The Compounding Conundrum

Compounded drugs have an important place in veterinary medicine, but their use requires a balancing of risks and rewards by practitioners and animal owners.
Compounded drugs have an important place in veterinary medicine, but their use requires a balancing of risks and rewards by practitioners and animal owners.                                             Credit: Arnd Bronkhorst Photography

The drug compounding industry—at least that segment serving equine veterinarians, their clients and their patients—has a public relations problem these days, a serious one. The old adage that “no news is good news” no longer applies to drug compounders; instead, “good news is no news” has become the unfortunate catch phrase for the industry. Media recognition that compounding can be an important, and sometimes life-saving, tool for veterinarians appears from time to time, often hidden away in the back of a trade journal with little fanfare. When things go wrong, however, the tragic results often show up on front pages, above the fold, and spread like wildfire on the Internet. 

Media reports in recent years have alleged a litany of mistakes, negligence, lawsuits and illegalities:

• A compounding error by a Florida pharmacy resulted in the deaths of 21 polo ponies, civil litigation and a subsequent federal lawsuit that called into question the authority of the Food and Drug Administration (FDA) to regulate drug compounding.

• An equine protozoal myeloencephalitis (EPM) medication prepared by a Kentucky compounding pharmacy was implicated in the deaths of four horses, generating an FDA warning letter, denials and several lawsuits.

• Tainted raw materials imported from China and reportedly incorporated into a compounded bleeder treatment led to medication positives, a hefty fine and a lengthy suspension for a Quarter Horse trainer at Ruidoso Downs in New Mexico when his horses tested positive for the active ingredient in Viagra.

• Three Thoroughbred trainers in Maryland were suspended and fined after their horses tested positive for stanozolol, an anabolic steroid once marketed under the trade name Winstrol and now available only as a compounded product.

• A flurry of FDA warning letters were directed at compounders and marketers of unapproved and untested equine ulcer drugs that illegally mimicked two approved medications sold by Merial.

Mistakes happen even at the best pharmacies, and compounded designer drugs undeniably are used by some trainers and their veterinarians looking to find an edge on the competition.

The problems, although well-publicized, present only a tiny drop in a very large bucket when considering the scope of the compounding industry.

Determining just how large that bucket actually is, though, is an almost impossible task. Despite the inherent difficulty, the FDA has crunched the numbers anyway.

The agency is considering revised regulations affecting drug compounders. Notice of the proposed changes published in the May 19, 2015, Federal Register included estimates of the number of prescriptions that are written for compounded drugs every year. The FDA estimate was compiled to satisfy the Paperwork Reduction Act, a government requirement for information about the “recordkeeping burden” created by the new regulations, rather than to assess the state of the industry. With that caveat in mind, the FDA’s best guess, based on statistics from a variety of sources, is that “approximately 75,000 pharmacies (including, presumably, veterinarians compounding medications in their own clinics) will receive approximately 6,350,000 prescriptions for compounded animal drugs annually.” Even if the FDA estimate is off by a million or so prescriptions a year in either direction, the drug compounding industry is huge, and growing.

Perception that a problem exists creates its own compelling version of reality, however, and all compounders—the many good ones and the few bad—often are tarred with the same brush.

Drug compounding is regulated at the federal and state levels and also is subject to non-binding recommendations and guidelines from a number of veterinary organizations, including the American Veterinary Medical Association (AVMA) and the American Association of Equine Practitioners (AAEP). In addition, the Association of Racing Commissioners International (ARCI) has stepped in with a controversial Model Policy that would curtail the use of most compounded drugs at racetracks.

Almost everyone seems to agree that drug compounding has a valid place in the practice of veterinary medicine. The question for equine practitioners is not whether to use compounding pharmacies when necessary for the welfare of their patients, but how to do so without running afoul of the myriad regulations and guidelines.

The Language of Compounding

Navigating the often-confusing world of drug compounding begins with a lesson in what a compounded drug is not. A compounded medication is not a so-called “pioneer drug.” Nor, despite occasional marketing ploys to the contrary, is a compounded drug the “generic equivalent” of a typically more expensive brand-name product.

A “pioneer drug” is a drug that has received FDA approval based on extensive and strictly monitored testing for efficacy and is manufactured from approved ingredients in an approved facility. The approval process, as much as is possible, assures safety, consistency and effectiveness of the medication when labeling instructions are followed.

