Two numbered subsections of one act divide every compounder in the country, and the division decides which agency turns up, what the container has to say, and whether the preparation may legally exist before a patient is named. Both categories dispense drugs that are not FDA-approved and that the agency has not reviewed for safety, efficacy or quality before dispensing. What separates them is everything that happens around that fact, starting with the price structures in the pricing article.
The two exemption lists are not the same list
Section 503A opens by naming three provisions that shall not apply to a qualifying compounded drug product: section 351(a)(2)(B), section 352(f)(1) and section 355 — current good manufacturing practice, labeling with adequate directions for use, and new drug approval.[1] Section 503B opens the same way and names a different three: sections 352(f)(1), 355 and 360eee–1, the last being the drug supply chain security requirements that trace an approved product through distribution.[2]
Compare the lists and the difference is the factory. Manufacturing practice is switched off for a 503A pharmacy and left on for an outsourcing facility, which is the single largest legal separation between them. The fourth entry only looks like an asymmetry: an outsourcing facility is exempt from supply chain tracing by name, and a 503A preparation never enters that system in the first place, because the tracing law defines “product” to exclude a drug compounded in compliance with either section.[6] Neither kind of vial carries the transaction history that follows a branded one from plant to counter.
Where the powder is allowed to come from
Under 503A, a bulk drug substance must comply with an applicable United States Pharmacopeia or National Formulary monograph where one exists; if no monograph exists, it must be a component of a drug approved by the Secretary; and if neither is true, it must appear on a list developed by regulation. It must also be manufactured by an establishment registered under section 360, and be accompanied by a valid certificate of analysis for each substance.[1]
Under 503B the gate is narrower. An outsourcing facility may not compound from a bulk drug substance unless the substance appears on a list the Secretary establishes of substances for which there is a clinical need — a list built through a Federal Register notice, at least 60 days of comment, and a second notice designating the entries — or the drug compounded from that substance is on the drug shortage list at the time of compounding, distribution and dispensing.[2] For semaglutide and tirzepatide, neither condition currently holds, which is the subject of the shortage article.
A named patient, or a shelf
The 503A exemption is written around an individual. It applies to a drug product compounded for an identified individual patient on receipt of a valid prescription order, or in limited quantities before receipt of such an order where there is a history of valid orders generated within an established relationship between the pharmacist or physician and either the patient or the prescriber.[1] No patient, no exemption.
An outsourcing facility may work either way. It may distribute against a patient-specific prescription or against an order that names no individual patient at all, which is what makes hospital office stock possible.[2] It carries a restriction in exchange: the drug will not be sold or transferred by an entity other than the outsourcing facility that compounded it, a bar that does not prevent administration in a health care setting or dispensing pursuant to a prescription.[2]
The container has to say what it is
This is the part a buyer can actually hold. The label of a drug compounded by an outsourcing facility must include the statement “This is a compounded drug.” or a comparable statement specified by the Secretary; the facility’s name, address and telephone number; the lot or batch number; the established name; the dosage form and strength; the statement of quantity or volume; the date compounded; the expiration date; storage and handling instructions; the national drug code number if available; the statement “Not for resale”; and a list of active and inactive ingredients identified by established name with the quantity or proportion of each.[2]
Where the product is dispensed other than against a prescription for an identified patient, the words “Office Use Only” are required too, and the container the individual units are removed from must carry the MedWatch address and telephone number to facilitate adverse event reporting, plus directions for use.[2] A preparation compounded under 503A carries no federal list of that kind, because section 352(f)(1) has been switched off for it and what remains is state pharmacy law. The ingredient question that follows is answered in the article on vial contents.
A 503A pharmacy has a ceiling on shipping out of state
The condition almost nobody in this market discusses sits in 503A(b)(3)(B). A drug product may be compounded under the exemption only if it is compounded in a state that has entered into a memorandum of understanding with the Secretary addressing the interstate distribution of inordinate amounts of compounded drug products and providing for state investigation of complaints about products distributed out of state — or, in a state that has not entered into one, the pharmacist, pharmacy or physician distributes compounded products out of the state in quantities not exceeding 5 percent of total prescription orders dispensed or distributed.[1] The statute directs the Secretary to develop a standard memorandum in consultation with the National Association of Boards of Pharmacy.
A national mail-order model is interstate distribution by construction, so which regime applies to the filling pharmacy is a live question rather than a technicality, and the answer depends on the state that licensed it. No comparable ceiling applies to an outsourcing facility.[2]
What a risk-based schedule has actually produced
Outsourcing facilities are subject to inspection on a risk-based schedule set by the Secretary, weighted by compliance history, recall record, the inherent risk of what is compounded, and whether the facility has been inspected within the last four years.[2]That is the obligation. The delivery has been measured.
A 2026 mixed-methods study examined 48 outsourcing facilities that registered between January 1, 2020 and April 30, 2025. Only 11 of the 48 — 22.9% — had been inspected, with an average delay of 2.2 years from registration to inspection. Every inspected facility had at least two significant objectionable findings, with a mean of 6.2 (SD 3.2), and thematic analysis of 68 findings identified five recurring domains: quality control, personnel training, documentation, process validation and product labeling. Inadequate sterility testing, poor environmental controls, unvalidated production processes and deficient recordkeeping were among the frequent issues.[3]
The agency’s own public table points the same way from the other end. Of the registered facilities carrying an inspection date in the update published on September 8, 2026, 53 of 55 show a Form 483 issued at the most recent inspection.[4] The table itself notes that a Form 483 is issued when investigators observe significant objectionable conditions and does not constitute a final agency determination of a violation, and that it excludes state board actions entirely.
Read together, those two figures complicate the obvious reading rather than confirming it. Registering as an outsourcing facility buys a real set of federal obligations; it does not buy a clean inspection, and for a substantial share of registrants it has not yet bought an inspection at all.
The agency ranked the two categories once, in days
When the semaglutide shortage was declared resolved, the FDA set two different wind-down periods: 60 days for compounding under 503A and 90 days for outsourcing facilities. The declaratory order explains the gap in its own words. Drugs compounded in outsourcing facilities are subject to more assurances of quality than drugs compounded under section 503A because, in contrast to 503A compounders, outsourcing facilities are subject to CGMP requirements, FDA inspections on a risk-based schedule, specific adverse event reporting requirements and certain other conditions; and because they need relatively more resources and time to produce a product under CGMP.[5]
That is a ranking of obligations, not of outcomes. The same order states that drug products meeting the conditions of section 503A are subject to less robust production standards that provide less assurance of quality.[5] Neither sentence reports a comparison of what came out of the two kinds of facility, and no such comparison has been published for these drugs.
Why the category is worth knowing before the first charge
Not because one category is safe and the other is not. Because the two leave different public records. An outsourcing facility has a federal row with a registration date and an inspection column, a statutory duty to report adverse events to the agency, twice-yearly reports of what it compounded, and a label that is required to name it.[2] A 503A pharmacy answers to the board that licensed it, and the record lives with that board.
Which means the category answer is what turns every later question into something checkable rather than something to be trusted. How to put those questions, and what a refusal to answer them establishes, is set out in the supplier article, and the status of the approval language itself is in the article on the approval sentence. What the sellers on the tirzepatide board publish about either is recorded alongside their prices.