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The Future of 503B Pharmacies: An Interview With Syed Saleem

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What are 503B compounding pharmacies, and how are they evolving? In today’s episode, Darshan Kulkarni talks with pharmacist Syed Saleem about the basics of 503Bs, and the future of the compounding pharmacy industry. Plus, why it’s useful to maintain pharmacy licenses across different states.

Narrator: This is the DarshanTalks Podcast. Regulatory guy, irregular podcast, with host Darshan Kulkarni. You can find the show on Twitter @darshantalks or the show's website at

Darshan: Hey, everyone. Welcome to another episode of DarshanTalks. We have a really special guest with us. We have Syed Salim and Syed is... Syed, why don't you actually introduce yourself?

Syed: Wonderful. Thanks Darshan. Thanks for having me. My name is Syed Saleem. I am a pharmacist. I hold a doctorate of pharmacy and an MBA. I have a pharmacist license active in 24 States, United States. I also have some of the certifications, Six Sigma, Project Management, pharmaceutical specialist and a few other.

I do have a vast background in the compounding industry and the regulatory and compliance. And also formulation's, including 503A, 503B. I've been in the company industry prior to the DQSA, that is the Quality Safety Act, which came in around 2013. So I do have a wide range experience touching into production side of manufacturing, retail, hospital. Yeah, all those.

Darshan: So a really simple question, cause I have to ask this because, like you know, I'm a pharmacist as well. But you said you have licenses in 24 States, is it?

Syed: That is correct.

Darshan: So how difficult is it to maintain that?

Syed: It is pretty tedious because every state has their own CEs to be... certain CEs. Like some States do require you having a pain management sees CEs some States require your sterile compounding, non-sterile compounding. Each of these States has their own requirements. And I have to tell you, I have a good spreadsheet and then I do have reminders and yeah. A few of those tools. Yes.

Darshan: Have you found that to be useful in the compounding world?

Syed: Sure it is, because... And again, the regulatory requirements does need a pharmacist to be licensed onsite to have these licenses in those particular States. So for that reason, a pharmacist needs to have the licenses in those States. If the pharmacy or the 503B outsourcing facility need to do business in those particular States.

Darshan: So, if that's true, do you lined up at... Tell me about the type of work you do Syed.

Syed: Sure. I'm a pharmacist in charge/director role at the 503B facility, which also has a 503A though. So we hold a 503B FDA registered facility and also a pharmacy. But majority, I think that most of the business is on the 503B sides. We comply with our 503B requirement, which is basically following all the CGMP, following all the CFRs.

So it is pretty strict and it is well beyond the 797 requirements. So we need to have... it's like a mini pharma manufacturing, wherein we have a quality department, which is a completely independent. With their quality control quality assurance, a quality unit, with a quality manager who looks after that. Then we have a regulatory compliance department and then we have a production operations. So it's very organized. It's not a typical pharmacy or compounding pharmacy, which used to be before, we are evolving towards manufacturing.

So this facility we are, we build it brand new. I know a lot 503Bs struggle to transition from the old compounding pharmacy, but this facility, we had to build the ground up. Right from the DQ, it's design qualifications. Having all the instruments validated. I mean, pretty much everything what we do here represents a pharma manufacturing in a mini scale.

Darshan: That's the real question, right? So everyone talks about how 503Bs are pharmacies, and you talk about how they're really many manufacturing companies, or mini manufacturers. What is the distinction as you see it? What are the big mistakes people make?

Syed: That's a good question. So a lot of times when people want it... there used to be a big compounder. And that's the reason why which the 2013 tobacco happened with the NSCC, because the group is so big and they were not able to get a grasp on the quality part. Because initially, as you know, as a pharmacist, compounding was basically specialized pharmaceuticals made for individual patients. But what happened during the course is a lot of people were needing some specialized medications for different needs. The other reason is big pharma companies could not keep up with making such a small batches, because again, it is financially not feasible for them to make a few thousand batches or a few hundred batches. A Few hundred, I mean, units.

So for that reason that the company came into existence. And when the company came into existence, and what happened was they saw there was a growth in the so-called custom medications. Then they grew and grew and they become so big, it was difficult to... On the business sense they were growing, but on having a grip on the quality and systems was getting out of control. Eventually, what we see the bubble bust in 2013. Then the government had to step in and DQSA Act was passed. Then everybody had to comply with the newer regulations.

