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By DAN REYNOLDS, senior editor of Risk & Insurance®

Compounding, the craft or art of mixing multiple medications into a cream or capsule, is described as a cottage industry that has its roots in California and has spread to such states as Colorado, Arizona and Texas. In many cases, compounds are being sold to and dispensed by physicians with little or no regulatory oversight.

As in any sausage-making process, whether it be collateralized debt obligations in the financial world or compounded pain killers, the risks for fraud, not to mention injury or death to the patient, whether that be in a workers' compensation case or some other setting, are high.

"Is it really the right thing?" asked Daryl Corr, the Tampa-based president of Healthesystems, a pharmacy benefit manager that works with risk managers to identify and control pharmacy treatments and costs.

"Because we have seen it in some cases where you really have to scratch your head whether it is fraudulent or not," said Corr.

According to Healthesystems, the following medications are high on the list of those most commonly found in compound medications.

-- Ketoprofen POW: a nonsteroidal anti-inflammatory drug (NSAID), commonly found in gel form

-- Cyclobenzapr POW HCL: a muscle relaxant

-- Diclofenac POW Sodium: a nonsteroidal anti-inflammatory drug

-- Gabapentin POW: an anti-seizure medication

-- Lidocaine POW HCL: a numbing agent

For one, tracking down the National Drug Code data for compound drugs for accurate pricing purposes is difficult because in many cases it isn't included within the prescription detail. Another issue is that the actual content may not be as labeled.

"Since there isn't any oversight of the compounds and the companies creating them, there is the question as to whether the drugs really contain what they are supposed to have. We have actually experienced some situations where, upon further analysis of the actual ingredients, this was the case," Corr said.

According to Healthesystems, the most commonly used narcotics in compounds are morphine, hydrocodone and oxycodone.

In the world of workers' compensation fraud, compounds containing the above opioids, even distributed by trained and licensed physicians and when compounded and sold by reputable, publicly traded pharmacy companies, create enough of a problem.

But what about compounds in the hands of salespeople or staff members in something along the lines of a plastic surgery outlet, a so-called medi-spa which may be operating under the remote oversight of a registered nurse or physician.

At October's annual conference of the American Society for Healthcare Risk Management, held in Denver, one presenter told the story of what can happen when a compound ends up in the wrong hands with little oversight.

Kathleen Johnson, the director of risk management for the St. Joseph Medical Center in Towson, Md., told the story of Shiri Berg, a 22-year-old North Carolina State student who sought the services of a medi-spa for laser hair removal on her legs.

A sales person, providing no printed consultation or use materials, handed Berg a tube of numbing cream created by a compounder and told her to apply it to her legs prior to treatment.

The compounded cream contained 10 percent Lidocaine and 10 percent Tetracaine. The unknowing college student went home to her apartment and applied the cream to the full length of her legs, wrapping them in cellophane for good measure.

As she drove back to the clinic for treatment, Berg slipped into convulsions and then a coma and died 10 days later. The cellophane had acted as a warming agent for the Lidocaine and the Tetracaine.

In the area of workers' comp fraud, it's multiple prescriptions for painkillers and how they can be abused by addicts that is at work. But all compounds, whether they be for cosmetic reasons, or for the control of pain, have created a much more complex world.

"With some of it, there really isn't anyone policing the store, and you have some mom-and-pop-type compounding business creating these drugs where the laws are pretty loose regarding whether anyone is required to review the drugs before they go out the door," Corr said.

December 1, 2009

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