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Compound medications – a killer scam

Compound drug use is exploding – so much so that Texas has changed their employee benefits program to limit reimbursement to $300.  They didn’t have much choice, as the Texas Employees’ Retirement System’s compound drug costs have gone up 4,600% over five years.

That was not a typo.

They’re now requiring prior auth and ONLY covering FDA approved drugs.

The only thing that may potentially slow down the growth is bad news – and that was delivered in spades last week with the news that a coroner’s report found the infant died after ingesting a topical pain cream.  After sustaining injuries at work, the baby’s mother, Priscilla Lujan, applied some of the cream to her knee and back, made a baby bottle, and some of the substance got on the nipple.  The story was broken by Karen Foshay of KPCC; Foshay reported the cream contained the

“antidepressant amitriptyline, the pain reliever tramadol and the cough suppressant dextromethorphan…

Workers’ compensation records show Jarminski’s office billed $1,700 for the initial 25-day supply of the cream. That is much more than the prices of various mass-produced medications, asserted McCann.

Jarminski [the mother’s physician] was informed the cream was linked to Lujan’s son’s death but, according to McCann, that didn’t stop the doctor from sending more creams.

“Priscilla had expressed she didn’t want to see that cream anymore or use it anymore,” McCann said. “Despite that they continued to send her more creams by mail and bill workers’ comp for it.”

McCann said at least two to four more tubes of cream were sent to Lujan after her son’s death. It’s unclear how much Jarminski billed in workers’ compensation claims for those additional tubes.

As horrible as this is, this baby’s death may protect others from this deadly scam. The press is all over this, medical malpractice insurers are undoubtedly quite concerned, and law enforcement is getting more engaged.

While one would hope the mother’s doctor prescribed this medication solely for health reasons, the prescribing physician was one of those indicted in the California compound drug case.

Of course, the compounders have hired a PR firm to try to convince us with BS that which they can’t validate with science – and even started an astroturf group to “fight for patients rights”.  Like the right to have tubes of deadly cream lying around…

UPDATE From a colleague’s email –

One strategy that seems to work well in Texas is to approach every compound as Experimental and Investigational and require prior authorization for ALL. The Texas WC UR rules appear to allow for that approach since essentially none of the compounds has gone through specific FDA approval. Without high quality (or essentially any) studies to support their use compounds can only be viewed as E&I in Texas.

At least one large carrier I know of is approaching compounds this way in Texas and other jurisdictions.

For those interested in the current state of research into compounds and workers’ comp, CompPharma’s research paper can be downloaded here.

What does this mean for you?

DO NOT approve compounds without proof of medical necessity and safety.

6 thoughts on “Compound medications – a killer scam”

  1. I would like to know what did the claims processing company do or not do from the outset to question the “medical necessity” for the compound and/or the appropriateness of the billed charge. It so curious that such an outrageous scam – which I believe you are describing – could get pass the claims processor.

    1. Ralph: It is not at all uncommon for the compound to be provided to the claimant without any pre-authorization request made to the adjuster. We encountered a case recently in which the claimant was provided a $26,000 compound medication at the initial office visit without any request for pre-authorization. We expect a lot of adjusters but it’s pretty difficult to fault the adjuster in that scenario.

  2. Sad article and there are probably other instances we don’t even hear about. What I cant seem to wrap my arms around is how our profession can reign this in. What I see daily in my current role is at times so excessive and has our clients screaming for answers. I’m just not sure blocking it is the way to go for those patients who do get relief from it, or are able to return to work/ daily life because of that handful 9 (or bucketful) of bad eggs trying to get the cash and run. Its really a shame.

  3. As an injured worker who received those creams in the mail one day I can tell you those creams had no directions, no warnings and did not state what was even in them. 3 or 4 were sent. I called the pharmacy number they came from and was told to layer them. I tried layering them and also tried using them alone. The relief is minor numbing on the top of the skin from what I felt. Not worth using it. I told them to stop sending the creams and a year later, they would be sent again. The problem I have with these creams is they did not come with any directions, warnings or what was in them. I have read a lot of people bashing the mother. I have to say as a patient, I would have never guess they were so dangerous. The prescribing doctor never told me these creams were coming in the mail, or anything about them either. I wish I would have known what was in these creams as I would have never used them. I assure you other patients feel the same.

  4. Scam?? Hardly. My doctor prescribed me a cream, and I no longer need my oral muscle relaxant or my oral anti-inflammatory capsule to control my pain/swelling. It worked well for me.
    I’m sure there are isolated incidents which people have experienced, but the same can happen with any drug/doctor/product, etc.
    How about getting some real data (not one isolated story) next time and your story may be more credible.

    1. Stan – thanks for the comment.

      I’d suggest you re-read the post, and also search for other posts on compounds. You will note that CompPharma has produced the first detailed research report on compounds in worker’s compensation, a robust analysis of the science and state of the industry.

      I’m glad the compound worked for you. Next question – what did it cost? And is that cost justifiable? IF you had to pay for it, would you?

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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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