The question of whether all compounded drugs are "new drugs" has been disputed in the United states for over 15 years. The Federal Food, Drug, and Cosmetic Act generally requires that "new drugs" obtain U.S. Food and Drug Administration approval before being sold in the U.S. Between 1938 and the late 1980s, the U.S. Food and Drug Adminsitration did not asert that compounded drugs are subject to the drug provisions. Then the U.S.Food and Drug Administration developed and advanced a new theory. As articulated in a 1989 memorandum by a U.S. Food and Drug Administration attorney, the U.S. Food and Drug Administration could take the position that compounded drugs were new drugs and therefore subject to new drug approval requirements. Although the memorandum acknowledged that this represented a significant change in policy, the U.S.Food and Drug Administration adopted this legal theory. Their position that compounded drugs are new drugs led to a clash between the agency and compounding pharmacies. Congress appeared to settle this dispute in 1997 when it passed the Food and Drug Administration Modernization Act. This law contained a provision expempting pharmacies from the new drug approval requirements (and two other requirements) if they met certain critieria. Although the U.S. Food and Drug Administration has continued to maintain that is will not assert the "unapproved new drug" theory against the traditional compounding of drugs, it has invoked the "new drug" theory in many warning letters to pharmacies, including a series of heavily publicized warning letters issued the day before oral argument in the Medical Center Pharmacy case to the validity of the U.S. Food and Drug Administration's interpretation. The Fifth Circuit decision in the Medical Center Pharmcy case will provide an answer. It may not, however, be the final answer.