FDA Category 1 vs Category 2: What They Mean for Peptide Compounding

When the FDA evaluates bulk drug substances that have been put forward for use in pharmacy compounding, it assigns them to one of three categories. These categories determine whether a substance can be legally prepared by licensed pharmacies – and, critically, whether the FDA will pursue regulatory action against those that do.

The system exists because the FDA’s formal Bulks Lists (under Sections 503A and 503B of the Federal Food, Drug, and Cosmetic Act) are still being developed. The process has been drawn out over years. In the interim, the FDA published guidance documents in 2017 (updated January 2025) describing how it intends to treat proposed substances while evaluation is ongoing. For peptides specifically, the category system is the gate that controls whether a compound can be legally prepared by a pharmacy or not.

	Category 1	Category 2	Category 3
Status	Can be compounded	Restricted – cannot be compounded	Cannot be compounded
Why	Sufficient info submitted; no significant safety risks identified	Sufficient info submitted; FDA identified significant safety risks	Insufficient supporting information submitted
FDA stance	Will not pursue compounders	Would consider pursuing compounders	Would consider pursuing; substance must be re-submitted to proceed
Path forward	Awaiting formal list rulemaking	Requires PCAC review + formal rule to change	Can be re-submitted with better documentation
Still active?	Yes – applies to pre-Jan 2025 submissions	Being phased out – no new Cat 2 after Jan 2025	Being phased out – no new Cat 3 after Jan 2025

Category 1 is effectively a green light for compounding. Licensed 503A pharmacies can prepare a Category 1 substance for individual patients with a valid prescription, and 503B outsourcing facilities can compound it at scale for healthcare facilities. The pharmacy must still comply with all other requirements: state board regulations, USP 795 (non-sterile) and USP 797 (sterile) compounding standards, and the conditions described in the FDA’s interim policy guidance.

Category 1 is not FDA approval. The substance has not gone through the clinical trial and New Drug Application process. The compounded product is not an FDA-approved drug. Patients receiving a compounded peptide are receiving a preparation that has not been evaluated for safety and efficacy to the standard required for approved pharmaceuticals. The distinction matters both clinically and legally: there is no FDA guarantee of quality, consistency or therapeutic effect for compounded products, even when made from Category 1 substances.

Category 2 is a stop sign. When a substance lands here, the FDA has reviewed the supporting evidence and found enough safety concerns to restrict compounding pending further evaluation. Licensed pharmacies that prepare Category 2 substances risk being targeted by the FDA.

In late 2023, the FDA placed 19 widely used peptides on Category 2, including BPC-157, TB-500, Thymosin Alpha-1, CJC-1295, Ipamorelin, AOD-9604 and others. This ended legal access through licensed compounders virtually overnight. The safety concerns cited included impurity and API characterisation issues, lack of human exposure data, immunogenicity risks for certain routes of administration, and insufficient evidence of clinical effectiveness for the specified uses.

The restrictions were controversial and led to legal challenges from compounding pharmacy trade groups. In 2026, the majority of those peptides were removed from Category 2 and referred for formal PCAC evaluation – a process tracked in detail in our reclassification tracker.

Category 3 is a “try again” designation. The FDA is not saying the substance is dangerous – it is saying the submission did not include enough information (clinical data, characterisation data, safety profiles) for the agency to make a determination either way. A substance in Category 3 cannot be compounded but can be put forward again with better documentation.

As of the January 2025 final interim guidance, the FDA stopped assigning new substances to Categories 2 and 3 altogether. Any substance submitted after January 2025 goes directly through the PCAC evaluation process. However, substances already categorised before January 2025 retain their existing designation until formally changed – which is precisely the situation facing the peptides currently under review.

The categories apply to two distinct types of pharmacy compounding, each created by different sections of federal law:

503A: Traditional Compounding Pharmacies

Section 503A governs state-licensed pharmacies that prepare customised medications for individual patients based on specific prescriptions. They are regulated primarily by state boards of pharmacy and must comply with USP 795/797 standards. There are approximately 7,500 dedicated compounding pharmacies in the US, with over 30,000 additional pharmacies offering some compounding services. For a 503A pharmacy to compound using a bulk API, that API must either be a component of an FDA-approved drug, have a USP/NF monograph, or appear on the 503A Bulks List. Most peptides meet none of these criteria, which is why the category system controls their availability.

