Key takeaways:
- Approximately 1% to 3% of all prescriptions written in the United States are for compounded drugs.
- Physicians should use caution when prescribing compounded medications.
Compounded medications currently represent an estimated 1% to 3% of all prescriptions written in the United States, according to a recent 2025-2026 report issued by the Alliance for Pharmacy Compounding.
“There’s a good chance you know someone who has benefited — or whose pet has benefited — from a compounded drug,” read the report, which was released in March.
According to experts who spoke with Healio — as well as the FDA — compound pharmacies, and the compounded drugs they offer, can fill an important niche for patients who cannot be treated with FDA-approved drugs. For example, a patient may be allergic to a certain dye and require a drug made without it. Elderly patients or children may similarly be unable to swallow certain pills and require their medication in liquid form. Other times, physicians at a hospital or clinic may reach for a compounded drug when an FDA-approved therapy is not medically appropriate.
John R.P. Tesser
“Compound pharmacies have evolved to become customizers,” John R.P. Tesser, MD, FACP, MACR, of Arizona Arthritis & Rheumatology Associates and Midwestern University, told Healio. “They change doses, change medications from pill form to liquids, remove dyes or other things people may be allergic to.”
However, experts have also counseled caution when using compounded drugs, reminding physicians that these tailor-made products are not FDA-approved and urging them to do their due diligence when researching the compound pharmacies that provide them.
“You need to know the source of the medications being prescribed,” said Grace C. Wright, MD, PhD, rheumatologist and president of Grace C. Wright MD PC. “And while of course you should monitor the efficacy of the medications, you also should pay particularly close attention to safety.”
According to Wright, the most common uses of compounded drugs typically involve pain management and women’s health, specifically hormone therapy.
“We have gaps in therapies for many of our diseases and many areas of health — like different types of hormone therapy — that demand use of compounded medications,” she told Healio.
According to the Alliance for Pharmacy Compounding 2025-2026 report, which was based on survey results from 600 pharmacy compounders across the United States, the top five compounded therapies offered by these pharmacies are hormone replacement therapy (36%), veterinary drugs (14%), GLP-1 receptor agonists (11%), dermatology medications (8%) and men’s health treatments (7%).
In addition, approximately 76% of the respondent pharmacies reported offering compounded ketamine, with the top formulations being sublingual (78%), nasal (71%) and transdermal (66%).
There are approximately 7,500 compounding pharmacies across the United States, according to data from the American Pharmacy Association. Meanwhile, the Alliance for Pharmacy Compounding 2025-2026 report states that the median traditional compounding pharmacy dispenses 350 compound drugs each week, and serves 150 different prescribers.
And although the compounded medications dispensed or distributed by these facilities are not approved by the FDA, their operations are regulated by federal law.
“Accreditation agencies exist for these pharmacies,” Tesser said. “This can lend some confidence to a prescribing physician that the pharmacy is legitimate.”
Information from the FDA about compounded pharmacies can help rheumatologists use them safely and effectively.
Rules and regulations
The FDA makes some important stipulations that physicians should consider when using a compound pharmacy.
One key point is that compounded drugs are not — and should not be treated as — generics. A generic drug is approved by the FDA under the Federal Food, Drug and Cosmetic Act and meets all requirements under that law, including establishing therapeutic equivalence to a brand name drug, among others. In contrast, a compounded drug is not approved by FDA.
“Generic medications are FDA-approved drugs that must demonstrate bioequivalence to brand-name products,” Wright said. “A substantial similarity in active components is required, typically 80%. Compounded medications are custom-made preparations that are not FDA-approved and do not undergo premarket review for safety, efficacy or quality.”
According to the FDA, federal law regulates compounding by a licensed pharmacist in a state-licensed pharmacy, or federal facility, or by a physician. Federal law also addresses compounding by or under the direct supervision of a licensed pharmacist at an outsourcing facility, a category of compounder established in 2013 by the Drug Quality and Security Act.
According to the Alliance for Pharmacy Compounding, these outsourcing facilities, also known as 503Bs, are unlike traditional compound pharmacies, or 503As, in that they must adhere to current good manufacturing practice standards, similar to those manufacturers of FDA-approved drugs must adhere to.
In exchange, federal law allows outsourcing facilities to prepare large batches of compounded drugs and distribute them to hospitals and clinics. These drugs are in turn administrated to patients by a physician or other provider without a patient-specific prescription.
According to the FDA, outsourcing facilities are inspected by the FDA via a risk-based schedule and are subject to increased quality standards.
“Generally, state boards of pharmacy have primary responsibility for the day-to-day oversight of state-licensed pharmacies that are not registered with FDA as outsourcing facilities,” reads an FDA explainer on compound pharmacies.
However, regardless of where a drug is compounded, whether in a 503A or 503B facility, or a physician’s office, federal laws still apply, including those regarding unsanitary conditions. According to the FDA, compounded drugs made in unsanitary conditions can “put patients at risk and lead to widespread patient harm.”
Physicians should also consider that biological products cannot be compounded.
