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Express Scripts suit over compounded drugs signals future challenges

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A lawsuit filed by several compounding pharmacies against Express Scripts Inc. challenging the nation's largest pharmacy benefits manager's refusal to pay for compounded medications under group health plans could portend future challenges as payers attempt to limit such medications in workers compensation claims.

“That tug of war between the payers on the one hand and the compound pharmacies on the other is conceptually important across (sectors), including workers compensation,” said Michael Gavin, president of Duluth, Georgia-based medical cost management company PRIUM, which is not involved in the litigation.

In the suit filed last month in St. Louis federal court, the plaintiffs allege that St. Louis-based Express Scripts unlawfully denied group health plan claims for compounded medications in violation of the Employee Retirement Income Security Act.

The suit seeks a declaratory judgment barring Express Scripts from rejecting already requested compounded medications and that it be ordered to pay for properly requested compounded drugs in the future.

Compounded prescriptions are two or more medications that are combined outside their typical, commercially available form, such as pills. Compounds, which usually are customized for each patient, include topical creams and gels, injections and oral liquids, anesthetics, anticonvulsants, analgesic painkillers and muscle relaxants.

Pharmacy dispensers of compounded drugs typically bill insurers and employers for each ingredient in a prescription.

Plaintiffs in the Express Scripts lawsuit include Grasso Enterprises L.L.C., a Boerne, Texas-based compounding pharmacy that operates under the name Annie's Apothecary; Houston-based compounder NERxD L.L.C., which does business as Cypress Compounding Pharmacy; and West Monroe, Louisiana-based Wiley's Pharmacy & Compounding Services Inc., which does business as Mason's Pharmacy.

The complaint alleges that Express Scripts “recently embarked upon a scheme to deny all claims under health plans seeking payment for "compound' pharmaceutical medications” and that an internal Express Scripts document in June showed it plans “to cut spending on compound pharmaceuticals by 95%.”

“The scheme is forcing patients to go without treatment, jeopardizing their health and causing bodily harm, or forcing them to pay out-of-pocket sums that they may or may not be able to afford for basic health care needs that have been prescribed by their doctors,” according to the complaint, which cites conditions for which compounded medications are used.

Express Scripts declined comment on the pending litigation.

The PBM, which handles workers comp and group health claims, said previously that the use of compounded medications and their costs have been on the rise. According to an April Express Scripts report, compounded medication use among workers comp clients increased 71.9% in 2013 over 2012, and the average cost per prescription rose 29.8% to $1,299.

Plaintiff attorney Richard J. Quadrino, the founder and CEO of Quadrino Law Group P.C. in Melville, New York, said Express Scripts' efforts to cut back payments for compounded drugs have had “negative impacts upon patients and the pharmacies.” He said his clients have seen efforts by other PBMs to limit compounded medication claim payments under group health plans.

“The other major pharmacy benefits managers have not implemented the same type of scheme as Express Scripts, but they are engaged in other inappropriate efforts to curtail costs,” Mr. Quadrino said in a statement to Business Insurance.

Phil Walls, chief clinical and compliance officer at Tampa, Fla.-based PBM Matrix Healthcare Services Inc., said his company has had success in reducing the use of compound drugs by reviewing all compound prescriptions that come in for comp claims and working with doctors to prescribe traditional, less costly drugs when possible.

“We're trying to get an understanding of why he or she was prescribing a compound because we at least want to acknowledge that there are a few valid reasons for using a compound,” Mr. Walls said. “But in the vast majority of cases, it simply doesn't exist.”

Prium's Mr. Gavin said workers comp payers should pay attention to the Express Scripts case, as it represents “the extreme growth and profitability of the compounding (pharmaceutical) space.” He said he believes state regulations that allow workers comp payers to review claimant prescriptions and medical treatment would prevent compounding pharmacies from filing a similar lawsuit against PBMs for denying compounded drugs in workers comp claims.

By collaborating with physicians, rather than denying compound prescriptions outright, Mr. Walls said he believes workers comp payers can limit potential pushback from compounding pharmacies or workers comp claimants.