An article in the New York Times (October 4, 2012) describes an outbreak of meningitis caused a fungus that contaminated steriod solutions supplied by a compounding pharmacy in New England. Hospitals ordered the solution, which was in short supply, from the compounding pharmacy which mixed custom batches of products to compensate for shortages. But such pharmacies are not regulated as closely as manufacturing facilities because of their intermittent small lot production, thus generating quality issues. Is the real problem the low margins for generic products or the close regulation of manufacturing by the FDA that causes capacity swings ? Should regulatory oversight of compounding pharmacies be increased, even if means lower drug availability and thus higher prices for drugs ? How should penalties be structured to prevent such quality failures – is shutting down all manufacturing at the contaminated facilities the answer or are there alternatives ? Instead of compounding pharmacies, should products be imported government stocks (from Japan or Canada) to ensure quality compliance ?