Drug compounding is the preparation of a medical formulation to meet the specific needs of a patient that cannot be met with commercially available products. This may be done for many reasons such as to change a delivery method, to avoid a non-active ingredient to which the patient is allergic, or to provide an exact dose that is not commercially available. Compounding may also be done for medically optional reasons, such as preference of flavor or texture, or dietary restrictions.

Hospital pharmacies compound medications for intravenous administration, whereas outpatient or community pharmacies typically engage in compounding medications for oral or topical administration. Some hospitals outsource to large-scale producers, designated by the FDA as 503A or 503B compounding pharmacies, particularly for sterile-injectable medications.