Now, as the saying goes, old habits die hard, a lot of people are not able to transition into the new role easily. There are some pushbacks as to why this, why that? We encounter this, and that's why we make quality as our mantra at our work facility. We say that quality is everything for us. So that's the mentality or the culture we develop at any of this compounding pharmacy. When I say compounding pharmacy, it's 503Bs outsourcing facilities especially.

So that is how the 503Bs most of them, I hope... I mean, they would be transitioning into the outsourcing facilities by following the CGMP and adapting and accepting. Because, again, they need to understand that they're normal compounding pharmacy, small-scale, which is going to be a few patients. If there's any issues, they can immediately get a check. But when a 503B outsourcing facility produces, you're distributing medication, you're not dispensing. So that is the mentality, it needs to change, and the culture needs to change. People need to become aware, and hopefully we will become a part of the filling the gap of all this drug shortages occurring on a daily basis, especially this pandemic.

Darshan: So that really raises the question. A couple of different things popped up as you started talking about this. What do you think are the most common mistakes people make? You've seen these facilities grow, and when I talked to compounding pharmacies, they always talk about things like, Oh, we have so many steps in place, and we're so much better than your average pharmacy. Look at all the steps you've taken. And you and I have had this conversation where there's a vast gap between what people are doing and what the FDA expects. What do you see as that gap? What are the most common mistakes people make as you see it?

Syed: Again, it's a very good question. Just like I was mentioning to you earlier, the cultural shift needs to take place. It is not from what you have grown into where you are, it's about where you need to be. So a lot of 503Bs, again, there are few of them I would say. When they say, we are doing so much better than a company pharmacy, they're still having a compounding pharmacy mindset.

You'll be looking towards reaching to a manufacturer level not from how much you improved from being a compounding pharmacy. Just like I was mentioning, quality is one of the areas which the compounding, I would say, 503B outsourcing facilities needs to focus on. Because it needs to be completely independent. They need to have full oversight on every aspect of the company operations, production, material, procurement. Quality has to be everything in there.

But to answer your question, what is lacking is the 503Bs still thinking that they have improved a lot from the compounding pharmacies. They have done good, but the FDA expectation is for us to reach to a manufacturing standard, while in CFRs not the traditional compounding way.

Darshan: And that's a really fair statement. So now you mentioned one of the things that was really critical in there, was how the DQS came in. The drug quality and safety act came in, to try to guide pharmacists and go look, if you're going to do... As you drew that distinction, it's a really interesting distinction you drew, dispensing versus distribution.

If you're going to start distributing drug, and whether it's being done through an actual third party distributor, or you're doing it through your own pharmacy itself. The fact is that you need to follow these higher standards. But here's my question, in your opinion, based on your experience, do you think it goes far enough? And if so, what do you think does it right. And what do you think are some things that are missing?

Syed: So just like for the distribution, when you're distributing anything, it needs to be of a standard that there is a clear audit trail of every piece of product you produced in case of, as every batch lot, up to the unit level. So you need to have a clear audit trail of anything which is made and you have audit trail of the people, the hospitals, the clinics, the end-user who you've distributed to. Have a good database of... And also, if there's any issues, so can communicate immediately to those things.

Dispensing was, it's usually in a smaller scale happens when you make a few after the same [inaudible 00:12:05] the lots of us are smaller. The batch sales are smaller there. Whereas in a distribution you need to... we mentioned a full batch record. It is just like any manufacturing batch record. So where it is in real time, the quality control records every step which is going into the production process. Including the time of contact times for cleaning. That is when it crucial. So we have cleaning validation done, because which chemical we use for how long and how long it needs to be left on the counter before we can wipe it off.

So things like this. Which basically again, shifting your mentality from compounding into manufacturing, because there is a lot at stake. So we need to embed this in the culture saying that, Hey, you know what, we are no more a compounding pharmacy, but we need to meet the standard for manufacturer.

