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Just how dangerous is compounding?

Way more dangerous than we’ve been led to believe by compounding pharmacies and their supporters. A report in the Washington Post by two investigative journalists highlights shoddy practices and unsanitary conditions at three pharmacies that have sickened and killed patients.

Unfortunately compounding is a growing phenomenon, especially in workers’ comp.  Research from CWCI and other sources indicate that despite the lack of any evidence-based research justifying widespread use, compound meds are becoming a larger part of pharmacy spend.  Fortunately, we can observe what’s happened in California to forecast the future for compounding in other states.

California recently tried to address the issue thru bill AB 378, which specifically focused on the ingredient cost; the net? the number of scripts dropped 35% (from 3.1% of all scripts to 2%)…however the cost per script zoomed.  Compounds now account for one out of every eight dollars spent on drugs…

(see CWCI’s February 2013 report for details on what happened and why)

In his blog, David DePaolo reported on a criminal case involving payments to physicians for prescribing compounds;

“The complaint, filed by the owners of a medical billing company in the U.S. District Court in New Hampshire, alleges that Cyrus Sorat is a part owner of Health Care Pharmacy and Deutsche Medical Services in Tustin, Calif., and paid 208 doctors to prescribe compound drugs to injured workers needing topical analgesics. Sorat promised to pay the doctors an unreported fee for each prescription they wrote, and also agreed to handle billing and recover receivables on behalf of the physicians, according to the complaint.”

While cases such as these are unusual, the increased use of compounds, and specifically the changes in the compound drugs dispensed are clearly intended to maximize reimbursement.

Make no mistake – this isn’t about patient care or return to work or excellent medicine, it is about enriching a few at the expense of employers and taxpayers, while not caring one whit about possible patient safety issues.

Workers’ comp – the last refuge of scoundrels and charlatans.  Again.




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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.



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