Compound drugs continue to hit, and hit hard

Compound drugs are not regulated by the Food and Drug Administration (FDA) and are usually created on an individual basis by a pharmacist, doctor, or compounding pharmacy. Compounds are created if a member’s needs cannot be met by an FDA-approved medicine.1 For example, if a member is allergic to an inactive ingredient found in an approved drug.

Some members truly need compound drugs. But spending on compound drugs has skyrocketed. In just a few years, compound drugs have gone from being an insignificant part of the drug spend picture to a multi-million dollar expense.2,3 Some question whether compound pharmacies are taking advantage of members – and payers.2

Meanwhile, safety and quality issues have surfaced. People have been sickened or injured from incorrectly measured compounds or contaminated ingredients.4 In 2012, an outbreak of fungal meningitis was tied to a compound drug that caused dozens of deaths.

Stepping up efforts to monitor quality and control costs

Health plans have clamped down on coverage, scrutinizing requests and tightening treatment guidelines. This has not completely stopped the compounding industry from testing reimbursement practices, but it has made a significant dent.2

Prime’s $25 million approach: manage costs while improving safety

Prime Therapeutics (Prime) offers strategies for managing compound drugs. By working together with you, our Blue Cross and Blue Shield (Blue) Plan owners and clients, we deliver both savings and safety.

Recently, one of our clients experienced a spike in costs for these drugs. Over a 10-month period, costs skyrocketed 400 percent, with monthly expenses climbing to $5 million.5 We created a strategy to better manage these costs and ensure access to safe, effective drugs for members. Together, Prime and this Blue Plan created a strategy to better manage these costs and ensure access to safe, effective drugs for members.

Our connected approach set this Blue Plan on the path to more than $25 million in savings.5

We started with a careful review of claims data to assess compound drug use and costs. Then, we created a two-part strategy:

1) A prior authorization program for compound ingredients

We created a list of targeted ingredients subject to prior authorization. This list consisted of 20 bulk chemicals that had not been reviewed or approved by the FDA.

2) Exclusion of bulk chemicals and pain patches

We implemented strategies over six months. We then continued to review reimbursement practices for high-cost bases and other ingredients.

This approach, coupled with other planned changes, will deliver approximately $25 million in annual savings. At the same time, these strategies help to improve member safety. Both safety and savings are achieved with very few disruptions in care.

Staying ahead of a moving target

There is no one-size-fits-all answer to managing compound drugs. That’s why we regularly observe practices and review claim risks specific to compounds as part of ongoing pharmacy audits. We also examine invoices from wholesalers to verify fulfillment accuracy during on-site and desk audits.

Above all, Prime’s integration with Blue Plans makes it easier to find and deliver opportunities for savings.

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1. FDA.  Compounding and the FDA. Accessed Nov. 17, 2015.

2. AIS Health. PBMs Strike Back at Compounded Drugs. Accessed Nov. 17, 2015.

3. “Rising Cost of Prescription Compounds.” Solid Benefit Guidance. July 24, 2014. Retrieved from

4. USA Today. Deaths, infections tied to 'compounding' drugs. Accessed Nov. 17, 2015.

5. Prime internal analysis, 2015, 3rd Quarter.

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