Compounded drugs are customized medications using combinations or alterations of of medicine to satisfy the needs of a particular patient.
Often compounding is for medications that are not commercially available, such as patients who are allergic to a common ingredient. Compounding is essential for conditions that occur in too small a percentage of the population to justify mass-production of a medication. Strictly speaking, adding a "spoonful of sugar to make the medicine go down" is a form of compounding to the extent it alters the medication.
Compounding is a traditional part of the standard curriculum at most pharmacy schools.
The States regulate compounding practices as part of their regulation of pharmacies. Some States require all licensed pharmacies to provide compounding services for patients.
Compounded drugs are not considered to be "new" drugs subject to FDA approval. Rather, the safeguards are that a pharmacist may only sell a compounded drug based on a valid prescription from a licensed practitioner.