Overview of the federal and state framework governing compounded medication production in the U.S.
Federal authority
The Food, Drug, and Cosmetic Act (FD&C Act) Sections 503A and 503B, refined by the Drug Quality and Security Act of 2013 (DQSA), establish the two pathways for legal compounded medication.
State authority
State pharmacy boards license individual pharmacies, inspect facilities, and have primary authority over 503A compounding. State boards can investigate, suspend, or revoke licenses separately from any federal action.
Standards bodies
USP (United States Pharmacopeia) sets specific compounding standards: USP <797> (sterile preparations), USP <800> (hazardous drugs), USP <71> (sterility testing), USP <85> (bacterial endotoxin testing). These are referenced in both 503A and 503B regulation.
How the framework changes with shortage status
When a drug is on FDA's shortage list, 503A pharmacies and 503B outsourcing facilities have more room to compound it. When the shortage ends, 503B facilities lose the shortage basis for compounding it from bulk, and 503A pharmacies may not regularly compound copies of the commercially available drug. FDA allowed transition periods after the 2024 and 2025 shortage decisions. This shaped the compounded GLP-1 market from 2024 to 2026.
Recent inflection points
- October 2, 2024: FDA said the tirzepatide shortage was resolved (reaffirmed December 19, 2024), followed by transition periods for compounders.
- February 21, 2025: FDA said the semaglutide shortage was resolved, with similar transition periods.
- April 30, 2026: FDA proposed not to place semaglutide, tirzepatide or liraglutide on the 503B bulks list (91 FR 23431). No final decision as of October 15, 2026. See our analysis.
- September 18, 2026: FDA warning letter 738238 to Empower Pharmacy said its compounded tirzepatide and semaglutide combination products "appear to be essentially copies" of the approved drugs.