The Compounding Quality Act, part of the Drug Quality and Security Act, signed into law last month, creates a volunteer registration of “outsourcing facilities” that will be subject to scrutiny by the FDA, including routine inspections.

The law was spurred by the issues at New England Compounding Center where fungal meningitis contamination killed 64 Americans and sickened more than 750 others.

“The alarm bell that went off from that tragedy is still ringing,” Mark Baum, CEO of San Diego-based drug compounder Imprimis Pharmaceuticals Inc., told BioWorld Insight.

FDA estimates there may be between 700 and 1,000 drug compounders making sterile products that are shipped interstate that could register as outsourcing facilities, but the agency’s insight is foggy since the industry has been largely unregulated at the national level. And the FDA has no idea how many of the facilities will actually register.

During an FDA announcement of its plan for implementing the new law earlier this month, the agency made it clear that it was betting on market forces to entice compounders to become registered because the only other way to track them is through an adverse event report or quality complaint.

“We’ll be encouraging health care providers and health networks to consider strongly purchasing compounded products from FDA registered and regulated facilities,” FDA commissioner Margaret Hamburg told the media in a briefing, noting that the FDA plans to list the registered outsourcing facilities on its website.

The plan seems to be enticing early adopters. Last week multiple compounding pharmacies, including Pharmedium Services LLC and Imprimis, announced intentions to register.

Registered outsourcing facilities compounding sterile drugs will be subject to the same types of inspections as traditional drug manufacturers. The frequency of the inspections will be based on risk, including the products being produced and the history of the facility.

“If you’re making sterile products, your world is really going to change,” Imprimis’ Baum said.

Compounders will have to follow Good Manufacturing Practice, which will affect everything from materials coming into the facility to shipping and everything in between. “The costs are going to be tremendous,” Baum said. “I don’t think many mom and pop compounders are going to register.”

Of course it depends on where the compounder is starting from. Pharmedium, of Lake Forest, Ill., has been voluntarily registered with the FDA since the company’s inception more than a decade ago and has already implemented many of the expected regulations.

“I don’t think there’s going to be as big of a hurdle for us because we’ve already implemented a lot of these things,” Rich Kruzynski, President of Pharmedium, said of the regulations, the details of which are still being worked out.

While there will be costs to comply with registering as an outsourcing facility, including a $15,000 inspection fee associated with the registration, drug compounders expect they’ll be able to make up the costs through increased volumes.

“These higher standards are going to give physicians more confidence that the compounds are safe,” Baum said.

Kruzynski isn’t as convinced that the doctors in the hospital setting, where Pharmedium primarily supplies its compounded drugs, will increase their usage, but he’s confident that the regulations will give hospitals the confidence to save money by outsourcing more of their intravenous compounding rather than performing it in house.

“People have said they’re going to increase their usage of us because of the confidence in the regulatory category under FDA,” Kruzynski said.