Risk Management Tools & Resources


Due Diligence of Outsourced Pharmacy Compounding as Part of Infection Prevention Efforts


Laura M. Cascella, MA, CPHRM

Data suggest that the majority of hospitals outsource some or all of their compounded sterile preparations (CSPs), and most rely on more than one vendor to meet their needs.1 The reasons for outsourcing are numerous. For example, healthcare organizations might outsource compounding services if they:

  • Need to acquire medications that are outside the scope of their usual compounding services
  • Don’t have the proper staff resources or equipment to compound various preparations
  • Need products that are too risky or expensive to compound in-house
  • Are facing supply shortages of necessary medications because of manufacturing problems, discontinuation of certain products, or supply chain issues
  • Need individual doses of drugs or products with longer shelf lives2

Although outsourcing can offer a number of organizational, operational, staffing, financial, and other benefits, it is not without risks. These risks have come to the forefront of healthcare in the past decade, largely as a result of the fungal meningitis outbreak in 2012 that was linked to a compounded epidural steroid injection. This incident showed how the effects of lax protocols and oversight can be widespread and devastating.

Although unprecedented in scale, the 2012 outbreak is not an anomaly. Over the years, numerous reports of medication errors linked to compounding have emerged, and some of these errors have had serious patient safety consequences, such as infections, overdoses, and fatalities.3 An investigation by the Pew Charitable Trusts’ Drug Safety Project found that compounding errors were linked to more than 1,200 adverse events, including 99 deaths, over a 16-year period. Further, the actual number of adverse events due to compounding errors during this timeframe was likely higher due to underreporting of these issues.4

Various factors — such as inadequate oversight, poor compounding practices, and lack of adverse event reporting — can increase the risks associated with outsourced CSPs. Yet, despite these concerns, healthcare organizations still recognize the necessary and vital role that compounding plays in patient care.

To help mitigate the risks associated with pharmacy compounding, the American Society of Health-System Pharmacists (ASHP) and the Institute for Safe Medication Practices recommend that healthcare organizations perform due diligence when selecting pharmacies to provide compounding services. Risk strategies that healthcare organizations can employ as part of their due diligence efforts include the following:

  • Whenever possible, order FDA-approved products from pharmaceutical manufacturers. Consider pharmacy compounding only if a medication, dosage, form, or strength is not commercially available.
  • When outsourcing compounding services, carefully evaluate potential contractors and assess their qualifications. Due diligence of compounding services requires evaluating a range of criteria, including pharmacy history, licensing, safety precautions, quality assurance processes, staff education, and more. MedPro’s checklist Assessing Pharmacy Compounding Services offers high-level guidance on evaluating these factors.
  • Consider visiting potential contractors’ corporate and pharmacy facilities as part of the assessment process. Determine whether contractors allow unannounced inspections after a contract is in place.
  • Review your organization’s drug supply chain and pinpoint any areas in which compounded medications from an external compounding facility might enter the healthcare system. Reviewing the drug supply chain is particularly important in situations in which hospitals and healthcare systems acquire physician practices, surgery centers, and other healthcare facilities.
  • Establish and maintain adequate auditing and documentation processes for outsourced CSPs (e.g., in relation to types and quantities of products received, turnaround times, delivery methods, security protocols, quality reports, etc.).
  • Ensure that your organization has a functional and accurate method for identifying patients who have received CSPs.
  • Determine whether state law requires patient consent for use of outsourced CSPs.
  • Review existing contracts with compounding pharmacies to ensure they comply with your organization’s current policies and procedures for outsourcing. Also, routinely evaluate outsourcing policies and procedures to identify any gaps or areas for improvement.
  • Include representatives from the pharmacy department in all decisions related to acquiring and using products from external compounding pharmacies.

For more detailed information, see the ASHP Guidelines on Outsourcing Sterile Compounding Services. Additional information about pharmacy compounding can be found in ASHP’s Compounding Sterile Preparations Competency Library.


1 State of pharmacy compounding 2021: 14th annual national survey findings. (2021, April). Pharmacy Purchasing & Products, 18(4 [Suppl.]). Retrieved from www.pppmag.com/article/pppv18n4s1; Office of Inspector General. (2013, April 10). High-risk compounded sterile preparations and outsourcing by hospitals that use them (Report OEI-01-13-00150). Washington, DC: U.S. Department of Health and Human Services. Retrieved from https://oig.hhs.gov/oei/reports/oei-01-13-00150.asp

2 Johnson, C. Y. (2012, Nov. 3). Compounding pharmacies fill important medical niche. The Boston Globe. Retrieved from www.bostonglobe.com/metro/2012/11/02/compounding-pharmacies-filled-niche-for-major-hospitals/47MsPtBMEkT67TQmfNXF8O/story.html; American Society of Health-System Pharmacists. (2015, October). ASHP guidelines on outsourcing sterile compounding services. American Journal of Health-System Pharmacy, 72(19):1664–1675. Retrieved from www.ajhp.org/content/72/19/1664; Watson, C. J., Whitledge, J. D., Siani, A. M., & Burns, M. M. (2021). Pharmaceutical compounding: a history, regulatory overview, and systematic review of compounding errors. Journal of Medical Toxicology, 17(2), 197–217. https://doi.org/10.1007/s13181-020-00814-3

3 Institute for Safe Medication Practices. (2012, October 18). Sterile compounding tragedy is a symptom of a broken system on many levels. ISMP Medication Safety Alert! Retrieved from www.ismp.org/Newsletters/acutecare/showarticle.aspx?id=34; Institute for Safe Medication Practices. (2017, June). Death due to pharmacy compounding error reinforces need for safety focus. Retrieved from www.ismp.org/resources/death-due-pharmacy-compounding-error-reinforces-need-safety-focus

4 The Pew Charitable Trusts and the National Association of Boards of Pharmacy. (2018, February). State oversight of drug compounding. Retrieved from www.pewtrusts.org/en/research-and-analysis/reports/2018/02/state-oversight-of-drug-compounding

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