Compounded medications are custom-made medications that traditionally were formulated by pharmacies for specific patients. By 2012, the practice had mushroomed, with some pharmacies selling thousands of doses of regularly used mixtures for physicians to keep for future use.
Now utilization and costs associated with compound medications fell significantly for both managed and unmanaged claims in 2017. This welcome news is attributable to payers continuing to leverage processes that identify whether a compound is necessary and only allowing those prescriptions that appear to provide medical benefit. In addition, most states have either been considering or have already implemented formularies in part to short-circuit exorbitant compound use.
Coventry reports that managed compound costs have steadily declined for three consecutive years and fell by more than half between 2016 and 2017.
The decreases were notable in California, New York, Pennsylvania, and Texas. Each of these states saw the percentage of all claims using compounds drop by more than half for the last two years.
Unmanaged compound costs have likewise posted sharp declines. Spending has now reached the lowest level in seven years.
The same large states that logged decreases in managed compound costs also registered sizable drops in unmanaged compound costs. Eight of the top 10 states experienced at least 40% reductions in the number of injured workers using compounds. These states were Arizona, California, Connecticut, Georgia, Illinois, New York, Pennsylvania, and Texas.
More payers, prescribers and injured workers have begun to question the need for a compound over a commercially available formulation. The workers’ compensation industry has for several years highlighted the limited clinical appropriateness of compounds, their high cost and the continued instances of civil and criminal investigations into compounding.
And the Food and Drug Administration is poised to limit large scale compounding.
In 2012 there was a fungal meningitis outbreak caused by tainted steroids made by a compounding pharmacy. That prompted Congress in 2013 to pass a law aimed at bringing more compounding pharmacies, traditionally overseen by states, under FDA oversight. The law, the Drug Quality and Security Act, created a category of “outsourcing facilities” that could register with the FDA and sell products in bulk while following federal manufacturing standards.
Under this new law, the FDA on Monday proposed excluding three substances from a list of ingredients that could be used to manufacture compounded medications in bulk for use by hospitals and doctors’ offices. The action was the first time the regulator has moved to exclude any substance from a list of ingredients that may be used to produce in bulk compounded medications that do not need to go through the agency’s safety approval process.