MSP Compliance Blog


Expert summary, analysis and recommendations on issues impacting Medicare Secondary Payer compliance.

The FDA Focuses New Attention on Compounding Pharmacies

Posted on April 17, 2013 by Rita Wilson

According to an article released by NBC News on April 11, 2013, the FDA posted reports on its web site for 28 of 31 compounding pharmacies it inspected between February and April listing a raft of violations ranging from inappropriate clothing for sterile drug processing to insufficient testing for contaminants.

The release of the inspection reports comes five days before a congressional hearing into the meningitis outbreak traced to the Framingham, Massachusetts-based New England Compounding Center (NECC) that killed more than 50 people and sickened hundreds. The hearing, by the House Committee on Energy and Commerce, will be the second held on the matter.

In November, the FDA’s commissioner, Dr. Margaret Hamburg, testified before the same committee that ambiguities in the law had inhibited its ability to take aggressive enforcement action against compounding pharmacies, which are mostly regulated by the states. Republican lawmakers argued that the agency has plenty of authority but failed to use it in a way that could have prevented the meningitis outbreak.

In my post on December 13, 2012, I summarized the first hearing held by the House Committee on Energy and Commerce noting that in follow up the committee sent letters to the board of pharmacy for all 50 states making specific points regarding their responsibility to regulate compounding pharmacies and asking for a response from each by December 7, 2012.  If responses were submitted, they were neither published nor acknowledged by the committee.  Now, it appears that the FDA is back in the hot seat, being challenged on its lack of action.

On Thursday a group of Democratic lawmakers urged the Committee in a letter to invite the head of the International Academy of Compounding Pharmacists (IACP), an industry association, to testify at Tuesday’s hearing.  The letter specifically noted Internal IACP documents provided to the Committee reveal that for almost two decades, the organization lobbied aggressively and successfully to restrict FDA authority over compounding pharmacies, even when top IACP leaders were aware of significant public health risks from compounding.”

Last month the IACP wrote to members of the Senate Committee on Health, Education, Labor and Pensions in a bid to head off any attempt to allow the FDA to determine whether a firm should be classed as a compounding pharmacy and which pharmaceuticals company. That authority, the letter said, “should and must remain exclusively” with the states.

Both the FDA and the state boards of pharmacy have done a great job of dodging the bullet thus far.  Unfortunately, however, it is the patient who suffers.  And in the case of a workers’ compensation case, the payer as well.   Compounds represent one of the most dangerous and fraudulent forms of medication dispensing. That being said, compounds can also be extremely beneficial when medically necessary, and in the right environment of audits and controls.

Compounds are difficult to analyze value and benefit. As such, they are never indicated for pain management in Evidence Based Medical (EBM) guidelines such as the Official Disabilities Guidelines (ODG).

While there are exceptions, as a general rule compounds should never be authorized and/or covered without consideration of the following intervention strategies:

  1. If Utilization Review (UR) is a part of the state regulatory landscape, compounds should be sent through UR before being authorized for fill the first time.
  2. If the UR reviewer deems the compound to be unnecessary, immediately direct your PBM to exclude it from the patient’s formulary.
  3. If UR isn’t an alternative, escalate the authorization request to a nurse, clinician or physician to request a determination of  necessity and appropriateness based on the state’s designated treatment guidelines.
  4. As an example, for states that follow ODG, compounds would be indicated as necessary and appropriate ONLY in the following situations:
    1. An indicated first line therapy was tried and failed,
    2. The patient has an allergy to an inactive ingredient of a more traditional form of a medication.

At the claim level, we cannot protect our patients against every danger, clinical oversight and scam artist seeking to benefit financially from the workers’ compensation system.  By consistently following the guidelines available, however, and encouraging more states to implement treatment guidelines like ODG, we can better position our companies and our patients to achieve the best in care, cost and compliance.