The history of compounding pharmacy — from the 1990s to the modern peptide landscape

By the time the outbreak was fully characterized, 64 people had died from fungal meningitis and related fungal infections. More than 750 were sickened. It was the deadliest pharmaceutical contamination event in United States history. The New England Compounding Center, it emerged, had been operating as a large-scale drug manufacturer in all but regulatory status — shipping millions of doses to patients it had never identified, in states where its operations may not have been authorized, under manufacturing conditions that federal investigators described as grossly deficient. The facility had no real-time sterility testing. Lots were shipped before contamination testing was complete. The owner had a history of regulatory violations that had not been acted on with sufficient force. The regulatory framework, such as it was, had allowed a dangerous gap to exist between what a pharmacy was supposed to be and what NECC had become.

To understand how that gap opened, it helps to understand where modern compounding came from.

Pharmacy has always involved compounding — the preparation of customized medications for specific patients. The apothecary tradition that predated industrial pharmaceutical manufacturing was compounding in its entirety: the pharmacist received a physician's prescription, obtained ingredients, and prepared the medication by hand. This was not specialty practice. It was simply what pharmacists did. The rise of mass-produced pharmaceuticals in the twentieth century changed the equation fundamentally. As manufacturing technology improved and regulatory frameworks developed to ensure the consistency and safety of industrially produced drugs, the proportion of prescriptions filled with compounded preparations declined sharply. By the mid-twentieth century, the industrial drug had become the default, and compounding had receded into a niche role.

But it never disappeared, for reasons that are straightforwardly practical. Some patients need doses that standard commercial products don't offer — the child who can't swallow a pill needs a liquid formulation, the elderly patient who needs a fraction of a standard tablet needs it accurately measured, the patient with an allergy to a dye or preservative in the commercial product needs an alternative version. Some drugs are simply not manufactured commercially at useful doses or forms. Some drugs go on shortage, and compounders can bridge supply gaps. Compounding fills genuine medical needs that industrial manufacturing cannot or does not serve.

The 1990s reemergence of specialty compounding went beyond these traditional needs. A confluence of forces drove renewed interest: the growth of bioidentical hormone replacement therapy, which proponents argued required individualized formulations that commercial standardized products couldn't provide; the expansion of pediatric pharmacology, where weight-based dosing frequently required preparations outside standard commercial sizes; the dermatology and pain medicine specialties, where topical formulations with specific drug combinations had significant clinical utility; and the rise of concierge and integrative medicine practices whose practitioners were comfortable working with custom formulations as part of individualized treatment approaches. Specialty compounding pharmacies grew rapidly through this period, developing sophisticated sterile preparation capabilities and shipping medications across state lines to patients who had been prescribed them by physicians in other states.

The regulatory framework was not keeping pace with this growth. Compounding pharmacies were regulated primarily by state pharmacy boards, not the FDA. The distinction was constitutionally grounded: pharmacists practice under state professional licensing authority, and pharmacy practice has historically been a state-regulated profession. The FDA's authority over drugs is rooted in the interstate commerce clause and the food and drug manufacturing provisions of federal law — provisions that had traditionally been understood to apply to manufacturers, not to individual licensed pharmacists preparing customized medications for individual patients. This created a gap. Large-scale compounders shipping drugs across state lines were operating in interstate commerce. They were producing drugs in volumes that looked like manufacturing. But they were licensed as pharmacies under state authority, not as drug manufacturers under federal authority, and the FDA's jurisdiction was contested.

The NECC disaster forced a resolution. The 2013 Drug Quality and Security Act created two distinct regulatory categories that the previous framework had lacked. Section 503A defined the traditional compounding pharmacy: state-licensed, preparing medications pursuant to valid prescriptions for individual identified patients, not engaging in large-scale distribution. Section 503B defined a new category called outsourcing facilities: entities that could compound sterile medications in bulk, without patient-specific prescriptions, but under direct FDA oversight — subject to FDA inspection, required to follow current good manufacturing practices, and required to register with the FDA. The distinction addressed the NECC problem directly by establishing that bulk sterile compounding is drug manufacturing and should be regulated accordingly, while preserving the traditional compounding model for the patient-specific, prescriber-directed use that has always been its core function.

