With its new rule requiring preauthorization of compound prescription drugs, Texas has become the latest state to attempt to curb the unnecessary use of compound drugs in workers’ compensation. The Texas Division of Workers’ Compensation (DWC) drafted the rule to stop prescribers from continuing to exploit a loophole in the state workers’ compensation drug formulary, one which allowed compound prescriptions to be filled without first obtaining preauthorization to confirm medical necessity for the injured worker. Largely because of prescriber misuse, the DWC experienced a 46.4% increase in compound prescriptions from 2010 through 2014. The total cost of compound medications more than doubled and the average per prescription cost rose from $356 to $829 in the same period.

Similar findings in other states are starting to drive lawmakers to address the problem. Arkansas and New York will introduce state-mandated pharmacy formularies in 2018 with requirements that prescribers demonstrate the medical necessity of a compound before it is dispensed. Likewise, California and the federal government are addressing preauthorization because they are seeing compound medications driving increased medical cost while delivering no significant value for injured worker care.

Compounding pharmacies have been tied to everything from state and federal fraud investigations to the tragic deaths of patients where appropriate safety standards were not mandated. While the active medication ingredients of a compound medication undergo traditional Food and Drug Administration (FDA) testing, there is no FDA testing or approval process to measure the safety or appropriateness of those ingredients once they have been compounded. Often, compounded drugs are prescribed as costly topical creams, despite lacking evidence to support any benefit or effective absorption of these treatments. Adding a preauthorization requirement, reliant on systematic use of evidence-based treatment guidelines, keeps costly and unnecessary compound drugs out of the system.

When a request for a compound medication is received by a utilization review (UR) nurse or a telephonic case manager providing UR, the clinician evaluates related medical records, the medications sought to be dispensed via the compounded medication and the medical necessity of each ingredient. According to FDA findings, the benefit of a compound medication is only evident in limited circumstances like the inability to ingest/digest ingredients or a medication allergy to a commercial formulation. Ingredient-level review is needed for a sound evaluation of whether the injured worker will benefit. The treatment of these injuries is in no way inhibited by the simple requirement of evaluation.

Expect to see more legislative activity to strengthen oversight of compound medications. Legislation – and mandated preauthorization – helps us take another step in the nationwide effort to address health safety threats and rising cost affiliated with prescription drugs. As preauthorization rules are implemented, all parties should benefit from improved quality of medical treatment, increased collaboration between doctors, pharmacists and UR teams, additional clarity and efficiency in prescribing practices and, ultimately, a more effective path toward return to work for injured employees.

Don Lipsy, Managed Care Specialty Products Manager

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