“Biological products are not eligible for the exemptions for compounded drugs under sections 503A and 503B of the FD&C Act,” reads the FDA explainer on compounding. “Federal law does not provide a legal pathway for marketing biologics that have been prepared outside the scope of an approved biologics license application.”
Regarding the purchase of compounded medications online, experts who spoke with Healio counseled caution for consumers and practitioners alike, as the drugs may not meet the standards and inspections described above.
However, even those rules and standards can at times fall short in protecting patients and consumers, according to experts.
‘Standards are not necessarily enforced’
Robert W. Levin, MD, president of the Alliance for Transparent and Affordable Prescriptions, and associate affiliate professor of medicine at the University of South Florida, pointed to the 2012 fungal meningitis outbreak in New England as an example of what can go wrong with compounded medications.
That multistate outbreak, which was later traced to contaminated prednisolone compounded at an outsourcing facility in Massachusetts, resulted in nearly 800 illnesses and 64 deaths, according to the CDC.
Robert W. Levin
“Quality standards are not necessarily enforced,” Levin said. “Potency is subject to whatever materials the compounded pharmacy might have. Quality might be different from batch to batch.”
Although many patients use compounded medications for pain, these products can be subject to the same variability in quality, according to Levin.
“Some crooked compounding pharmacies make these pain salves using standard cheap drugs they grind together,” he said. “They charge thousands of dollars to insurance companies for medications that were probably bought for a few bucks. There is definitely some abuse of the system.”
Compounding pharmacies have also recently entered the weight loss market with compounded GLP-1 medications. According to the Alliance for Pharmacy Compounding 2025-2026 report, 55% of respondents reported compounding semaglutide (Ozempic, Wengovy; Novo Nordisk) or tirzepatide (Mounjaro, Zepbound; Eli Lilly) preparations within the past 2 years, with the most common formulation being sublingual (84%). In addition, 51% reported increasing staff or hours, while 24% reported expanding or moving to a larger facility, to meet the demand for compounded GLP-1 products.
Meanwhile, the emergence of such drugs has been controversial among some endocrinologists and other physicians citing their lack of rigorous safety testing, according to Levin.
“Endocrinologists have come out against compounded GLP-1 drugs,” he said.
Similar issues have arisen with hormone therapies, he added.
“There are claims that some of these products are natural or bio-identical,” Levin said. “But you can find little or no evidence on efficacy and safety.”
Wright echoed and highlighted many of these concerns.
“Different doses may have off-target effects and interact differently in the patient or with other medications,” she said.
Some examples of this include spine abscesses and infections with compounded steroids for epidurals, Wright added.
“Also, weight management medications are prescribed with inadequate supervision, with pills created with no data on effective doses or adverse effects of the orally administered form of an injectable,” she said. “Also, safety in manufacturing and the purity of the final product are not regulated.”
Tesser raised similar concerns, and urged physicians to follow up with compound pharmacies about their accreditation and testing policies.
“Physicians using a compound pharmacy should ask what training the pharmacists at the compound pharmacy have, and whether a third-party lab tests the medications,” he said. “You should ask about accreditation.
“When adverse events occur, there is limited insurance coverage, if any,” Tesser added. “There are also limited data on the stability or shelf life of many compounded medications.”
Meanwhile, if the medications are accessed online, patients and physicians should consider whether that facility is licensed to dispense drugs in the state in which they live, according to experts.
All of these factors should be considered by physicians who may need to prescribe a compounded medication, said Wright.
“We must, of course, always remember our first principle to do no harm,” she said. “But then think of the patient and determine if we, the health care system, missed their need and whether a special formulation could help.”
For more information:
Robert W. Levin, MD, can be reached at rwlevin@msn.com.
John R.P. Tesser, MD, FACP, MACR, can be reached at John.Tesser@azarthritis.com.
Grace C. Wright, MD, PhD, can be reached at gcwright.md@gmail.com.
Sources/Disclosures
Source:
Healio Interviews
References:
A snapshot of pharmacy compounding in America: 2025-2026. https://a4pc.org/news/apc-releases-the-2025-2026-snapshot-of-pharmacy-compounding-in-america-key-trends-and-insights. Published March 2026. Accessed May 2026.
Compounding and the FDA: Questions and answers. https://www.fda.gov/drugs/human-drug-compounding/compounding-and-fda-questions-and-answers. Published September 2025. Accessed May 2026.
Frequently asked questions about pharmaceutical compounding. https://www.pharmacist.com/Practice/Patient-Care-Services/Compounding/Compounding-FAQs. Published February 2020. Accessed May 2026.
Multistate outbreak of fungal meningitis and other infections. https://archive.cdc.gov/www_cdc_gov/hai/outbreaks/meningitis.html. Last updated October 2015. Accessed May 2026.
Disclosures:
Tesser reports receiving consulting, grant/research support and/or honoraria (including speakers bureau, symposia and expert witness) from AbbVie, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Celgene, Eli Lilly & Co., Genentech, Gilead, GlaxoSmithKline, IGM Biosciences, Janssen, Merck, Novartis, Pfizer, Roche and UCB, as well as consulting fees from SetPoint Medical. Levin and Wright report no relevant financial disclosures.
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