Should health insurance pay for compounded medications?

Former President Ronald Reagan once quipped that the nine most terrifying words in the English language are: “I’m from the government, and I’m here to help.” Today, it seems like we could exchange the words “the government” with “your insurance” with exactly the same sentiment, and we wouldn’t be far off.

The latest development in the insurance industry is the controversy initiated by Express Scripts through their denial of claims from compounding pharmacies for customized compounded medication. In a story covered by Bloomberg Businessweek and other news sources, it was revealed that three compounding pharmacies have entered a lawsuit against the PBM giant that insures upwards of 90 million lives over their refusal to pay for legally ordered compounded medications.

For those not otherwise familiar with the industry, a compounded medication is a custom formulation of ingredients ordered by a legitimate physician to treat a covered patient when a commercially-available form of those ingredients is not otherwise available. A compounded medication may be for a unique dosage form, unique combination of ingredients or unique strength of a medication. Estimates suggest that 30 to 40 million prescriptions for compounded medications are dispensed each year.

The practice of compounding prescriptions has been under additional scrutiny since 2012. But this latest maneuver by Express Scripts has nothing to do with the safety of compounded medications, but solely with the additional costs involved in their preparation.

According to an Express Scripts statement related to this case, “The cost associated with compounding medications has skyrocketed over the past two years. Clients spent $28 million on such drugs in the first quarter of 2012 and $171 million during the same period this year.”

The seemingly gratuitous decision to not pay for compounded medications amounts to a relinquishing of their responsibility as an insurer.

While they have the right to institute the same sort of cost-saving strategies used with traditional medications such as prior approvals and step therapies, the decision to simply not pay for any such formulations isn’t right. It fails to appreciate that compounding plays an important role in the delivery of traditional medications for patients with unique needs that can’t be met through currently available products.

My advice to Express Scripts is this: If you really don’t want to pay for compounded medications, maybe you need to get into another industry. Maybe car insurance or life insurance would be a better gig for you.

Or maybe insuring people is just too risky altogether, and you should transform your business into something easier like selling bird seed or silly putty. Leave prescriptions insurance to those who understand that healthcare is complex and people are not cookie-cutter creations whose diseases cannot always be cured with a “one size fits all” approach.

I’m not a “compounding pharmacist” per se. Compounding has never been the bread and butter of any pharmacy business I have managed. Nevertheless, I appreciate the work being done by conscientious pharmacists and pharmacy technicians to make customized medication solutions for patients who need them.

Yes, we can debate the necessity of certain compounded formulations and their benefit over currently available products. So what? We can have the same debate over hundreds of legitimately approved prescription drugs as well, which arguably offer little or no improvement over less expensive alternatives.

That isn’t the point. The point is that compounded preparations are frequently the only effective approach for certain patients and age groups, and refusing to cover such treatments makes about as much since as refusing to cover certain diseases because they are expensive, too.

Have there been AWP scams and unscrupulous providers overcharging for their services? Of course. That happens in every industry, and health plans need to address this by normal cost-control mechanisms, not wholesale elimination of coverage for this important category of medications.

With respect to this issue, I think Express Scripts needs to change their policy quickly. Otherwise many more patients will be hearing three disturbing and terrifying words: “Sorry, not covered.”

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About the Author

Jason Poquette

Jason Poquette, BPharm, R.Ph., earned his pharmaceutical degree from the University of Connecticut in 1993. In addition to his 20 years of practice, Jason writes his own blog, The Honest Apothecary, a pharmaceutical news and information site dedicated both to patients and to fellow pharmacists.

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