1. “The Rising Costs of Compounded
Drugs in Health Plans:
How Best to Manage Them”
March 1, 2016
John Grossomanides, R.Ph.
Pricewaterhouse Coopers, Manager H&W
2. Goals & Objectives
Identify the drugs which are increasing compound costs
Quantify the amount of cost seen in compounding drugs
Provide insight as to how appropriately control these high cost agents
2
3. Defining Compound Drugs
As Defined by The FDA…
“Compounding is a practice in which a licensed pharmacist, a
licensed physician, or, in the case of an outsourcing facility, a person
under the supervision of a licensed pharmacist, combines, mixes, or
alters ingredients of a drug to create a medication tailored to the needs
of an individual patient”1
1. http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCompounding
3
4. Characteristics of Compounded Drugs
May include sterile and nonsterile preparations
Made up of active and/or inactive ingredients.
The active ingredient or ingredients in a compounded drug may be one or
more FDA-approved products,
Or may be bulk drug substances. (Bulk drug substances—usually raw
powders—are generally not approved by FDA for marketing in the US)
Oral liquids(Suspension/Solutions), capsules, or cream/ointments
4
5. Examples of compound benefits:
Adjust strength or dosage – Captopril Solution
Flavor a medication
Reformulate the drug to exclude an unwanted, nonessential
ingredient
(e.g. gluten, or a dye to which a patient may be allergic)
Change the form of the medication i.e. if they have difficulty
swallowing
Fortified Prescriptions
5
6. WHY is compounding a concern
High Cost of the ingredients
Increasing Drug Trend
Changes in National Council for Prescription Drug Programs (NCPDP)
claims submission standards for compounded prescriptions
Number of NDCs in First Data Bank added for bulk drug substances
grew from less <500 in 2009 to almost 2500 in 2013
Safety
6
9. Health Plan Demographics
100% Commercial
170,000 lives
3 tier copay benefit design ( $10-$30-$50)
Open formulary
No exclusions of therapeutic classes
9
10. Top cost drivers compound drugs
Gabapentin powder
Fluticasone propionate powder
Micronized Progesterone
Tobramycin Sulfate
Inactive ingredients: Flavoring agents, bases, Ethoxy Diglycol
10Internal data on file, 2007-2015
11. Other High Cost Drugs used in compounds
Ketamine
Flurbiprofen
Lipoderm
Meloxicam
Bupivacaine
Mometasone
ALL USED TOPICALLY FOR PAIN
11
12. Example of a Compound Prescription
12
International Journal of Pharmaceutical Compounding Vol.11 No.3 May/June 2007
13. 13
Compound Cream vs. OTC product
Medrox Rx– Manufactured for: Pharmaceutica North America Package
size: 120 grams (4 oz.) tube NDC: 45861-0005-01
Methyl Salicylate - 20% Menthol - 5% Capsaicin - -0.035%
AWP: $3.125/gram or $375.00 for a 120 gram tube
Note: the percent is the number of grams of the active ingredient per 100
grams of inert cream/gel
Compare the actual production costs as quoted to a private label OTC
pharmaceutical manufacturer for a Medrox like product: $4.91
17. Cost Savings Strategies
Simply Exclude Compounds from coverage
Prior Authorization
Dollar threshold
Prior failure of commercially available formulations
Require supporting medical literature from peer review journal
Coverage rules for inactive ingredients/ customized formulary
Strict Off Label use policy
RESVERATROL Anti-inflammatory dietary supplement available in over-
the-counter (OTC) formulations; not an approved drug
17
