Health Care

Tricare to tighten compound drug coverage

The Defense Department on May 1 will begin putting the brakes on specialty drug prescriptions — a move Pentagon officials say will improve patient safety and could save the department money.

Tricare officials said March 12 that pharmacy contractor Express Scripts will begin screening every ingredient used in compounded medications to ensure that all substances in these custom prescriptions are approved by the Food and Drug Administration.

Those with approved ingredients will be covered by Tricare; those with unacceptable ingredients will need to be reformulated to include approved ingredients or will require prior approval to be covered.

Defense Health Agency officials said Wednesday that a new system implemented by Express Scripts allows the company to screen medication ingredients within seconds to determine whether they are FDA-approved.

By law, Tricare is prohibited from paying for unapproved procedures and medications, and since some compound medications use inert ingredients that don't require FDA approval, they are not supposed to be covered, officials said.

But the new screening tool allows Express Scripts to drill down into the formulations and, if all ingredients are FDA-approved, provide instantaneous coverage, said Dr. George Jones, Tricare's pharmacy chief.

"We have developed a process that leverages the technology as much as we can ... and developed a set of criteria to ensure the safety of our patients while also ensuring that Tricare can pay for the ingredients," Jones said.

Compound medications are specialized formulas created by pharmacists to tailor treatments for individual patients. Made from active and inert ingredients, they're often formulated for those who can't tolerate certain medications in their manufactured form — either to tweak a dosage, change the delivery (from a pill to a liquid, for example) or eliminate an allergen.

But the market for compound medications also has exploded in the past five years, mainly for the treatment of pain. Among the most popular — and pricey — medications are those that combine painkillers with creams to be used as topical ointments.

In the past decade alone, Tricare's annual costs for compound prescriptions has risen from $5 million to $514 million.

And in just the first two months of 2015, Tricare has paid $434 million for the medications, mainly for pain treatments.

Compound medications make up less than 0.5 percent of the total number of Tricare prescriptions but account for more than 20 percent of total pharmacy costs, according to defense officials.

DoD first tried to restrict coverage of these drugs in 2013 but pushback from advocacy groups and patients prompted Tricare leaders to table the decision until further studies were completed.

Defense officials said the decision was made then to comply with the law and protect beneficiaries.

In 2012, 64 people died nationwide from a fungal meningitis they contracted after receiving steroid injections produced by a large compound manufacturer, New England Compounding Center.

Jones noted that while those deaths were linked to contamination of a supposedly sterile medication during the manufacturing process, safety and effectiveness concerns remain for any ingredient that has not been vetted by the FDA.

"We were mainly ensuring that the products that we were paying for were safe," Jones said.

Also, he said, there is a growing sense that compound drugs no longer are being made based solely on individual need. Rather, many appear to be developed using standard recipes and formulas — and are being directly marketed in those formulas to beneficiaries.

According to Jones, a military treatment facility notified him this week that a representative for a compounding company was soliciting customers in the facility's pharmacy, and added that people also have been approached in commissaries and exchanges while shopping.

"Compounds by definition are supposed to be individualized therapy for an individual patient's needs," Jones said. "It's been difficult to believe that's what's truly going on when there are printed recipes and and standard formulas [being sold]."

According to Jones, roughly 29,000 patients with compound prescriptions will receive a letter this month from Tricare alerting them to the coming changes. They will be encouraged in the mailing to contact Express Scripts about their medications, Jones said.

He stressed that Tricare intends to still cover most compound drugs and will find ways to accommodate beneficiaries with their medications, whether it be reformulating the medicine, requesting prior authorization or appealing a denial.

Jones could not provide an estimate of how much the change would save the Pentagon's health budget, noting that many prescriptions will be reformulated with approved ingredients and still covered.

But the new system allows Express Scripts to negotiate prices of the FDA-approved ingredients with the manufacturers, so cost savings "will be realized," he said.

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