Although a large chunk of workers’ comp pharmacy spend goes towards opioids, another class of drugs continues to take up a significant portion of total spend. Compound drugs are largely unregulated by the Food & Drug Administration (FDA) and their prices have only gone up in the past few years. As a result, many insurers are taking steps to limit these drugs or are denying reimbursement for them.

Compound drugs are a mixture of drugs meant to address a unique patient or a specific medical need. In workers’ comp a lot of them come as creams or ointments and are applied topically, and can be dispensed straight from the physician’s office. They may not be any more effective than other drugs and they may not even be medically necessary in many cases. They typically require preauthorization for dispensing since the mix of drugs in them is so varied and they are considered experimental drugs. It would be hard for the FDA to keep track to approve them all since they can be a mixture of many different drugs in many different amounts. They can be extremely expensive; according to a report from Express Scripts they averaged $1,769.45 per prescription last year.

We wrote a more detailed article about compounds here as well.

Insurers are trying to take control of compound drug prescriptions. In Texas, Traveler’s just won their case against American Specialty Pharmacy, who they denied reimbursement to for compounded medicines delivered as a cream. The Texas Closed formulary largely allows compounds that contain all “Y” medicines to go through without preauthorization but if there is an “N” drug in the mix they need preauthorization. Traveler’s contended that American did not get preauthorization for dispensing the cream, which is required when a drug is considered experimental or non-FDA approved. The medicine was not even necessary for the injury that it was prescribed for, according to the testimony of Dr. Suzanne Novak, who wrote the “pain” portion of the ODG standards. She went on to say that since a compound is a mix of medications, there is no way of truly knowing how much of each drug the patient is getting. This cream in particular contained six different medications. Traveler’s had notified American that they were not going to reimburse the $1,612.95 that the cream cost and American asked for a medical fee dispute resolution. The Texas State Office of Administrative Hearings said that since they had not been preauthorized they should not have dispensed the drug in the first place and they were not eligible for reimbursement. Many consider this a “win” for payers however it is not yet known in American will appeal.

Pharmacy Benefit Managers may be able to help payers control compound medications. To limit compound dispensing, insurers could ensure that a compound is prescribed only after other traditional treatment methods have been tried and shown to be ineffective.

Compounders are pushing for their side as well, earlier this year accusing Express Scripts of trying to drive them out of business.