503B: Outsourcing Facilities

Section 503B was created by the Drug Quality and Security Act of 2013, passed after a deadly fungal meningitis outbreak linked to contaminated compounded steroids from the New England Compounding Center killed 76 people and sickened over 750. 503B facilities can produce medications in larger batches without patient-specific prescriptions and distribute them to hospitals, clinics and physicians’ offices. They are directly regulated by the FDA and must comply with Current Good Manufacturing Practices (cGMP) – the same standards applied to pharmaceutical manufacturers. Every batch must be tested before release. 503B facilities have their own separate list and category designations.

The landscape has shifted significantly since the 2023 restrictions. Of the 19 peptides originally placed on Category 2, 12 were removed in April 2026 and referred for PCAC evaluation, five were removed in September 2024 and subsequently rejected by the PCAC at its October and December 2024 meetings, and two (GHRP-2 and GHRP-6) remain on Category 2 with no review scheduled.

The 12 recently removed peptides – including BPC-157, TB-500, KPV, MOTS-C, Semax, Emideltide and Epitalon – currently sit in a regulatory grey zone. They are no longer designated as posing “significant safety risks,” but they have not been placed on Category 1 or the formal Bulks List. They cannot yet be legally compounded. Seven are scheduled for PCAC review on 23-24 July 2026; the remaining five (including GHK-Cu injectable and Melanotan II) are deferred to a second session before February 2027.

Moving a peptide from restricted status to the formal list is not a simple administrative switch. It requires several defined legal and procedural steps:

• Nomination: A nominator (typically a pharmacy, trade association or clinician group) submits a petition with physical/chemical characterisation data, safety information, evidence of effectiveness and historical compounding use.
• FDA evaluation: The FDA reviews the submission and assigns a category. Adequate information with no significant safety risks leads to Category 1. Identified safety concerns lead to Category 2.
• PCAC review: For substances requiring further evaluation, the FDA brings them before the Pharmacy Compounding Advisory Committee. The committee hears presentations, reviews evidence and votes on a recommendation.
• FDA rulemaking: If the PCAC recommends inclusion, the FDA must publish a formal rule through notice-and-comment rulemaking. This is a legal requirement – it cannot be bypassed – and typically takes months.
• Final publication: Once published, the substance is formally on the 503A list and can be compounded under all applicable conditions.

The January 2025 final interim guidance added an important change: the FDA will no longer categorise newly proposed substances into Categories 1, 2 or 3. Any substance submitted after January 2025 goes directly through the PCAC evaluation process. The category system is being phased out for new submissions but remains fully operative for the peptides currently under review, all of which were categorised before that cutoff.

“Category 1 means FDA-approved”

No. Category 1 means the FDA will not pursue compounders. The substance has not been through the clinical trial and approval process that FDA-approved drugs like semaglutide or tesamorelin have undergone. Compounded preparations are not FDA-approved drugs regardless of category status, and carry no FDA guarantee of safety, efficacy or manufacturing consistency.

“Removal from Category 2 means it’s legal to compound”

Not exactly. When the FDA removed 12 peptides from Category 2 in April 2026, the substances were not placed on Category 1 or the approved list. They occupy an undefined position – off the restricted list but absent from any list that permits compounding. The FDA has stated that the procedural removal should not be read as a go-ahead to compound.

“The categories apply to people buying peptides online”

The category system only governs licensed pharmacies operating under the 503A or 503B frameworks. It has no direct bearing on the “research use only” grey market, where vendors sell peptides online without prescriptions or pharmaceutical oversight. The legal status of peptides in the US involves multiple overlapping regulatory frameworks beyond compounding categories, including the FD&C Act’s prohibition on unapproved drugs, the Dietary Supplement Health and Education Act, and state-level enforcement.

“A PCAC vote immediately changes the category”

The PCAC is advisory only. It votes on whether a substance should be added to the list, but the FDA retains sole authority over the final decision. After a favourable vote, the agency must complete formal rulemaking – including its own public comment period – before any change takes effect. The FDA has occasionally departed from committee recommendations, and at the October and December 2024 sessions, the committee itself voted against every peptide presented to it.