According to the FDA, compounding is generally a practice in which a licensed pharmacist, a licensed physician or, in the cast of an animal patient, a licensed veterinarian, or a person under the supervision of a licensed pharmacist, combines, mixes or alters ingredients of a drug to create a medication tailored to the needs of an individual patient.¹

Compounding can be traced throughout ancient history as an essential practice. What began with crude botanicals evolved into the extraction of active constituents, then into complete chemical synthesis that has created the refined therapies for patients now associated with modern compounding.

While commercially manufactured medications are designed to treat the average patient, compounding exists for the outliers and in-betweens whose treatment requires more than standardized formulations. Although compounding represents just 1-3% of all prescriptions dispensed today, the critical role in drug shortages and media-driven popularity for certain medications, such as human weight loss drugs, has the practice more popular than ever. That increasing popularity has also caught the attention of regulators. For compounding, this has led to some overdue updates to compounding standards (USP <795> & USP <797>) that improve patient safety, but also a specific veterinary guidance (GFI 256) that presents newfound challenges to veterinarians and pharmacies alike.

We will explore the key differences between compounded and commercial medications, the constraints of compounding regulations, the capabilities of compounding as a treatment option, and how veterinary teams better leverage it as a tool to enhance patient care.

Compounding 101

The key differentiator between compounding and commercial medication is customization. While commercial medications use a fixed formulation designed for consistent mass production (fully backed by rigorous safety and efficacy data), compounding offers the flexibility to add, edit, or remove ingredients to tailor treatment to a specific patient. Furthermore, compounding has the benefit of speed coupled with the ability to produce new formulas within a few hours whereas developing a drug approved by the FDA can take anywhere between 3-10 years.

Compounding fuels improved patient outcomes with its ability to remove allergens, increase palatability, and provide accessibility to drugs on backorder or that aren’t commercially manufactured. Under the FDA’s Animal Medicinal Drug Use Clarification Act, compounding is classified as extra-label drug use and any compounded medications are always “off-label”—its existence permitted only by an exemption in Section 503A of the Federal Food, Drug, and Cosmetic Act.^2,3 While the active ingredient and route of administration may be the same in both compounded and commercial drugs, only commercial medications have proven efficacy and safety for the specific product.

How it’s regulated

The regulatory framework for compounded medications is currently set by 2 key governing bodies: The FDA and The State Boards of Pharmacy (SBP) which typically develop regulations based on standards established by the United States Pharmacopeia (USP). USP is an independent, nonprofit organization that develops science-based quality standards. While the FDA does provide general guardrails for compounding, compounded medications are notFDA approved. SBPs carry the bulk of authority over compounding, with expectations for both pharmacies and prescribers often varying state to state. All of these organizations are fundamentally designed to ensure the safety of patients and the protection of prescribers through standards, guidance, and regulations.

GFI 256

Guidance for Industry (GFI) represents the FDA’s current thinking on a topic and intended to be viewed as a recommendation. GFI 256 outlines the FDA’s policies prescribing compounding medications in veterinary medicine from bulk substances and determines the appropriate use cases, specifically regarding prescriptions for patient-specific and food-producing animals as well as for office-use scenarios. Additionally, it establishes criteria for what is essentially a copy of commercial products: The same active ingredient/moiety and route of administration. GFI 256 also determines general expectations for establishing a meaningful clinical difference and providing medical rationale when prescribing compounded medications.

What’s in a compound?

The foundation of a compounded medication is the Master Formulation Record which is a detailed record providing ingredients and specific procedures for how a compounded medication is to be prepared.

Compounded medications can be prepared with FDA-approved commercial products (tablets, capsules) and active pharmaceutical ingredients (API) sourced from suppliers. It is important to note that over 70% of API manufacturers are located overseas, making it critical for pharmacies to develop a quality program to vet not only their stateside distributors, but also the actual manufacturer.

Where are compounded medications made?

In 2013, The Drug Quality and Security Act DQSA defined 2 pharmacy categories for compounding, 503A and 503B, both of which serve distinct roles within veterinary medicine with unique capabilities and limitations. The categories and formalized oversight serve to prevent compounders from acting as manufacturers and add cGMP-level expectations for office use. State level rules, requirements, and exceptions have been developed to specifically address veterinary patients in specific contexts.

503A pharmacies

The 503A pharmacies are designed to produce small scale and patient-specific products intended to meet the needs of each individual patient.