A “generic” is the equivalent of an FDA-approved, brand-name drug that makes its way to the market after the pioneer drug is no longer protected by a patent. A similar approval process guarantees that the generic drug can be prescribed as a substitute for the brand-name medication with similar results expected in most situations. Key elements of the approval process for both pioneer drugs and generics are testing for efficacy and quality control for manufacturing.

Compounded drugs, to borrow a well-worn of a different color. According to the Pharmacy Compounding Accreditation Board (PCAB), these are “prescriptions that are written by a physician, veterinarian or other legally authorized prescriber and prepared for an individual patient. They are not commercially available; rather, they are prepared by a pharmacist to meet an individual’s unique needs as determined by the prescriber.”

The AVMA’s current policy on drug compounding has a similar definition: “Compounding, consistent with the FDA Extra Label Use regulations, is the customized manipulation of an approved drug(s) by a veterinarian, or by a pharmacist upon the prescription of a veterinarian, to meet the needs of a particular patient.”

The definitions manage to convey important information in a few phrases: “prepared for an individual patient;” “not commercially available;” “customized manipulation;” “approved drugs;” “particular patient;” “extra label use.” A compounded drug, in other words, is custom medication produced on a very small scale, but only when specifically prescribed by a veterinarian for use in the treatment of a single animal patient.

Missing from the definitions are the requirements for efficacy testing and strict oversight of the compounding process required for FDA approval of new drugs. Giving existing regulations the broadest and most favorable reading, a tactic that the FDA often adopts when regulating the industry, all drug compounding is illegal. This is because any compounded medication is, technically at least, a new—but untested and unapproved—animal drug.

Safe Harbor

Compounders filling a prescription by manipulating a drug or drugs already approved by the FDA can avoid regulatory woes thanks to the Animal Medicinal Drug Use Clarification Act of 1994 (AMDUCA). This “safe harbor” law with the unwieldy name allows veterinarians to prescribe extra-label use of approved animal or human drugs so long as regulatory requirements are followed. The regulations governing extra-label use were written to give veterinarians treatment flexibility when “the health of an animal is threatened or suffering, or death may result from failure to treat.” The regulations are situation specific, however, and do not give veterinarians free rein to mix and match approved drugs at will.

The regulations governing extra-label use of approved drugs can be found in Title 21, Part 530, of the Code of Federal Regulations. The regulations include stringent rules for extra-label use in treating food animals (due to fears of drug residues entering the human food chain) and simplified rules for non-food animals. The latter category, thankfully, includes horses. A valid veterinarian-client-patient relationship is required, and rules governing record keeping and labeling must be followed. Requirements that permit compounding from approved drugs for non-food animals include:

• that an approved drug to treat the animal’s condition is not available;

• that the compounding is performed by a licensed pharmacist or a veterinarian “within the scope of a professional practice;”

• that there are procedures (not specified) in place to ensure that the compounded drug is safe and effective;

• that the scale of the compounding process is “commensurate with the established need.”

The restriction on scale of production is legalese for a requirement that the compounding pharmacist or veterinarian produce only the amount of a drug necessary to treat a specific animal. This reflects a concern that compounding for permissible extra-label use might be used as a pretext for large-scale drug manufacturing from bulk drugs, a process that is specifically prohibited by the extra-label regulations.

The statutory exemption for extra-label use of medications compounded from already approved drugs is straightforward, at least with respect to federal regulation of anything. Regulating compounding from bulk ingredients, in contrast, has been more difficult. Confusion reached a tipping point in 2011 when a federal district court in Florida raised troublesome questions about the agency’s regulatory authority. Proposed “Guidance for Industry (GFI) #230,” released for public comment by the FDA in mid-May of 2015 and titled “Compounding Animal Drugs from Bulk Drug Substances,” is a significant step in providing consistent guidance for drug compounders and veterinarians.

Franck’s and the Feds

The genesis of GFI #230 was a tragic miscalculation that resulted in the deaths of 21 polo ponies competing for Venezuela at the 2009 United States Open Polo Championships in Florida. A veterinarian for the Venezuelan team requested that Franck’s Pharmacy, an established compounder with a base in Ocala, Florida, prepare an injectable version of a prescription medication (Biodyl) for the horses in his care.

