503A compounding pharmacies can expect more inspections from their state boards of pharmacy (BOPs) and audits from pharmacy benefit managers (PBMs) due to the rising demand for compounded glucagon-like peptide-1 (GLP-1) medications, cautioned industry experts in a Jan. 29 webinar sponsored by the healthcare law firm Frier Levitt.
“As a result of the significant demand for these products, whether in the branded version or a compounded version, there is a heightened level of scrutiny by BOPs, specifically as it relates to the compounding of GLP-1s,” said Lucas Morgan, JD, a partner in Frier Levitt’s healthcare and life sciences practices. “That kind of demand results in a marketplace where quality and patient safety concerns, and concerns about product sourcing—particularly where you are getting your APIs [active pharmaceutical ingredients]—are at a very high level.”
Assume that you could be inspected by your BOP at any moment, Mr. Morgan warned. “There may be instances where you receive advance notice. … But you should also assume that these inspections could be unannounced; they have a substantial amount of discretion to inspect pharmacies to ensure ongoing compliance with all rules and regulations,” he said. “Ensure that all of your equipment is inspected and up to date with any required certifications. And make sure that all of your operations comply with any unique standards applicable to your state.”
Mr. Morgan stressed the importance of taking a proactive stance on compliance and working with qualified legal counsel. “It is absolutely a best practice to work on these issues now, when there is not a problem and things are calm, rather than to respond in a reactive manner because someone has called your practices into question.”
Don’t Neglect the Basics
Although compliance with USP General Chapter <800>, which became compendially applicable on Nov. 1, 2023, may be at the forefront of many compounding pharmacies’ priority lists, it shouldn’t derail attention from other more basic obligations, Mr. Morgan noted. He compared the situation to a band that’s working on a hot new song and spends all their time practicing it. “Then they go perform their concert, and they nail that song, but they forget how to play the old ones and it’s a terrible show,” he said. Attaining USP <800> compliance doesn’t erase the need to meet other rules and regulations. “Some of the most frequent and basic violations we see are simple things like not posting hours, not posting licenses and not providing notifications regarding changes such as new locations.”
Product sourcing concerns can be a particular challenge, given the increased demand for GLP-1 drugs. Due to that marketplace growth, there will be an increasing number of API vendors competing for business.
“This should go without saying: Buy only from reputable sources. The trick, though, is how do you vet what is a reputable and reliable source?” Mr. Morgan said. Pharmacies should document the measures they take to buy only from safe, reputable sources. “You can’t rely on their representations,” he said. “Ensure that you always have all documentation of that readily available, immediately upon request from a state BOP investigator or other regulator.”
That means, for example, having certificates of analysis (COAs) on-site, directly from the manufacturer. “It is not enough to come from a reputable third party who is working with the manufacturer,” he said. “You need to be able to show the chain of custody, so to speak, on the actual COA—not a copy—that you received from the manufacturer itself. I can’t emphasize this enough because I’ve seen it be a problem time and time again.”
The same documentation scrutiny should be applied to relationships with prescribers. “Make sure that you are working with reputable, qualified prescribers and medical practices that have established relationships with their patients,” Mr. Morgan said.
Be ‘150% Sure’ of Your Status
Many compounding pharmacies have sought to expand their dispensing of compounded GLP-1 products into other states, using nonresident pharmacy permitting, registration or licensure. This is likely to become more difficult, Mr. Morgan cautioned, noting that some states require out-of-state pharmacies to obtain separate permits for compounding, and others have made specific statements about the issue of GLP-1 compounding.
“There is an additional layer of scrutiny that I don’t believe was there before, as BOPs can clearly see the connection between the compounding of these products and increasing demand for nonresident pharmacy permits,” he said. “Like any gatekeeping entity that is in the position of safeguarding the public health, safety and well-being of their residents, they want to ensure that if they grant these permits, the entity and individuals receiving it are fully qualified to do so in compliance with both their rules and regulations, and those of their home state.”
This means, he said, that “if you are going to try to operate pursuant to any sort of exception, especially when it comes to licensure and permitting requirements, you had better be 150% sure that you are unequivocally correct in your interpretation of that exception.”
Heed ‘the Boundaries of the Law’
Much of the compounded GLP-1 business has been on the cash pay side, but some payors are now starting to reimburse in certain circumstances. “Due to the cost of the drugs, PBM audits are likely to increase,” said Martha Rumore, PharmD, JD, a pharmacist-attorney in Frier Levitt’s life sciences department. “That’s especially true in cases where the drugs are dispensed off-label and require the pharmacy to demonstrate clinical justifications. So make sure that you are confirming what you receive.”
Her final piece of advice: “If you aren’t sure how to move forward, whether you are a physician, compounding pharmacy or API manufacturer, reach out for legal advice to ensure that you stay within the boundaries of the law.”
The sources reported no relevant financial disclosures.
This article is from the March 2025 print issue.