• Primary oversight authority: state board of pharmacy
• Compounding activities: “traditional” or patient-specific
• Standards: United States Pharmacopeia (USP)
• Beyond Use Dates (BUDs): Based on USP or internal testing/external literature
• Formulary: Flexible in strength, size, ingredients. Large formulary, focus on the individual patient
• ·Compounding equipment:
  • Pros: Low upfront and maintenance costs, small footprint (most fit on benchtop), ease of operation
  • Cons: Restrictive batch sizes, slower output, labor intensive, higher incidence of inconsistency, and relatively short BUDs

503B pharmacies

The 503B pharmacies are designed to produce large-scale, office-use products intended to meet the needs of hospitals and practices. Within compounding, it is typically utilized during shortages and for sterile compounds.

• Primary oversight authority: Food and Drug Administration
• Compounding activities: Bulk quantities, often for drug shortages. Sales to providers/hospitals
• Standards: Current Good Manufacturing Practices (cGMP)
• BUDs: Based on stability studies
• Formulary: Rigid, smaller formulary focused on use in widest patient population
• Manufacturing equipment:
  • Pros: Speed and efficiency (large batch size), consistency and repeatability, as well as details with advanced data logging on batches
  • Cons: high upfront and maintenance costs, complex training required to operate, rigid formulations, high changeover time

Practical in-practice practices

So now that we understand how compounding works behind the scenes, let’s look at how it applies to veterinary teams by reviewing the essential compounding requirements.

• Establish a valid veterinarian-client-patient relationship (VCPR). The federal definition of a VCPR includes “The practicing veterinarian is readily available for follow-up in case of adverse reactions or failure of the regimen of therapy. Such a relationship can exist only when the veterinarian has recently seen and is personally acquainted with the keeping and care of the animal(s) by virtue of examination of the animal(s) and/or by medically appropriate and timely visits to the premises where the animal(s) are kept.”⁴ Physical exam requirements may vary state-to-state, so veterinary teams need to ensure they remain up to date with regulatory changes.
• Determine whether your patient needs customized care. Compounded medications should only be chosen when FDA-approved medications cannot meet the patient’s needs. This includes assessing allergy/contraindication, route of administration, specific dose, availability, and safety/adherence.
• Document medical rationale. Prescriptions should include a brief explanation of the decision to prescribe a compounded product whether that’s a specific allergen, and toxic ingredient, or other safety concerns. Price, preference, and convenience are not acceptable reasons for choosing compounding for patient care.
• Don’t forget about BUDs. Remember to take BUDs into account before prescribing compounded medications and ensure your client is educated on proper storage, beyond-use dates, and how to know if the medication is compromised.
• Collaborate with your compounder. Work with your compounder to ensure that the product, pharmacy team, and facility processes all adhere to verifiable quality assurance and regulatory compliance.

Most commercial medications are not designed with pets in mind and less than 7% of approved drug products are veterinary, which allows compounding to fill a gap within veterinary medicine. Compounding provides veterinary-focused solutions,⁵ including:

• Accommodating for allergies, which are in 70% of ingredients in typically approved tablets and capsules
• Providing therapy alternatives in the case of shortages and discontinuations
• Wide availability of strengths and dosage forms for any species
• Variety of flavoring and bitter masking to improve patient compliance

In the world of veterinary medicine, the flexibility offered by compounding is often a necessity, but it comes with responsibility. By better understanding how compounding works behind the scenes and how to approach prescribing compounded drugs with intent, veterinary teams can broaden care opportunities leading to stronger client compliance and improved patient outcomes.

Reference

1. Human drug compounding. US Food and Drug Administration. Updated June 21, 2023. Accessed March 31, 2026. https://www.fda.gov/drugs/guidance-compliance-regulatory-information/human-drug-compounding
2. Animal Medicinal Drug Use Clarification Act of 1994 (AMDUCA). US Food and Drug Administration. Updated June 7, 2023. Accessed March 31, 2026. https://www.fda.gov/animal-veterinary/guidance-regulations/animal-medicinal-drug-use-clarification-act-1994-amduca
3. Section 503A of the Federal Food, Drug, and Cosmetic Act. US Food and Drug Administration. Updated June 21, 2023. Accessed March 31, 2026. https://www.fda.gov/drugs/human-drug-compounding/section-503a-federal-food-drug-and-cosmetic-act
4. Extralabel Drug Use in Animals, 21 CFR § 530 (2024). Accessed March 31, 2026. https://www.ecfr.gov/current/title-21/chapter-I/subchapter-E/part-530
5. US Food and Drug Administration. Product Identifier Requirements Under the Drug Supply Chain Security Act – Compliance Policy: Guidance for Industry. US Dept of Health and Human Services; 2024. Accessed April 6, 2026. https://www.fda.gov/media/182749/download