Bulk pharmaceutical ingredients increasingly used by compounding pharmacies have seen astronomical price hikes over the past two years and now payers are catching on to the trend and stepping in.
Since 2012, 117 individual bulk ingredients have seen price increases in excess of 100%, and 13 ingredients have seen price increases in excess of 1,000%. The ingredient gabapentin, for instance, which is used to treat certain types of seizures, has seen its price rise anywhere from 645% to 3156%, depending on the manufacturer. The pain reliever diclofenac sodium, meanwhile, has seen its price jump more than 1500% by three different manufacturers since 2012.
“Compounding pharmacies have exploited a loophole the past few years to charge hundreds or thousands of dollars per gram of bulk powder or cream,” David Whitrap, spokesman for Express Scripts, told in-Pharmatechnologist.com. “There are absolutely some instances where a specifically compounded medication is clinically necessary for a patient. But, by and large, compounded medications do not provide any additional clinical value over numerous FDA-approved prescription or over-the-counter alternatives that patients can take.”
In Q1 2012, Express Scripts clients spent about $28m on compounded medications, while in the same quarter this year they spent $171m because of the price increases.
The company has since decided to eliminate about 1,000 bulk ingredients that either have less-expensive, clinically-equivalent, FDA-approved options, or that have no clinical evidence for their use whatsoever, Whitrap told us. “We will take these actions while ensuring there is a pathway for patients who clinically need compounds to get these compounds as covered by their plan.”
He added that the elimination of these ingredients will lower the treatment costs for employers by 95%, affecting just 0.6% of our member population, and some have even begun plans “to implement this program as early as this week.”
Optum Rx, a benefits manager that’s part of United Health Group, CVS Caremark and the Catamaran pharmacy benefits manager have also started placing restrictions on coverage, according to the Wall Street Journal .
The Journal also notes that the price hikes from 2012 to now also came as a result of how claims are submitted by payers. In 2012 the National Council on Prescription Drug Programs, which sets standards for billing practices, allowed compounding pharmacies to bill for all ingredients, as opposed to only on the most expensive ingredient.
The change was meant to more accurately reflect the costs of the ingredients, though in some cases, ingredients suppliers now had an opportunity to charge higher prices for all ingredients.