveness, and most important, safety. As traditional compounders struggled to keep up with demand, incidences of contamination and serious patient illness (sometimes fatal) increased. [4,5]
It became apparent to public health experts, industry leaders, and regulators that the designation of pharmacy compounding and related regulation under Section 503(A) of the Federal Food, Drug, and Cosmetic Act would no longer suffice in keeping patients free of harm. Subsequently, the Drug Quality and Security Act (DQSA) was passed, creating the additional formal designation of the 503(B) Outsourcing Facility.  It should be noted that, although 503B facilities must be supervised by licensed pharmacist(s), they are not required to be a licensed pharmacy.  Thus, per current FDA designation, the more proper terminology is "503B Outsourcing Facility" rather than 503(B) Pharmacy or 503B pharmacy compounding facility.
503A Compounding Pharmacies
503A pharmacies are more closely related to what might be considered "traditional compounding pharmacies." They provide medications to fill individual patient-specific prescriptions. They are designated by the FDA for home use. Under Section 503A, only very limited amounts of batch drugs can be produced. An example of this would be the provision of only a 30-day supply to meet specific patient needs. Pharmacies categorized under 503A would also only be able to supply sterile medications under patient-specific conditions.
It is important to note that preparations in 503A pharmacies, because they are customized, cannot be produced in large batches. This makes the medication more expensive. Ultimately, this cost is passed on to the patient, at times making much-needed medications cost-prohibitive.
Although 503A pharmacies must be registered with the Drug Enforcement Administration (DEA) and their state boards of pharmacy, they do not need to be registered with the FDA.
Medications prepared in 503A compounding pharmacies must comply with requirements according to their respective state boards of pharmacy regulations and USP requirements 795 and 797. 503A pharmacies are required to perform environmental monitoring inspections every six months. Beyond Use Dating (BUD) is executed according to external scientific evidence, but not necessarily according to rigorous scientific testing.
Unlike 503B outsourcing facilities, they do not need to comply with Current Good Manufacturing Practices (cGMP). This means that preparations are not tested according to potency, integrity of label claims, or stability. Such issues create potential problems in the reliability of the compounds to effectively treat patients. Interestingly then, the positive impression of "patient-specific" may be somewhat of a misnomer in a 503A pharmacy.
503B Outsourcing Facilities
503B outsourcing facilities produce large batches of medication for use in healthcare facilities, ambulatory surgery centers, healthcare systems, and physicians' office use. Like 503A facilities, they additionally have the option to fill patient-specific prescriptions.
503B outsourcing facilities have the ability to manufacture compounded sterile preparations (CSP) to a wide patient population. cGMP creates the foundation for safely in the manufacturing of ophthalmic solutions, pain management medications, anesthesia, and numerous types of sterile injectables. Because 503B compounding facilities have the ability to scale up production, consumer demands can be achieved quickly while ensuring patient safety at a reasonable cost.
"Outsourcing facilities are a relatively new creation that provides a necessary element in the patient care continuum. These facilities fit in perfectly between traditional pharmaceutical manufacturers and traditional pharmacies to serve provider and patient needs by preparing and distributing drug products that are not otherwise commercially available." Carl Woetzel, President, Fagron Sterile Services.
The Drug Quality and Security Act (DQSA) was signed into law in 2013. It created Section 503B, allowing this new type of compounding pharmacy to exist. Because these entities produce a much wider range of drug products, related regulations are decidedly more extensive. Sterile as well as non-sterile medications can be mass-produced in a facility that is designated as 503B. Registration requirements include the FDA as well as the DEA and the residing state boards of pharmacy.
Regulations required of 503B compounders are much more rigorous than for 503A pharmacies. Like 503A pharmacies, compliance with USP 795, 797 and respective state boards of pharmacy are required. Most notably, 503B facilities must also strictly adhere to cGMP requirements (21 CFR Parts 210 & 211).
What is 503B Compliance and How Does It Benefit the Public?
The major difference between 503A and 503B drug manufacturing processes are the requirements as instructed in Current Good Manufacturing Practices (cGMP). A central tenet of cGMP is that quality assurance is built into the drug product development life-cycle: from receipt of raw materials to patient administration. 
It should be noted that cGMP is also mandated for pharmaceutical manufacturers that produce over-the-counter and prescription medications. 503B compounding facilities then, are held to these similar high standards; 503A pharmacies are not. This is why the term, "503B pharmacies" may be somewhat misleading. 503B outsourcing facilities operate on a much larger scale than a typical pharmacy, but still expediently provide drug products when patients and their providers need them.
CFR part 210 addresses the manufacturing of specific medications and includes the compounding process, packing, and holding of medications. Whereas part 211 addresses the quality of the finished product, such as stability testing and labeling. 
cGMP mandates that the quality assurance unit within the 503B outsourcing facility be autonomous. The unit typically does not have other production responsibilities. Critical responsibilities of this unit include and are not limited to: 
- Inspections of raw materials.
