Insight, analysis & opinion from Joe Paduda


Killing compounds and workers comp – UPDATE

Update – this morning we find out that only two states – MO and TX – test compounded drugs, and their findings are alarming indeed.  The strength of the potions concocted by compounders can vary greatly, with Texas determining a quarter of the compounds they tested were “too weak or too strong” and MO finding the potency is as much as three times higher than the compound was supposed to be.

Although the FDA’s ability to regulate compounders is very limited, the agency studied compounds produced by12 different pharmacies a decade ago; a third of the products failed one or more standard quality tests.  Another test in 2006 found the same results.

According to the NYTimes, the “International Academy of Compounding Pharmacists suggested that [compounding pharmacists] respond to any request for samples by saying, “We do not compound or distribute ‘samples’ of any of our prescription medications to anyone.” And if a compounded drug was on the premises, the trade group added, a pharmacist should say it was awaiting pickup by a patient…the memo is emblematic of the industry’s frequent and often successful attempts to fend off regulators at a time when concerns are growing about the quality of compounded drugs and the uncertain provenance of their ingredients, some of which originate in China [emphasis added] and flow through various repackagers and middlemen with little scrutiny, according to interviews with health experts and government records.”

Original post – When will we hear of the first workers comp claimant to die from a faulty compounded drug?  Has it happened already?

This isn’t hyperbole – compounded drugs have blinded victims and killed before – a  young woman using a topical anesthetic, a patient treated for pain, nine deaths from defective solutions produced by an Alabama compounder, and the most recent  – and worst – outbreak of meningitis.

In all, there have been at least 200 “adverse events” involving 71 compounded products over the last twenty years. Yet lax – or non-existent – regulation continues to this day.  Compounding pharmacies are regulated (for the most part) by the states.  The reality is many states are poorly equipped to deal with the issue, and many states really don’t do much to regulate/monitor/enforce regulations related to compounding pharmacies.

This from Michael Cohen, an expert on the issue:

Compounding pharmacies should be testing and monitoring the environment in which products are compounded, training and closely supervising staff, adhering to the recognized standards for compounding safety that were formulated by the United States Pharmacopeia (in Chapter <797> of the USP) and detecting process deviations before they cause harm. Yet, an analysis of recent cases of contamination of products from compounding pharmacies that have led to adverse health outcomes revealed that breaches of standards, unsafe staff behaviors, untrained and unskilled personnel, improper use of equipment, extended beyond use dating outside of manufacturer labeling without sufficient testing, and/or a general lack of good compounding skills had been involved in almost all cases.Without federal oversight and/or greatly improved state oversight of compounding pharmacies, patients will continue to be harmed.

So…why aren’t the Feds more involved?

Glad you asked.  Turns out there have been repeated efforts to increase oversight of compounding pharmacies, however they have been stymied by effective lobbying from, among other groups, the International Academy of Compounding Pharmacists.

The IACP claims “compounded medicines are a critical part of modern, individualized health care and provides them the necessary tools to ensure that access to personalized medication solutions remains possible.”, yet they’ve been instrumental in successfully blocking federal regulation of “mass-compounding” thru an effective lobbying campaign involving Congress.

While compounding advocates talk about the need for individual, customized medicine, they lobby to prevent oversight of what are really drug manufacturers masquerading as compounders.

The result is now evident – 23 dead patients, and more may be coming.

For workers comp, the implications are clear. The drug produced by NECC is used in treating back pain via epidural steroid injection, an all-too-common procedure in comp.  As of now, there are 281 infected patients, and with an incubation period of up to six months, many thousands of patients agonizing over their potential fate.

What does this mean for you?

If you are a workers comp payer,

  1. Figure out if any of your claimants may be at risk.  The list of affected facilities is here.
  2. Search for the facility name in your medical bill data, along with the CPT codes associated with ESI.
  3. Identify any claimants that may have been affected, and get your medical director and nurse case managers involved.
  4. Get your subro folks involved.
  5. Oh, and tell your Governmental Affairs people to ask Congress to fix the oversight problem.  Unless you want to repeat this process again.

3 thoughts on “Killing compounds and workers comp – UPDATE”

  1. Joe– The Feds take the position of compounding as a state issue since it is a “practice of pharmacy” and leave it up to them (states) to regulate. Therefore, the State Boards of Pharmacy must do a better job of regulating and investigating compounding pharmacies to ensure cGMP practices are followed as well as licensed professionals are actually the ones compounding the medications. I suspect we will hear of more specialty pharmacy closures due to increased pressure on the boards to actually go in and inspect the pharmacies.

    As a practicing pharmacist for 20 years, it is interesting to me that the profession is going back to its roots by compounding medications in lieu of commercially available products. As we know in WC, if there is money to be made, it will be done and you will pay for it.

  2. Joe – Great article! The clinical, operational, logistical and professional oversights that led to this outbreak are almost unfathomable! Glad to see you bring it full circle and address the crisis from a ‘go forward’ strategy for those who may be directly impacted.

    Coincidentally, I was looking at the issue of compounds from the perspective of pre-settlement intervention strategies in preparation for the MSA just before the outbreak and was amazed to see how compounds seem to ‘pass’ through the workers’ compensation system so easily. My article encouraging claim level interventions can be found at

    Hope to see the fight continue!

Leave a Reply

Your email address will not be published. Required fields are marked *

Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



© Joe Paduda 2018. We encourage links to any material on this page. Fair use excerpts of material written by Joe Paduda may be used with attribution to Joe Paduda, Managed Care Matters.

Note: Some material on this page may be excerpted from other sources. In such cases, copyright is retained by the respective authors of those sources.