United States: FDA Issues Guidance On Registration, Fees And Reporting Requirements For Drug Compounding Outsourcing Facilities

On November 21, 2014, the U.S. Food and Drug Administration (FDA) announced the release of three new guidance documents related to drug compounding outsourcing facilities.[1] These documents include:

  • Final Guidance on registration of human drug compounding outsourcing facilities
  • Final Guidance on registration fees for such outsourcing facilities
  • Revised Draft Guidance on electronic drug product reporting requirements for compounding outsourcing facilities

As detailed in an earlier Duane Morris Alert, the 2013 Drug Quality and Securities Act (DQSA) added Section 503B to the Food, Drug, and Cosmetic Act (FDCA), which established federal oversight for human drug compounding outsourcing pharmacies (outsourcing facilities). Compounds for human use prepared in outsourcing facilities compliant with Section 503B are exempt from FDCA new drug approval and the adequate directions for use labeling requirements; outsourcing facilities, however, are still subject to certain current Good Manufacturing Practices (cGMPs).[2] The newly issued guidance documents provide further insight into FDA's current position on certain requirements for outsourcing facilities.

Final Guidance on Registration of Outsourcing Facilities

The Final Guidance on registration sets out the procedure by which a compounder must register with FDA. For its initial registration or annual renewal, an outsourcing facility must submit general information, including whether the facility will compound drugs on FDA's drug shortage list, and whether the facility will compound from bulk drug substances. Registration generally should be completed electronically, although a waiver is available if a facility cannot register electronically. Registration is not complete until FDA assesses the registration fee and that fee is paid.

Final Guidance on Registration Fees

The Final Guidance on registration fees finalizes the draft guidance discussed in an earlier Duane Morris Alert. Beginning with fiscal year (FY) 2015, outsourcing facilities must pay an annual establishment fee during the October 1 to December 31 registration period.[3] A facility is not considered to be registered for the following year until it has submitted registration information and paid the annual establishment fee, both of which must be completed by December 31. Drugs compounded when an outsourcing facility is not registered do not qualify for the Section 503B exemptions to new drug approval and the adequate labeling requirements.

Annual Establishment Fee and Adjustment Factors

The annual establishment fee, discussed in greater detail in the earlier Duane Morris Alert, is equal to $15,000 multiplied by the inflation adjustment factor plus a small business adjustment factor. The inflation adjustment factor, determined by a formula described in the Final Guidance, compounds each year such that it is calculated using the prior year's inflation-adjusted establishment fee. The small business adjustment factor, added to the establishment fees assessed for all facilities not qualifying as small businesses, is equal to the total fees "lost" from facilities qualifying as small businesses, divided by the number of non-qualifying facilities.

Every outsourcing facility must pay the full establishment fee, regardless of when during the calendar year it registers as an outsourcing facility.

Small Business Fee Reduction Eligibility

An outsourcing facility may submit a written request for a small business fee reduction. If deemed to be a small business, the facility will pay an establishment fee of only $5,000 multiplied by the inflation adjustment factor. In order for a facility to be eligible for the reduction, its worldwide gross annual sales must be $1,000,000 or less (in U.S. dollars) during the 12 months ending on April 1 of the fiscal year preceding that in which the fee is assessed. Such gross annual sales include all sales from affiliates, regardless of whether those sales relate to compounding products or other drugs.

Payment of Fees

After an outsourcing facility has submitted its annual registration information, FDA will email the facility an invoice specifying the establishment fee the facility is required to pay. Unlike in the earlier draft guidance, the Final Guidance makes no statements as to how long FDA anticipates the invoicing process to take. Once an invoice is issued, a facility must pay the fee within 15 calendar days or FDA will consider the facility's registration information to have been withdrawn.[4] In order to ensure sufficient time for this process, FDA recommends that outsourcing facilities submit their registration information by December 10 of each year.

Reinspection Fees

If FDA reinspects an outsourcing facility, the facility is required to pay a reinspection fee for each such reinspection. Reinspection fees will be equal to $15,000 multiplied by the inflation adjustment factor. Small business reductions are not available for reinspection fees. Once a reinspection is complete, FDA will email the invoice for the reinspection fee within 14 calendar days. If the facility does not pay the fee within 30 calendar days of the invoice date, the fee will be subject to interest and fees until paid in full.

Dispute Resolution

An outsourcing facility that wishes to dispute an assessed fee or the denial of small business status may request reconsideration of FDA's original decision. The outsourcing facility may submit a further appeal of a denial of reconsideration to the Director of the Division of User Fee Management and Budget Formulation.

Revised Draft Guidance on Drug Product Reporting Requirements

This revised Draft Guidance provides FDA's current approach on drug product reporting required under Section 503B. Unlike most FDA guidance documents, which are simply advisory, as prescribed by Section 503B, the final version of this guidance will have the force and effect of law—i.e., it will be binding.

Pursuant to section 503B of the FDCA, facilities must file drug product reports upon initial registration and thereafter on a twice-yearly basis. According to the Guidance, these reports must be submitted electronically (unless the facility obtains a waiver), between June 1 and June 30, covering the period between December 1 and May 31; and between December 1 and December 31, covering the period between June 1 and November 30.

Drug product reports have to list all drugs that the facility has compounded in the six-month reporting period. For each of these drugs, the facility is required to provide information about:

  • Active ingredient and strength of that ingredient per dose
  • Source of active ingredient—i.e., whether it is a bulk or finished drug
  • National Drug Code (NDC) number for source drug or bulk active ingredient, if available
  • Dosage form and route of administration
  • Package description, including type and volume of smallest saleable package
  • Number of individual units in smallest saleable package
  • NDC number of final product, if assigned.

FDA will be accepting comments on the Draft Guidance through January 23, 2015, both electronically, at http://www.regulations.gov, and in writing, to the Division of Dockets Management. Further details on the procedure for submitting comments to the Draft Guidance are available on FDA's notice in the Federal Register.


As outsourcing facilities are still a relatively new category of registrant under the FDCA, FDA is continuing to issue guidance documents as to its current thinking on Section 503B's requirements.

For Further Information

If you have any questions about this Alert or would like more information, please contact Rachael G. Pontikes, Alison T. Rosenblum, any of the attorneys in our Pharmaceutical, Medical Device, Pharmacy and Food industry group or the attorney in the firm with whom you are regularly in contact.


  1. Official notices for each of the guidance documents were published in the Federal Register on November 24, 2014.
  2. Regulations have not been promulgated regarding the cGMP requirements with which outsourcing facilities must comply. FDA issued interim guidance as to its cGMP expectations for outsourcing facilities on July 2, 2014. For further discussion of these requirements, please see our related Duane Morris Alert.
  3. Outsourcing facilities that registered prior to October 1, 2014, need not pay an establishment fee for FY 2014. Fees for FY 2015 were announced in the Federal Register on August 1, 2014.
  4. Once an outsourcing facility pays the establishment fee, refunds are not available, even if the facility subsequently withdraws its registration.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

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