I try to give an example of saying that, Hey, if you have a bag of Lay's chips and you're sitting in a movie theater, do you look into the bag of Lay's chips for any debriefs or anything, or you just open and eat it? You're eating is because there is a company we should trust that they have made this in GMP facility, and there is a organization which is making sure that that product is safe. And if you're sitting in a movie theater, you're opening a bag of chips and eating it, without even looking at it, that means you're trusting the product.

Darshan: That's a really good example.

Syed: Yeah, thank you. That's where we need to develop the culture. And I say in our facility, everyone is responsible for quality, including shipping, including janitorial services, including... anybody who works at the facility is responsible for the quality. So that culture we need to develop in our... And it's kind of a uphill battle, especially if you have some old folks coming from the company pharmacy background. But yeah, it's a little bit of a challenge.

Darshan: So you talk about all these steps you've taken to actually make your facility really try to stick and adhere to GMP standards almost. Do you see a future where more companies will say, Look, I'm already doing GMP, I might as well file for an Anda. Or do you think there are certain advantages to sticking, to being a 503B facility?

Syed: That's a great question. Again, I think there is a good opportunity there. Just like I said, I can speak for my facility. We have done everything again, keeping the quality and customer safety, efficacy, and quality as our priorities. We look forward to filing for even... I mean, we are in talks also at times for clinical trials, if at all we need it. So we do have knowledge about the clinical trials, filing and also doing the BAs and BEs studies and things of that sort.

So what we want to do is strive hard towards upwards towards the manufacturing habits. So that way, at one point we would probably be able to take up the role of a generic manufacturer. And again, because of this pandemic, the disruptions and everything, there is a grave need foBs to step up. Number one, to provide a safe and effective product. For that, a lot goes into that. Which just like I mentioned, many, many things, and following the CFRs and all the quality culture need to be developed into the company.

So yes, I think I would see a future where our 503Bs could... I'm sure, probably a different registration, we won't be the same. So potentially they could become a generic manufacturer. Yes.

Darshan: Before we continue, by the way, you're giving some really excellent information. Is there an opportunity for people to talk to you? How can people reach you by the way?

Syed: Sure. I am available. I have an email, it's a [email protected] I used to be a consultant earlier also, which I'm no longer doing it, otherwise I could have given that. So that is the email [email protected] And also my phone number is (405) 410-8244. They can feel free to reach me anytime and I'll be glad to help. Definitely I do this with passion, so I'm always there to help.

Darshan: And I believe you're speaking as well at a conference. You're going to be speaking-

Syed: Yes, I am. We have a conference coming up on August 18, 19 and 20th. That is PharmaSalon. And this is a great opportunity for everybody who is into this 503Bs compounding pharmacy field to listen, and get benefit from it. It's going to be a great panelist. There are a lot of great folks coming together, discussing the challenges, the hurdles, and how we can resolve those. Some are conflicting, some are overlapping, some are redundant, all those things we can discuss. It's a great conference coming up on August 18th, 19th, and 20th.

Darshan: So continuing on, and thank you for that, by the way. Continues down at our same conversation though. You're talking about compliance and how it's so important. Have you gotten into the issues around advertising and promotional compliance. Or is that an issue that you really depend on other people to handle for you?

Syed: Absolutely. So again, advertising is something, you have those FCAs they're, False Claims Act and things like that. As a 503B, you cannot advertise apart from just providing it to the, especially the providers and hospitals, basically contracts and things like that. And you don't have any medications, none of them are branded medications.

So the way you can promote is it'll be an internal promotion, like through having a hospital contacts. Or having your marketing team going and reaching out giving them whatever the need of the product they have in the hospitals and clinics and that sort of thing. But yeah, in general, as an advertisement, like a typical company does with other... again, just to mention that the 503B doesn't have to comply with the labeling requirements. So that exempts us from putting all the requirement for a label of a generic product. So yeah, advertising is something which not much, I mean, we're not into promoting a product as a manufacturer would do.

Darshan: They're definitely some limitations there and we can have a different discussion on this, for sure. So we won't get into that too much. But I'm really loving this conversation you're having on creating a culture of compliance. And in your experience when you're training people, one of the interesting things you said is that, you worry when you have people coming in from pharmacy. What are the most common mistakes they make when they think about, Oh, you know what, I have 15 years of experience as a pharmacy tech. Or, I've worked in a hospital pharmacy, and I'm a pharmacist that I've done this for 15 years. Do you find that you have to retrain them, or do you think that they already have a leg up? How does that work for you? Do you have a training program, for example?