The 2013 framework also clarified the legal basis for bulk drug substance lists — the compilations of specific drug ingredients that 503A and 503B facilities are permitted to use in compounding under federal oversight. This matters because not every substance is eligible for compounding. The FDA maintains lists governing what 503B facilities may compound in bulk, and these lists reflect ongoing evaluations of safety, efficacy, and whether a commercial alternative already exists. 503A pharmacies are subject to somewhat different rules, including provisions around FDA-approved active pharmaceutical ingredients and substances on the bulk drug substance lists. The details are technical and the regulatory landscape has evolved through multiple rulemakings and guidance documents issued over the decade since the DQSA passed.

The relevance to the modern peptide landscape is direct and ongoing. Many of the compounds that have circulated in the wellness peptide market — including BPC-157, various growth hormone secretagogues, and numerous other short synthetic peptides — have existed in compounding pharmacy supply chains precisely because they could be obtained as active pharmaceutical ingredients and compounded under 503A or 503B frameworks. The regulatory status of these compounds has not been static. In 2024, the FDA issued guidance that significantly affected the availability of several peptides through compounding channels, including categorizing BPC-157 in ways that removed it from the list of substances that 503A pharmacies could use. Similar regulatory actions affecting other compounds in the wellness peptide space have created ongoing uncertainty about which substances will remain available through compliant compounding pharmacy channels and which will not.

This regulatory flux reflects a genuine underlying tension. The compounding framework was designed to serve individual patient needs through prescriber-directed customization. The growth of a market in which large numbers of patients are seeking specific named compounds — GLP-1 peptides, growth hormone secretagogues, recovery and cognitive peptides — through telehealth practices that write large volumes of similar prescriptions and route them to specific compounders looks, from a regulatory perspective, uncomfortably like the situation that preceded NECC. Not because the compounds being compounded are necessarily contaminated, but because the market structure departs significantly from the individual patient customization model that the compounding framework was designed to serve.

The honest assessment of where the framework stands is that it remains in genuine regulatory evolution. Compounding pharmacies, particularly 503B-registered outsourcing facilities that operate under FDA inspection and cGMP requirements, represent a legitimate and carefully regulated sector of pharmaceutical preparation. They serve essential functions — drug shortage relief, patient-specific formulations, pediatric dosing, allergy alternatives — that the commercial pharmaceutical market cannot fully address. The 503A framework serves individual clinical needs in ways that have long been recognized as legitimate medical practice. The question is where the boundary runs between legitimate individualized compounding and large-scale manufacturing under a compounding label, and that question is actively contested between industry, regulators, prescribers, and patients.

For the individual patient asking a prescribing physician about a compounded peptide, the practical implications are these: the regulatory status of specific compounds changes, and a compound available through compounding channels today may not be available in the same way in a year. The quality and regulatory compliance of compounding pharmacies varies significantly — 503B-registered facilities operating under FDA inspection are in a different regulatory category than 503A pharmacies that have not voluntarily sought additional oversight. The prescriber relationship matters: individualized clinical prescribing with a specific patient-specific rationale is the model the law contemplated, and it is meaningfully different from placing an order through a telehealth platform that exists primarily as a distribution mechanism.

What the compounding pharmacy history teaches is that the regulatory framework around individualized pharmaceutical preparation has always struggled with a version of the same problem: the line between serving individual patients and supplying a market is a line that market forces consistently press against. The NECC disaster was the most catastrophic instance of what happens when that line is crossed without adequate oversight. The current peptide landscape is a less acute but structurally analogous situation — a legitimate regulatory category being used in ways that strain the framework's original design. The people who built the 1992 and 2013 compounding regulations were trying to solve real problems. So are the physicians who prescribe compounded peptides for patients who have run out of standard options. The tension between those two sets of legitimate interests defines the current moment.