Tricare spends $259 million a year on medications it is not obligated to cover and should align its policies on compounded medications with existing regulations or change those rules, a federal watchdog agency says.
The Defense Department health program paid for 465,000 compounded medications in 2013, about one-third of 1 percent of all prescriptions covered by Tricare for the year, at a cost 50 times higher than it spent on compounded medications in 2004.
According to the Government Accountability Office, the benefit — used largely by retirees and their family members, who filled more than 85 percent of all Tricare compounded prescriptions last year — is more generous than coverage for these prescriptions under either Medicare or the Veterans Affairs Department health system, and offers a prime opportunity for cost-savings.
Compounded medications are prescriptions formulated by pharmacists that usually combine an FDA-approved pharmaceutical with bulk ingredients — powders, creams or liquids — designed to meet an individual patient's needs, either by altering a dosage, eliminating an allergen or changing the medication's delivery method.
Tricare announced in July 2013 that it would stop covering any compounded prescriptions containing ingredients not approved by the Food and Drug Administration.
Tricare officials said they made the decision out of concern for patient safety — in 2012, 64 people died after receiving contaminated steroid injections compounded at a facility in Massachusetts — as well as legal restrictions that keep the military health system from paying for prescriptions containing unapproved ingredients.
But the decision caused an uproar among Tricare beneficiaries who use compounded medications, prompting Congress to order a GAO analysis of the program.
In a report released earlier this month, GAO found that Tricare's coverage for these prescriptions skirts DoD's own regulations and contributes to rising costs.
"Although compounded drugs account for only a small percentage of the drugs dispensed to Tricare beneficiaries in pharmacy settings, their costs have increased significantly over the past ten years ... notably higher than Tricare's overall increase in drug costs," GAO analysts found.
"We recommend the Secretary of Defense align Tricare's payment practices for compounded drugs with applicable regulations governing the Tricare program. This may include considering whether to amend Tricare regulations to explicitly allow payment for some or all bulk drug substances in compounded drugs."
According to the GAO, all of the top 25 most expensive compounded prescriptions issued to Tricare beneficiaries at retail pharmacies in 2013 were topical medications, and most were pain medications.
The compounded medication at the top of the list was a combination of the pain medications ketamine and lidocaine with an anti-inflammatory and antidepressant and bulk ingredients, issued for 721 prescriptions at a cost of nearly $5.3 million.
The average cost per prescription of the medications in the top 25 ranged from $848 to $9,961.
In an interview with Military Times earlier this year, Rob Gussenhoven, chief science officer at DermaTran, a company that makes prescription pain creams for patients, including 2,000 Tricare prescriptions, said that cutting reimbursements for compounded medications could save DoD money but also might cause more problems for patients.
He said topical medications like the ones compounded by his company — and those determined by the GAO to be among the priciest compounded medications — often keep patients from taking other addictive and dangerous pain medications.
"It's the wrong time to restrict access to compounded medications," Gussenhoven said. "In addition to overdoses and deaths, opioid [painkillers] can ... disrupt the neuroendocrine system, reduce testosterone production, magnify pain and depression and lead to suicide ideation."
In a written response to the GAO report, Assistant Secretary of Defense for Health Affairs Dr. Jonathan Woodson said DoD health officials are monitoring the FDA's changing regulations regarding compounded medications and will take into account any decisions made by the FDA regarding compound medication rules.
Woodson also noted that the proposed fiscal 2015 defense authorization bill includes a provision that would allow DoD to provide coverage of these compounds, and if approved, "may shape DoD's approach to compounded drugs."
Patricia Kime is a senior writer covering military and veterans health care, medicine and personnel issues.
