CWCI: Compound drugs are more potent, costly

There are fewer prescriptions for compound drugs in the California workers' comp system these days. Nevertheless, payers are shelling out more money for them, according to a report by the California Workers' Compensation Institute.

The study focuses on the effect of legislative reforms intended to control the increase in prescriptions and costs of compounded pharmaceutical products in the state's workers' comp system.

"Compound drugs are created by combining, mixing, or altering two or more ingredients into a customized medication for an individual patient in response to a licensed practitioner's prescription," according to the CWCI report. "There is little evidence from clinical trials to support the use of many of the compound drugs dispensed to injured workers."

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The drugs are outside the jurisdiction of the federal Food and Drug Administration. Instead, they are regulated through Boards of Pharmacy within each state. In California, the Code of Regulations guides the production, distribution, and pricing of them.

Questions about the safety and efficacy of compound drugs have been raised in recent years, especially with last year's outbreak of fungal meningitis associated with compound drugs and other products from a Massachusetts company. Tests by the Centers for Disease Control and Prevention and the FDA determined there was bacterial and/or fungal contamination in unopened vials of products distributed by the facility. As of January, "678 people in 19 states who had been exposed to preservative-free methylprednisolone acetate injections linked to one of three lots produced by the New England Compounding Center had contracted meningitis and 44 had died," the research states.

While compound drugs outside the workers' comp system are often used as hormone replacement, dermatology, or formulations for children who can't swallow pills, "most of the compounded drugs in the California workers' comp system are pain management medications delivered through topical creams."

California's A.B. 378 attempted to stem the increased use of compound drugs in the workers' comp system by implementing unit price controls. The CWCI researchers measured and compared the volume of compounding drugs prescribed and the amounts reimbursed for them for the first half of 2011 and the first half of 2012, after the legislation became effective.

"It is arguable that the results of this study suggest that the potential savings intended by AB 378's unit price controls on compounded drugs were quickly offset through adjustments in the count and volume of compound drug ingredients as well as the use of higher priced components," the researchers said. "The changes in the utilization and cost of compound drugs associated with the implementation of AB 378 point to a mixed bag of statutory and administrative successes and remaining challenges."

On the plus side, compounded drugs declined from 3.1 percent to 2.0 percent of California workers' comp prescriptions after the implementation of the legislation. In a sample of 586,575 prescriptions analyzed by CWCI and PMSI, the researchers found the relative decline of 36.7 percent.

At the same time, "the percentage of workers' comp prescription dollars used to pay for compounded drugs continued to grow, increasing from 11.6 percent of the payments in the 2011 sample to 12.6 percent of the payments in the 2012 sample," the report says.

The researchers cited the following reasons for the cost increase:

The average amount paid for compounded drug prescriptions increased 68.2 percent, from $460.42 to $774.21. That, despite the fact that the average amount paid for workers' comp prescriptions for non-compounded drugs fell 4.6 percent, from $112.78 to $107.61.
The average number of ingredients per compounded prescription increased from 3.4 to 3.8, representing a 13.1 percent increase.
The average amount paid per ingredient increased 48.7 percent, from $135.63 to $201.67.
The average quantity per ingredient increased 25.5 percent even though the average days' supply fell slightly, suggesting the potency of compounded drugs increased significantly.

Read more at the WorkersComp Forum homepage.

March 11, 2013

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