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June 26, 2023

Promises, Promises

Deciphering Drug Product Claims by Pharmacy Compounders and Manufacturers

By Darshan Kulkarni and Nidhi Kulkarni

Click here for the audio version of this article

Compounded drugs are not Food and Drug Administration (FDA)-approved. Accordingly, the FDA does not verify an individual compounded drug’s safety and effectiveness profile. However, the FDA and Department of Justice (DOJ) have observed that certain drug compounders use potentially unlawful claims in the context of promoting these drugs. While the Office of Inspector General (OIG) and DOJ have primarily focused on inappropriate kickbacks and False Claims Act violations, the FDA has issued warning letters to various drug compounders, including Innovation Compounding and Imprimis Rx LLC, asserting that they made false and misleading claims about their drugs. The FDA alleged a failure to substantiate their claims. There is, therefore, a need to clarify the metes and bounds for claims by 503A compounding facilities and 503B outsourcing facilities. 



Millions of drugs are compounded each year to meet the unique needs of patients. Patients needs can vary, from those who might benefit from altered preparations, to requiring personalized drugs to treat a specific disease, to those suffering from drug allergies. These individualized needs were met by compounding pharmacies.

Compounding pharmacies generally operated as “mom and pop” stores, overseen by the state Boards of Pharmacy, until the New England Compounding Center (NECC) tragedy.  This involved a compounding pharmacy whose “slipshod, unsafe” compounding resulted in a fungal meningitis outbreak, which caused the deaths of more than 100 patients and injured over 800 in multiple states. This disaster demonstrated that there was a need for stringent oversight of large-scale manufacturing of compounded drugs, leading to the Drug Quality and Security Act (DQSA) of 2013. The DQSA gave the FDA authority to regulate and monitor the manufacture of certain compounded drugs and led to the formation of two compounding entity categories: (1) 503A compounding facilities, and (2) 503B outsourcing facilities (OF).

503A Compounding Pharmacies

Traditional compounding pharmacies, often known as 503A compounding facilities, create custom medication formulations in response to  a healthcare provider’s prescription for an individual patient. These medications must be compounded by a licensed pharmacist within a state-licensed pharmacy or federal facility or may be compounded in certain cases by a licensed physician who is not registered with the FDA as an outsourcing facility. Drugs compounded in a 503A pharmacy are subject to all provisions of the Food, Drug, & Cosmetic Act (FD&C Act) that apply to conventionally manufactured drugs except:

  • Current Good Manufacturing Practice regulations (cGMPs) (Section 501(a)(2)(B)),
  • Labeling with adequate directions for use (section 502(f)(1)), and
  • Premarket approval requirements (section 505).

These compounded drugs are deemed to be a lower risk since they are only distributed to healthcare facilities or dispensed directly to patients whose medical needs cannot be met by an FDA-approved drug.

503B Outsourcing Facilities

Unlike 503A facilities, 503B pharmacies, also known as outsourcing facilities (OF), meet patient needs by addressing needs that neither traditional drug manufacturers nor compounding pharmacies are able to meet. Unlike 503A pharmacies, OFs:

  • Must comply with cGMPs,
  • Are inspected by the FDA according to a risk-based schedule, and
  • Must meet certain other conditions, such as reporting adverse events and providing FDA with certain information about the products they compound.

However, unlike generic manufacturers, OFs must compound drugs under the direct supervision of a licensed pharmacist. Drugs compounded by a 503B OF are exempt from:

  • Labeling with adequate directions for use (section 502(f)(1)),
  • New drug approval requirements (section 505), and
  • Drug supply chain security requirements (section 582).

Types of Drug Advertisements

This article explores whether compounded drug producers can make promotional and non-promotional claims similar to a drug approved by the FDA. A drug is defined as: (1) a substance intended for the use in the diagnosis, cure, mitigation, treatment, or prevention of a disease or (2) a substance (other than food) intended to affect the structure or function of the body. The Center for Drug Evaluation and Research (CDER), within the FDA, is responsible for regulating both prescription and over-the-counter drugs. The Office of Prescription Drug Promotion (OPDP) is responsible for the oversight of drug claims.

An inter-agency memo between the FDA and the Federal Trade Commission (FTC) outlines jurisdiction over drug advertising. The memo outlines the FDA’s authority to primarily regulate prescription drug advertisements, while over-the-counter drug promotion is primarily overseen by the FTC.

Curent Regulations Governing 503As and 503Bs Sharing Information About Their Drugs

The process of drug development is lengthy, time-consuming, and costly. Drug development can take decades of research with no guarantee of regulatory approval by the FDA or other regulatory agency. Accordingly, it is imperative that pharmaceutical companies be able to recoup their investment by compliantly promoting their drug to patients and healthcare providers (HCPs). Drug advertising guidances from the OPDP are generally directed at drugs subject to a New Drug Application (NDA), an Abbreviated New Drug Application (ANDA), or their equivalent. Fortunately, while intended for a distinctly different regulatory strategy, these guidances can serve as promotional compliance guide posts for compounding pharmacies to follow.

The complexity associated with compounding pharmacy advertising is made greater by the extent to which the FDA can regulate drug compounder claims. In Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748 (1976), the U.S. Supreme Court ruled that commercial speech deserves First Amendment protection, and the FDA should intervene only if the claims are false, misleading, or illegal. However, the FDA must balance this against its responsibility to ensure that patients consume only safe and effective drugs. Therefore, it is necessary to define the FDA’s authority to regulate drug compounding promotions. Due to the legal uncertainty, while pharmacies may survive a court challenge, most simply want to follow FDA requirements to avoid being challenged in the first place.