- Rejection of drug products that do not meet required standards.
- Error tracing, both as a learning opportunity and to prevent future errors.
- Compliance with pre-determined specifications when accepting/rejecting products.
In smooth-running cGMP facilities, "checks and balances" provided by the autonomous quality assurance unit keep errors low and quality high. 
It falls upon the 503B compounding facility to confirm the pedigree of all ingredients, packaging, materials, and supplies. Procedures must be established to obtain Certificates of Analysis (COA). All testing methods must be validated prior to any active testing to assure compliance with USP testing standards. A product list must be provided biannually to the FDA.
503B outsourcing facilities are required to develop standard operating procedures and implement environmental monitoring that complies with standards of laboratory cleanliness according to the International Organization for Standardization (ISO).  Different types of pharmacy compounding areas require different levels of air cleanliness to prevent potentially fatal contamination of drug products. This specialized type of monitoring must occur much more often than in 503A facilities. Indeed, environmental monitoring must be performed (and of course documented) at minimum each production shift for ISO 5 areas. If compounding areas are designated as ISO 7 or 8, environmental monitoring must be carried out weekly to meet these critical requirements of air cleanliness.
Summary of Findings
The two separate FDA designations of "503A" and "503B" provide the framework for pharmaceutical compounders to produce, manufacture, and deliver drug products that indeed meet the requirements of public safety, accessibility, as well as minimize financial burden. Whereas 503A compounding pharmacies produce medicines under a physician's prescription, 503B Outsourcing Facilities operate on a much larger scale. In essence, they share many characteristics with the pharmaceutical manufacturing sector. This is why the FDA mandated that 503B compounders follow cGMP.
- 503B Outsourcing Facilities were created as a result of the Drug Quality and Security Act (DQSA) to provide safe and effective compounded drug products that are not otherwise commercially available.
- 503A Compounding Pharmacies (aka "traditional compounding pharmacies) provide individual physician-prescribed drug products.
- 503B drug products are readily available for ambulatory surgery centers, hospitals, and other healthcare systems.
- 503A drug products are designated for home use only.
- 503B Outsourcing Facilities are held to high standards of Current Good Manufacturing Practices that ensure quality and safety of drug products on a large scale.
It is apparent that the regulatory requirements, laws, and standard operating procedures are decidedly robust for 503B compounding facilities. The formal FDA designation of 503B Outsourcing Facility is much more accurate than "503B compounding pharmacy." These expansive but intricate systems have the ability to produce large batches of very high-quality sterile and non-sterile drug compounds. They are steady and stable in standard operating procedures, regulatory compliance, and raw material resources. Thus, they are completely able to meet the supply demands of hospitals, healthcare systems, and ambulatory surgery centers. Even so, patient safety and the effectiveness of medications will always be at the forefront. Because the patient always comes first.
1 United States Pharmacopeia. (n.d.) General Chapter 797 Pharmaceutical Compounding - Sterile Preparations. United States Pharmacopeia.
Retrieved from: https:// www.usp.org/compounding/general-chapter-797. (quote from paragraph 1).
2 United States Pharmacopeia. (n.d.) General Chapter 795 Pharmaceutical Compounding - Sterile Preparations. United States Pharmacopeia.
Retrieved from: https:// www.usp.org/compounding/general-chapter-797. Retrieved from: https:// www.usp.org/compounding/general-chapter-795.
3 PEW Charitable Trust (2014, May 21). Ensuring the safety of compounded drugs: Study highlights key quality standard.
Retrieved from: https://www.pewtrusts.org/en/research-and-analysis/articles/2014/05/21/ensuring-the-safety-of-compounded-drugs
5 Kastango, E.S., Douglass, K.H. (2014). Quality standards for large scale sterile compounding facilities.
7 FDA (Current as of 7/2/2019) Questions and answers: Outsourcing facility registration.
8 Kastango, E.S., Douglass, K.H. (2014). Quality standards for large scale sterile compounding facilities.
9 Master Control (n.d.). FDA 21 CFR Part 210-211.
American Society of Health System Pharmacists [ASHP]. ASHP guidelines on compounding sterile preparations.
Drug distribution and control: Preparation and handling. American Journal of Health -System Pharmacists. 71:145-66.
10 Kastango, E.S., Douglass, K.H. (2014). Quality standards for large scale sterile compounding facilities.
12 American Society of Health System Pharmacists [ASHP]. ASHP guidelines on compounding sterile preparations. Drug distribution and control: Preparation and handling. American Journal of Health -System Pharmacists. 71:145-66.
Source for Carl Woetzel's Quote:
Fagron Sterile Services. (n.d.) How Ambulatory Surgery Centers (ASCs) Can Benefit from Pharmaceutical Outsourcing Facilities: 8 Questions Answered.