Compound Drug Concerns

Compound Drugs Are Focus of Reports, Blogs, Laws

High prices and uncertain efficacy make workers' comp professionals question compound drugs.
By: | May 2, 2014

Increasing concerns surrounding compounding drugs have caught the attention of workers’ comp professionals. Recent reports, blog posts, and a new federal law suggest the issue is not going away anytime soon.

With skyrocketing prices and questions arising about safety and efficacy, many observers are taking a close look at the latest pharmaceutical-related issue to impact costs and outcomes. At the very least, the experts suggest practitioners arm themselves with enough information to make educated decisions.

What They Are

Originally considered something of an art form, the practice of combining different agents was practiced by priests and physicians, according to CompPharma, a consortium of pharmacy benefit management companies. It was a routine activity among pharmacists and the only source of medicines before mass production took over.


These days, compounded medications are tailored combinations of varying ingredients, depending on a patient’s needs. The idea is to address the unique requirements of some patients and injured workers.

Many compound drugs outside of workers’ comp are related to hormone replacement, dermatology, formulations for children who can’t swallow pills, and anti-cancer treatment. However, within the workers’ comp system, compounded medications are typically creams, gels, or ointments applied to the skin to manage pain.


“The compounding of drugs will and should remain a part of patient care,” CompPharma explained. “Compounding might be the only avenue available to provide medications to patients with unique needs.”

At the same time, CompPharma’s new report based on a review of existent research of compound drugs found:

“Compounding might be the only avenue available to provide medications to patients with unique needs.”

Compounds have not been proven to be more effective than commercially available, manufactured drugs that have been approved by the U.S. Food and Drug Administration in similar classes, and efficacy data in general are nonexistent for the types of compounds seen in workers’ compensation claims.

Using compounds poses risks to patients.

Compounds are often not medically necessary.

The regulation of compounding pharmacies varies from state to state.

Compounds are expensive.

There has been a nearly fivefold increase in the use of compound drugs in the workers’ comp system in the last five years even though “the quality of the preparation and the safety and efficacy of these ‘custom’ compounds are largely unknown,” the paper says. “Along with increased use, the prices charged for compounds have risen dramatically.”

Where a compound drug used to cost less than $100 per prescription, some pharmacies now bill in excess of $10,000 per prescription, according to Marie Bowker, senior director, practice leadership for Truven Health Analytics. In a recent blog post, she noted the “startling rise” in their costs, and related that one unidentified employer had recently learned it paid nearly $400,000 for about 140 compound drug prescriptions.

“The FDA doesn’t monitor operations at compounding pharmacies to ensure safety and sterility of the products manufactured.”

“Despite the high costs, a review of the recipe shows they are often using generic ingredients and/or ingredients not approved by the FDA for the conditions they are intended to treat,” Bowker wrote. “In addition, the FDA doesn’t monitor operations at compounding pharmacies to ensure safety and sterility of the products manufactured.”

The safety of compounding drugs has been called into question in light of several tragedies. The most recent was the 2012 outbreak of fungal meningitis and other infections associated with compound drugs and medical products from the New England Compounding Center that led to 44 deaths, according to the Centers for Disease Control and Prevention. Lab tests conducted by the CDC and FDA found bacterial and/or fungal contamination in unopened vials of several compound solutions distributed and recalled from the Massachusetts-based company.

While the crisis has led to an increase in the frequency of inspections by national and state-level regulators, questions about the safety of compound drugs persist. The regulation of compound drugs falls largely to boards of pharmacy on a state-by-state basis, although a law signed in late 2013 gives the FDA some oversight.


“Without consistent protocols to prepare each drug, compounded drugs can have a greater batch-to-batch variability,” said Tim Pokorney, senior vice president, clinical services for workers’ compensation at Express Scripts, and one of the authors of the CompPharma report.


While several states have adopted various measures to address the situation, experts have a number of recommendations for workers’ comp practitioners. Bowker suggests payers look at their data or ask their PBMs about their compound drug costs and talk with PBMs about their current and planned protocols to manage these claims.

Express Scripts says it sends letters to physicians encouraging the use of commercially available alternatives where appropriate.

CompPharma suggests payers limit approval of compound drugs to specific situations and obtain a letter of medical necessity from a prescriber to show conventional therapy has failed. The consortium also recommends payers request proof of the effectiveness and safety of topical compounds, disapprove topical compounds with multiple ingredients, and require informed consent from patients in the absence of FDA approval.

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

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