Due to a mathematical error made during compounding, an error that went unnoticed by the prescribing veterinarian and everyone else, the medication was too potent and nearly two dozen horses died after receiving the compounded drug. The error was investigated by the Florida Board of Pharmacy, which determined that the error was a “mis-fill, a mathematical error in converting an ingredient,” according to James Powers, a member of the board’s two-person probable cause panel. Franck’s was reprimanded and fined for the incident, but the Florida Board of Pharmacy voted to allow Franck’s to continue operation without any restrictions.

Despite the Board of Pharmacy’s investigation, sanctions and subsequent vote to allow Franck’s to stay in the compounding business, the incident led the FDA to inspect Franck’s operation three times in 2009. Following the first of those inspections, the FDA issued a Form 483 raising several concerns. The FDA’s observations related to quality assurance and training; none addressed bulk compounding.

Franck’s responded by asserting that its compounding activities were regulated by state agencies and that the pharmacy was not involved in drug manufacturing. The FDA took no further action until April 2010, when the agency asked a Florida federal court for an injunction preventing Franck’s from compounding animal drugs from bulk ingredients. The filing marked the first time since the FDA was created that the agency asked a federal court to regulate the operation of a state-licensed pharmacy producing animal drugs from bulk ingredients.

The litigation did not go well for the FDA. In a detailed decision, the court first explored Congressional intent in passing the Federal Food, Drug and Cosmetics Act of 1938 (FDCA) and the FDA’s subsequent—and varying—approaches to regulating drug compounding. Among those enforcement efforts was the 2003 Compliance Policy Guide Section 608.400 (CPG 608.400), titled “Compounding of Drugs for Use in Animals.” Although non-binding on the FDA or anyone else, CPG 608.400 purported to describe the “FDA’s current thinking on what types of compounding might be subject to enforcement action.”

Although CPG 608.400 was a departure from previous versions, taking a generally more aggressive stance toward regulation of drug compounding from bulk ingredients, the FDA considered the changes to be minor ones and chose not to submit the proposed guidelines for public comment (or to follow other traditional rule-making procedures) before adoption. The court found this lapse in procedure worrying. Nor did the agency respond in a meaningful way to letters critical of the new guidelines from veterinarians, compounding pharmacists, animal owners, 26 senators and 72 congressmen.

Calling the FDA’s statutory authority to regulate traditional, state-licensed compounding pharmacies “questionable,” and noting that FDA promises to revise CPG 608.400 in 2004 went unfulfilled, the Florida Court ruled in favor of Franck’s Pharmacy:

“In enacting the FDCA in 1938,” the court explained, “Congress did not intend to give FDA per se authority to enjoin the longstanding, widespread, state-regulated practice of pharmacists filling a veterinarian’s prescription for a non-food-producing animal by compounding from bulk substances.”

The District Judge took the FDA to task in a footnote, one of 97 appended to the 47-page decision. “Had the FDA done what it said it would do (revise CPG 608.400), or, even better, gone through formal rule-making, it might have been able to develop criteria for determining whether a large, interstate compounding pharmacy such as Franck’s is engaging in impermissible manufacturing or permissible, traditional compounding. Though it is not my place to say so, [the] FDA could still choose to follow this alternative course.”

Eleven years after the FDA promised to issue revised compounding guidelines, and four years after losing a ground-breaking decision in a Florida court, the agency followed the judge’s suggestion. On May 18, 2015, the FDA withdrew CPG 608.400 and submitted new guidelines in the form of GFI #230 for public comment. The 90-day comment period was scheduled to close on August 17, 2015. One downside to the FDA’s action is that CPG 608.400 was withdrawn immediately, while approval of a final version of GFI #230 will take awhile. In the interim, the FDA will evaluate all facts and circumstances when deciding whether to initiate an enforcement action against an animal drug compounder.

(Almost) Current Thinking

Like its predecessor, GFI #230 is advisory only. The guidelines provide general information, but are not binding on either the FDA or on the public. When finalized, GFI #230 will “represent FDA’s current thinking regarding compounding animal drugs from bulk drug substances,” including an emphasis on three major areas of concern: 1) compounding copies of approved drugs from bulk ingredients; 2) compounding for food-producing animals from bulk ingredients; and 3) compounding office stock from bulk ingredients.

Perhaps more importantly, the guidance will identify certain drug compounding situations in which the FDA “does not intend to take action” for technical violations of the approval, adulteration and misbranding provisions of the Food, Drug and Cosmetics Act of 1938.

The FDA recognizes that drug compounding from bulk ingredients has a valid place in veterinary medicine in those situations when “there is no drug available to treat a particular animal with a particular condition, because either no drug is approved for a specific animal species or no drug is available under the extra-label drug provisions.” In those situations, the FDA acknowledges, “an animal drug compounded from bulk drug substances may be an appropriate treatment option.”

