Compound Drugs

Compounding Challenges Comp Payers

The growing trend of compound drug prescribing raises safety concerns and obscures costs.
By: | April 10, 2014

A fivefold increase in compound drug prescribing over the past five years raises the issue of whether claims payers have adopted processes that challenge compounding expenses and protect injured workers.

That’s according to “Compounding is Confounding Workers’ Compensation,” a 41-page review of existing research conducted by several pharmacy benefit managers.

“The primary concern about compounds is that they have not been tested for safety.” — from the CompPharma report ‘Compounding is Confounding Workers’ Compensation’

While compounds have not been proven more effective than manufactured drugs approved by the U.S. Food and Drug Administration, they come with “staggeringly high costs” and their safety is largely unknown, according to the review published by CompPharma, a PBM consortium.

Compound drugs are substances that are not commercially available and must be tailored to meet a specific individual’s unique needs.  The most commonly prescribed compounds in workers’ comp are creams, gels or ointments called topicals, which are applied to the skin.

“The primary concern about compounds is that they have not been tested for safety,” the paper states. “The compounds frequently prescribed in workers’ compensation … present a number of potential risks to patients,” including the potential for “adverse events.”

Payers also face difficulty assessing appropriate payment for compound pharmaceuticals when assessing their efficacy is a challenge, according to the paper.

A second paper recently published by Coventry Workers’ Comp Services states that “roughly 80 percent of compound prescriptions are out-of-network and therefore ‘paper billed.’ ” Paper billing obscures determination of a compound’s contents and it eludes price control systems put in place by PBMs, according to the two papers.

Compounds represent about 4 percent to 5 percent of total workers’ comp client spend, according to the Coventry paper, which is a response to the CompPharma report.

CompPharma’s paper provides a history of compounding, details current regulatory measures, and advises on practices prescribers should take to avoid potential liability.  It also contains a list of measures that might help workers’ comp payers.

Those potential measures include:

  • Limiting approval of payments for compounds to situations where patients have unique needs such as a documented drug allergy or an inability to swallow.
  • Obtaining a letter of medical necessity from a prescriber to establish that conventional therapy has failed.
  • Requesting evidence of effectiveness and safety for topical compounds.
  • Avoiding approval of topical compounds containing multiple ingredients.
  • Requiring informed consent by patients in the absence of FDA approval of compounds or evidence of their effectiveness.

However, not all states allow payers to withhold payment when medical providers decline to cooperate, said Joe Paduda, the consultant who established CompPharma. Still, taking such measures puts doctors on notice that they should understand the medical necessity and science behind their prescriptions, he added.

“It’s a possible solution that will not work in in all jurisdictions, but it is much better than approving (compounds) without questioning them,” Paduda said.

Roberto Ceniceros is a retired senior editor of Risk & Insurance® and the former chair of the National Workers' Compensation and Disability Conference® & Expo. Read more of his columns and features.

More from Risk & Insurance

More from Risk & Insurance