Be Wary of Compound Medications In Workers Compensation

Compound drugs have come under great scrutiny due to their increase in utilization, their safety issues, as well as the significantly higher cost associated with these drugs.  It is a relatively small subset of the pharmacy spend in workers compensation at 2.7%, but it is the fastest growing and most expensive segment. According to the 2013 Express Scripts Drug Trend Report, the per-user-per-year cost increased 126% from 2012 to 2013.  This is a growing problem that warrants your attention and understanding of the challenges and solutions.



What Are Compound Drugs?


Compound drugs are often seen as the answer when a patient fails to respond to standard marketed drugs and dosages.  One size drug does not always meet every patient’s need. Infants, small children, elderly persons, and people with allergies, are a few examples where compound drugs may play a role in treatment. Little relief from symptomology, need for dosage variation, and drug form (liquid vs pill) are several more reasons for compounding.


The U.S. Food and Drug Administration (FDA) does not know the total number of compounding pharmacies in the United States.  Compounds are made from combinations of regulated and/or over the counter drugs.  These may be prepared from standard drug recipes from multiple recipe reference sources that pharmacists use.  The pharmacist does review safety for patient usage.


Medical Providers will turn to compound prescribing when they do not obtain the treatment results from standard market drugs.



Compound Medication Issues:


  1. For payers, the greatest issue with compound drugs is their expense. Their cost can be as much as double the standard market drug cost.
  2. Most states do regulate compound drugs. They generally abide by standards set in the United States Pharmacopeia. Few if any, have their own regulatory departments or oversight units.
  3. The US Food & Drug Administration does little to no regulation of compound drugs.
  4. There is still concern as to the necessity and results of their use. Some studies have shown that there is little to no clinical evidence that they were more effective than standard drugs.
  5. Compounding medications can allow for collusion, excess cost, and possible fraud.
  6. Unexpected side effects can lead to risks and exposures up to the life of the employee. There may be addiction, or even risk of fatality.
  7. The medical provider and pharmacist might have some legal responsibility in the event of usage failures or unexpected side effects. They may have the defense of professional judgment. This legal protection is difficult to overcome in order to prove negligence and liability.
  8. Few claim technicians are fully equipped or experienced enough to allow, understand, monitor, and control the use of compound drugs.
  9. Few risk managers are schooled enough to institute and control a compound drug program for the self-insured employer.




Compound Medication Positives:



Compounds may be tailored to the individual to avoid allergic reactions, when a commercially-available strength is not available or if a different form is proven necessary.


  1. Dosage and length of use can be tailored to need rather than standards set by market place drugs.
  2. Compound medications may offer another possible solution if desired results are not achieved using commercially available alternatives.



Employer Solutions:


Compound drugs can be medically necessary and produce positive results, but the high cost and safety concerns associated with these drugs warrants the employer to look for solutions.



Intervention Flexibility


A best practice in a pharmacy benefits management relationship is the ability to intervene at both the point of sale, as well as retrospectively.  Employers should put controls in place to require prior authorization or review prior to the compound being dispensed.


Retrospectively there needs to be communication with the physicians prescribing these medications to justify the medical necessity.  Prescribers that are held accountable to these results are deterred from non-essential use.  Patients also need to be educated on compound medications when they are prescribed so that they can make informed decisions.


With the right information at the right time, the employer is in control.






Compound drug usage in workers compensation claims could have positive results, but these results may be coming at unnecessary expense.  Thorough review and strong control is a must when considering or instituting a Compound Drug Program.





Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  Contact:


©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.





SUBSCRIBE: Workers Comp Resource Center Newsletter


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.



Speak Your Mind


Professional Development Resource

Learn How to Reduce Workers Comp Costs 20% to 50%"Workers Compensation Management Program: Reduce Costs 20% to 50%"
Lower your workers compensation expense by using the
guidebook from Advisen and the Workers Comp Resource Center.
Perfect for promotional distribution by brokers and agents!
Learn More

Please don't print this Website

Unnecessary printing not only means unnecessary cost of paper and inks, but also avoidable environmental impact on producing and shipping these supplies. Reducing printing can make a small but a significant impact.

Instead use the PDF download option, provided on the page you tried to print.

Powered by "Unprintable Blog" for Wordpress -