BlueCross BlueShield of Tennessee Administrative Services

Compounded Drug Products


Drug compounding is a practice in which ingredients of a drug are combined, mixed or altered in order to create a medication tailored to suit the needs of an individual.  Compounding is performed by a licensed pharmacist, a licensed physician or, in the case of an outsourcing facility, under the supervision of a licensed pharmacist. 

Compounded drugs are not FDA-approved, meaning that the FDA does not verify the safety or effectiveness of compounded agents nor does the FDA ensure manufacturing quality of these drugs.  Oversight for the production of compounded drugs generally falls under the primary responsibility of state boards of pharmacy with some authority for their operations remaining with the FDA.  Registered outsourcing facilities are regulated by the FDA and will be inspected on a risk-based schedule.

Health risks are associated with compounded drugs which do not meet federal quality standards.  Poor quality practices may produce compounded products which are not safe for use.  They may be found to be sub- or super-potent, contaminated with improper active pharmaceutical agents, non-drug ingredients or otherwise adulterated with environmental contaminants, such as bacteria, fungus, etc. 



BlueCross BlueShield of Tennessee’s Medical Policy complies with Tennessee Code Annotated Section 56-7-2352 regarding coverage of off-label indications of Food and Drug Administration (FDA) approved drugs when the off-label use is recognized in one of the statutorily recognized standard reference compendia or in the published peer-reviewed medical literature.




Policies included in the Medical Policy Manual are not intended to certify coverage availability. They are medical determinations about a particular technology, service, drug, etc. While a policy or technology may be medically necessary, it could be excluded in a member's benefit plan. Please check with the appropriate claims department to determine if the service in question is a covered service under a particular benefit plan. Use of the Medical Policy Manual is not intended to replace independent medical judgment for treatment of individuals. The content on this Web site is not intended to be a substitute for professional medical advice in any way. Always seek the advice of your physician or other qualified health care provider if you have questions regarding a medical condition or treatment.

This document has been classified as public information.