While many plan sponsors are paying close attention to their specialty pharmacy costs, they may be unaware of the latest disturbing trend in the pharmacy landscape: the startling rise in the cost of compound drugs. Compound drugs are mixed at the pharmacy according to a recipe prescribed by a physician and, up until the last couple of years, typically cost less than $100 per prescription.
However, today, a new type of pharmacy – one devoted to compounding drugs – is springing up across the country. And with the surge of these new pharmacies, we’re seeing big increases in the billed charge of compound drugs, which are frequently for topical pain relief. Some pharmacies are now billing in excess of $10,000 per prescription for compound drugs, but 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. In addition, the FDA doesn’t monitor operations at compounding pharmacies to ensure safety and sterility of the products manufactured.
One employer recently learned it had paid almost $400,000 for about 140 compound drug prescriptions. The compound drugs were excluded from the pharmacy benefit manager’s (PBM) annual trend report, which caused the employer to question why the trend report didn’t reconcile with the PBM’s invoices. After adding in the compound drugs, the employer’s overall trend jumped from 11% to 18% for 2013.
PBMs apply varying degrees of review on compound drug claims, making these claims ripe for fraud, waste, and abuse, especially since it’s not illegal for a physician to hold up to 40% ownership interest in the compounding pharmacies to which they’re sending the prescriptions.
So what can you, as a plan sponsor, do about this? Start by looking at your data or asking your PBM about your compound drug claims costs. Second, talk with your PBM about their protocols – current and planned – to manage these unique claims. Third, ask your Truven Health account team how our Pharmacy Benefit specialists can help you determine the best protocols for your organization.
Senior Director, Practice Leadership