Syed: Absolutely. We do have, the training is one of the very crucial part of our sourcing facility. We have a training program upon hire, and we have a technician or any associate who comes on board goes through a rigorous training. We make sure we have the document control. Good documentation practices. We follow all the GDP, GXP in terms of the GMP with all the other embedded CFRs. So basically, we have a training program which makes them to embrace and adapt the culture at our facility.

I do face challenges with especially the ones who have past experience with the compounding. There's a phrase which says, the most dangerous phrase in English is, 'this is the way we have been doing it.' So I do put this at the very end of every presentation I put this big bold from... I'm forgetting. There is Admiral, Admin... who said this. So I put in this picture and I say, "This is the, what, Admiral said, the most dangerous phrase is, 'this is the way we have been doing it.' So please don't do that. Adopt the culture. This is a C stands for continuous, current, basically. Current continuous, however, one interprets. So it's a constantly changing, improving, basically the GMP.

I keep saying that, and again, there are some which have difficulties, but once they come into the culture and we make them improve or enhance on their skills. It's a shift. Just like I said, and I try to give them example. You have to switch that button on their mentally, so that way there is a thinking shift. The example was the Lay's chips. That's one of the example I give, usually people get it, but yeah, we do have some challenges.

Darshan: Well, let me ask you this question. You've got a lot of pharmacies that are... I mean, I've worked a ton in hospital pharmacies at working retail pharmacies. I have worked in compounding pharmacies as well. My big experience has been, especially recently, you see these hospitals investing millions of dollars, trying to become USP 797, or even USP 800 compliant. In your opinion... And their ideas that I can distribute to my entire hospitals system, and that'll save me a ton of money in the long term. Do you think that that thought process is valid? If so, why? If not, why?

Syed: Again, a great question. The problem comes when you are, I'm just speaking like if it's a hospital setting. So now all the outsourcing facility must meet the CFR requirements. The CFR requirements means there's a lot of documentation. I mean a lot of documentation, batch [inaudible 00:23:49] maintenance, quality, quality control, approvals, change controls. There is so much documentation they need to comply with. And I'm not sure if the hospital can dedicate that enough resources, staff, automation, or resource of personnel, all these things.

Again, going from the mentality from compounding pharmacy to the 503B, they think that is a step ahead. But as of now the requirements doesn't give you any kind of a discount or leeway to cut corners apart from the CFR. So FDA expects that you meet all the CFR and GMP requirements. So I probably personally, I think even in the future, when they're trying to enhance the seven, nine, seven and 800, which is great and good, but to keeping up with the record system, I think that'd be challenging.

Darshan: So I'm going to ask one last question, because I know we've taken a lot more of your time than expected. But, one of the big things that's been coming up now is Kodak is talking about getting into generic manufacturing and Civica RX is saying, we're going to try to address this drug shortage. Do you think that these companies are well set up, or do compounding pharmacies meet a gap that these companies simply cannot get to?

Syed: Well, I think it's a great thing that, and everybody's pushing in and trying to provide the needed medications and the shortages. The COVID has changed a lot of things, how we do. With global political and economical, and financial landscape changing, Kodak... I did hear that and I think it's great that they're going to be here. But I think everybody has a role to play. I don't know to what extent the Kodak is going to provide or penetrate the market and what level.

But I think the 503Bs as a small units of manufacturing, if they're spread throughout the country and they can pick up those needs of the at least if not nationally, locally. Adhering to the standards of GMP following all the regulations keeping up with... again, the number one is safety, efficacy, and quality. These three things, if they keep as the priority and meet the needs of the FDA requirements. And I'm sure, whenever FDA don't have any issues, if everybody can leave up to the par.

Darshan: Right. Well Syed, this was really, really good having you on. I hope you'd consider coming back on again.

Syed: Absolutely, Darshan. I enjoyed it a lot. And thank you so much for having me.

Narrator: This is the Darshawn Talks Podcast, regulatory guy, irregular podcast, with host Darshan Kulkarni. You can find the show on Twitter @darshawntalks or the show's website at


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