Compounded medications have been around since just about the beginning of time.  It is an ancient art. Having medications compounded to patient specific needs can be a life saver of sorts.  Not everyone can use the specific, and limited dosages available commercially.  Compounded medications give doctors the ability to either increase or decrease dosages in smaller increments.  In other words, a 100 lb person may need 50mg of something, the 200 lb person may not need  twice as much or 100mg, but maybe a 65mg, which may not be commercially available.  This works especially well with children's doses.

Also, doctors can, in many cases, use different dosage forms for a variety of reasons.  In stead of  pills or capsules, they can prescribe creams, suppositories, topical gels, suspensions or even  lollipops.
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