(Management Case Study) To 503B or Not to 503B: Lessons Learned as a Health-System-Based 503B

This activity qualifies for live CPEL℠ recertification credit.

Purpose: SSM Health has had their own internal outsourcing facility since 2014. In the past 10 years, guidance and FDA expectations have evolved and has forced a re-evaluation of current and future state. This is a highly competitive, ever changing market. We will share out experiences on this journey and the key factors that ultimately led us to expand. While this worked for SSM Health, it may not work for everyone and we will also share our experiences with the FDA to help other hospitals and health systems as they select 503B partners.

Methods: SSM Health started small, inside a current hospital to see how this would evolve. When the guidance was released in 2018 regarding co-mingling of 503A and 503B, we were at a crossroads. Using our experiences around quality expectations, critically evaluating the safety, finances and supply chain opportunities, we created our proforma. There was an expense to move forward, but there would also be an expense to stop. We had to go through this process twice because we finalized plans in late 2019, and then halted for the pandemic. Hospitals and Senior Leaders changed after the pandemic and we used those experiences in our justification. The benefits of our expansion included cost savings, controlled risk, high quality products, reliability of supplies, system standardization and potential for future partnerships.
We also utilized our experiences to help the rest of SSM in selecting high quality 503B partners for products that aren't part of our portfolio. The FDA has very specific expectations and by sharing our regulatory history, we will provide tips to evaluate current 503B facilities. ASHP provides as very thorough Vendor Assessment tool but we are dependent on the vendor to share much of their business with a potential client. We will use current inspection reports and share what our discussions have been with the FDA so all hospitals feel informed to evaluate the regulatory documents.

Results: In 2022, SSM Health made the decision to move forward with a stand alone facility to take on all our hospitals, not just in one state. At the time of this submission, we are about to fully move into this space. We have all our licenses, and have a pending pre-inspection with the FDA. By December, we will be fully functional with quality and financial results to share. We have contracted with a new analytic lab and have fully validated our space. The work to standardize the formulary, update the EHR and increase overall medication safety has been a success across the 23 impacted hospitals. We are bringing on new products with the expansion of our customer base and continuing our current products.
We have utilized our experiences to partner with other 503B vendors that compliment the services we do not plan to provide. or cannot provide. Examples include hazardous medications, beta lactam antibiotics and many things on the drug shortage list.

Conclusion: SSM Health is the first and longest standing health system registered with the FDA as a 503B outsourcing facility. We have been on the 10 year journey with the FDA and have learned so much along the way. We have worked with many other health systems that have entered this space, have considered entering this space and have shared our experiences. Based on the frequency of inquires we get, we will help other health systems as they make their own decisions to partner with a current 503B or enter the space themselves by sharing our experiences, rationale and finances.