GFI #230 includes recommendations for drug compounding by state-licensed pharmacies, licensed veterinarians and outsourcing facilities. If those recommendations are followed, and if the compounded drug is not “otherwise adulterated or misbranded,” the FDA does not “intend” to initiate an enforcement action. That language does not mean that the FDA will not initiate an enforcement action, but it does suggest a qualified safe harbor in many situations.

One of the principal elements of GFI #230, as always with the FDA when discussing compounding, is to distinguish traditional drug compounding for a particular animal from larger-scale drug manufacturing. The latter is more likely to attract agency attention.

The Future of Drug Compounding

Final approval of GFI #230 should reduce some of the confusion about which compounding activities are likely to be tolerated by the FDA and which are not. For equine practitioners working apart from the regulatory fray, however, practical concerns related to drug compounding remain. Perhaps the most important question is this: How do you locate a reputable compounding pharmacy?

Accreditation by a reputable third-party professional organization can indicate that a compounding pharmacy adheres to industry-accepted policies and practices. The Pharmacy Compounding Accreditation Board (PCAB), which in June 2014 joined the Accreditation Commission for Health Care, is one such organization. Participation is voluntary, and PCAB accreditation is based on an application process that includes a check for proper state licensure and a rigorous on-site evaluation to assess staff competency, adequate facilities and verification that the pharmacy uses ingredients from FDA registered or licensed sources.

The Veterinary-Verified Internet Pharmacy Practice Sites (Vet-VIPPS), under the auspices of the National Association of Boards of Pharmacy, uses a similar evaluation process to accredit online pharmacies that sell and distribute prescription drugs for animals through the Internet.

Accreditation and the oversight that comes with it can be valuable indicators of a pharmacy’s adherence to industry standards, but a practitioner’s due diligence when selecting a compounding pharmacy requires more. Comments from colleagues, both good recommendations and bad, can be solicited and can help a practitioner assess a compounding pharmacy.

Appropriate questions—especially directed to a non-accredited pharmacy—also are important and should include:

• Is the pharmacy licensed in the state where it is located?

• Are the sources of bulk ingredients approved by the FDA?

• Is the pharmacy licensed in the state where the prescribing veterinarian practices if there is interstate shipment?

• Will the medication be prepared in response to a specific prescription (as required by the FDA) or sold from stock prepared in advance?

• Does the pharmacy have liability insurance that might cover an adverse reaction or an improperly prepared drug?

A serious red flag for practitioners can be advertising. Ads for compounded drugs show up on the Internet from time to time and often are directed at consumers rather than veterinarians. The advertisements might suggest that a compounded drug is a less expensive, but equally effective, substitute for an approved drug prescribed to treat the same condition. Generic drugs, unlike compounded medications, go through a lengthy FDA approval process; also, a price lower than an FDA-approved medication is not justification for using a drug that mimics an approved product. That type of advertising sometimes generates a warning letter from the FDA, but enforcement is inconsistent due mainly to a lack of resources.

Finally, practitioners should consult their professional liability insurance carriers regarding the extent of coverage for incidents arising from the use of compounded medications. A pharmacist generally is responsible for assuring the quality and strength of a drug during the compounding process and until the medication is dispensed. Potential liability for adverse effects from the use of the compounded drug then shifts to the prescribing and treating veterinarian. Use of a compounded drug that, by definition, lacks FDA approval may or may not satisfy the standard of care required of all veterinarians. The extent of coverage is a question that should be asked before a problem arises rather than after an adverse reaction.

Compounded drugs have an important place in veterinary medicine, but their use requires a balancing of risks and rewards by practitioners and animal owners.


• Food and Drug Administration searchable “Warning Letter” web site

• “Veterinary Compounding” brochure produced by the Animal Health Institute, the American Veterinary Distributors Association, and the AVMA http:/

• AAEP “Equine Veterinary Compounding Guidelines”

• AVMA “Veterinary Compounding” policy

• Information regarding Pharmacy Compounding Accreditation Board accreditation, including a search function to locate accredited pharmacies http://

• Information regarding the National Association of Boards of Pharmacy’s Veterinary-Verified Internet Pharmacy Practice Sites (Vet-VIPPS) accreditation program

• Draft version of GFI #230 (search by Guidance #)

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