Before the enactment of the DQSA in 2013, the FD&C Act included restrictions on the advertising and promotion of the compounding of any particular type of drug, class of drug, or type of drug. These restrictions as written were deemed to be unconstitutional by the US Supreme Court in 2002.

The fungal meningitis outbreak in 2012 outbreak led to the enactment of the DQSA by Congress in 2013 in order to enable FDA oversight. This resulted in the addition of a new section 503B to the FD&C Act. The FDA states, in its May 2018 guidance titled “Facility Definition Under Section 503B of FD&C Act,” that a 503B outsourcing facility compounder must label, promote, and advertise its drugs in a manner that does not mislead customers about whether the drugs were compounded in an outsourcing facility or 503A establishment (emphasis added). Even though the restrictions on advertising and promotion were held unconstitutional in Thompson v. Western States Med. Ctr., 535 U.S. 357 (2002), and the FDA in its guidances states that 503A compounding facilities and 503B outsourcing facilities can advertise and promote their drugs, there still remains a question as to what claims 503A compounding facilities and 503B outsourcing facilities may use to advertise and promote their services and/or products. In the context of prescription drugs, the FDA identifies at least three different types of prescription drug-related advertisements:

  1. Reminder advertisements,
  2. Help-seeking advertisements, and
  3. Product claim advertisements.

Reminder Advertisements

If done properly, reminder advertisements are regulated by the FTC. Reminder advertisements serve only to remind the public that such a drug exists. Such advertisements give the name of the drug, but do not talk about the drug’s risks or its benefits. It is important to note that a reminder advertisement should not include any words or pictures that might suggest the use of the drug. For example, a reminder advertisement might include a statement like “ask your doctor about” and then the drug’s brand and generic name. The advertisement would not state the use of the drug or have pictures, words or music suggesting the use of the drug. There is no reason either 503A or 503B facilities cannot use reminder advertisements about their compounded/ manufactured products.

Help-Seeking Advertisements

The primary goal of a help-seeking advertisement is to create awareness about a particular disease or condition and to encourage people to talk to their healthcare provider. Help-seeking advertisements describe a particular disease/symptom but do not suggest a specific treatment. These advertisements may include a drug company’s name and contact information. When the ads are done correctly, the FTC has primary regulatory authority over help-seeking advertisements. Both 503A and 503B facilities may use help-seeking advertisements to advertise and promote awareness of a particular disease or condition.

Scientific Exchange Between Manufacturers/Compounders and HCPs

Since the mid-1970s, the Supreme Court has recognized pure speech and commercial speech as deserving of First Amendment right protection.  Pure speech involves communication of ideas, which includes scientific information. Scientific exchange between manufacturers and prescribers is essential so that the prescribers have the correct and latest information at all times. On the other hand, commercial speech “does no more than propose a commercial transaction.” While limitations on pure speech are subject to strict scrutiny, commercial speech is deemed to deserve lesser protection.

It is presently unclear whether scientific discussions between a manufacturer (in this case, a compounder of drugs) and HCPs about an unapproved/uncleared drug or about off-label uses of a drug should be regarded as free speech or commercial speech. This distinction is important to determine the extent to which the FDA regulates such speech. Nevertheless, the FDA suggests that it can significantly regulate scientific discussions about unapproved/ uncleared drugs or about off-label uses of drugs, such as with the use of appropriate disclaimers. However, the Washington Legal Foundation, Caronia, Amarin, Pacira, and Vascular Solutions cases suggest that the FDA may be more limited and can intervene only if the manufacturer is sharing false or misleading information.


In conclusion, the dynamic landscape of compounding pharmacies presents a multitude of opportunities to effectively market to healthcare practitioners and patients. Additionally, the legal decisions in the Coronia, Amarin, and Pacira cases have underscored the importance of protected scientific discourse, opening the door for compounding pharmacies to engage in more robust, evidence-based discussions with healthcare professionals. These verdicts highlight the FDA’s limitations in regulating promotional speech and offer an opportunity for pharmacies to more freely share information about drugs compounded in 503A and 503B facilities, provided that the information is truthful and not misleading.

As we move forward, the continued growth and success of compounding pharmacies will largely depend on their ability to effectively navigate these changes, harnessing the power of scientific dialogue and innovative marketing strategies to build lasting relationships with healthcare practitioners and patients alike.

    Darshan Kulkarni PharmD, MS, Esq

    Kulkarni Law Firm, PC

    Darshan Kulkarni is the principal attorney at Kulkarni Law Firm and is based in the Philadelphia, Pennsylvania area. He is a Life Sciences regulatory lawyer whose practice centers on food and drug law issues, compliance, and privacy as they primarily relate to life science transactions, including in the context of due diligence, mergers, and transactions. He offers strategic solutions to support in manufacturing, recall management, quality control, promotional compliance and clinical trial agreements. He serves on multiple editorial and advisory boards, teaches for the Drexel University School of Law, and hosts the YouTube podcast DarshanTalks, which focuses on life science compliance, law, and regulatory issues. He can be reached at [email protected].

    Nidhi Kulkarni Esq.

    Foreign Barred at the Kulkarni Law Firm, PC

    Nidhi Kulkarni is an international lawyer, works with the Kulkarni Law Firm, and resides in Mumbai, India. She centers her practice on food and drug law. She assists businesses in navigating the complexities of U.S. Food and Drug Administration compliance. In her previous role at a Mumbai-based law firm, she successfully managed due diligence, compliance, and drafting responsibilities for capital markets. She can be reached at [email protected].

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