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Rising use and cost of compounded medications in workers comp sparks concern

Rising use and cost of compounded medications in workers comp sparks concern

The use and price of compounded medications in workers compensation has climbed sharply, prompting concerns about controlling prescription costs for comp claims and managing safety for injured workers.

Utilization of these medications in workers comp increased nearly fourfold in the past several years, while pricing spiked nearly 30% in 2013 compared with 2012, recent studies show.

Although compounds represent only 1% to 3% of drugs prescribed for workers comp patients, experts say they're keeping an eye on such medications due to the skyrocketing prices — sometimes up to $2,000 for a month's supply — and worries that compounds may be produced with inconsistent or incorrect doses.

Some compound bills “have been in the tens of thousands,” said Donald Lipsy, pharmacy benefits management communications and regulatory manager at Coventry Workers' Comp Services in Tucson, Arizona.

“Without consistent protocols to prepare each drug, compounded drugs can have a greater batch-to-batch variability. This poses significant safety concerns as injured workers could be receiving medication with a higher potency than intended,” Sarah Randolph, St. Louis-based clinical account executive at pharmacy benefit manager Express Scripts Inc., said in a statement to Business Insurance.

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

“In the past ... compounds would typically combine two or three different ingredients,” said David Calabrese, Northborough, Massachusetts-based vice president and chief pharmacy officer at pharmacy benefit manager Catamaran Corp. “Today, it's not unusual for us to see claims for compounds that combine up to a dozen or more active ingredients. And that's obviously going to increase the cost of the compound, but simultaneously increase some of the safety concerns that we have relative to these products.”

Pharmacy dispensers of compounded drugs typically bill insurers and employers for each ingredient, said Jim Andrews, executive vice president of pharmacy services for Atlanta-based pharmacy benefit manager Healthcare Solutions Inc. That has led some companies to use several high-cost medications in compound prescriptions, such as the anticonvulsant gabapentin, to increase their profit margin, he said.

Physicians, pharmacists and compounding pharmacies “have found a niche business that allows them to … charge a tremendous amount of money for that,” said Mr. Andrews, who has seen claims of $1,000 to $1,500 for a 15-day supply of compounded drugs.

The recent studies confirm the escalating use. An April study by Madison, Connecticut-based pharmacy benefit manager consortium CompPharma L.L.C. showed there were 30,669 prescriptions for compounded medications in workers comp claims in 2012, up from 6,416 compound prescriptions for workers comp claims in 2007.

Meanwhile, an April Express Scripts report showed the use of compounded medications in workers comp among its workers comp clients increased 71.9% in 2013 vs. 2012, and the average cost per prescription rose 29.8% to $1,299.

Compounding has taken off in group health and workers comp as states controlled other prescription cost drivers, such as drug repackaging and physician dispensing, experts say.

“What the payers, especially in work comp, have issue with is it looks like everyone's after the golden goose again,” said Mark Pew, senior vice president of product development at Prium, a Duluth, Georgia-based medical management company and unit of Ameritox Ltd.

In addition, experts say the effectiveness and safety of compounded drugs is uncertain, especially topical creams containing drugs that are normally taken orally. Sources say there is little research on the subject.

Because the U.S. Food and Drug Administration does not oversee quality standards for compounded medication production, sources say they're concerned patients could receive inconsistent amounts of medication or a mix with negative interactions.

Still, experts agree compounded drugs clinically benefit some patients. For instance, a patient who is allergic to inactive ingredients in a commercially available drug may use a compounded drug with nonallergenic fillers.

Additionally, employers may see benefits from compounded drugs that are used in place of narcotics to alleviate an injured worker's pain. “In my mind, that would be considered a plus rather than a negative,” Mr. Andrews said.

Sources say workers comp payers should work with dispensers of compounded medications to evaluate whether they are medically appropriate.

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