More friction for the compounding pharmacy business

Pharmacies sue PBMs for restraint of trade, while payers question their activities

Pharmacy compounding starts with a profound historical tradition—individual pharmacists composing medicinal formulations tailored to individual patients—but as practiced today, it keeps banging into the modern healthcare practices of FDA oversight, friction with innovator drug companies, and skepticism from payers. One of the latest disputes, as reported last week at the Pharmalot blog, is a lawsuit filed by several compounding pharmacies against Express Scripts and, by implication, other pharmacy benefit managers (PBMs) charging antitrust activity. Express Scripts has been intervening in the prescription fulfillment process by not reimbursing some compounded prescriptions for some patients; the lawsuit charges that “tens of millions of dollars” of revenue has been forgone. That suit, filed in federal court in St. Louis, follows others that were filed in 2014.

It’s not clear whether the two actions are related, but over 2015, the US Dept. of Defense, insurer of the Tricare prescription program for veterans, has been in negotiations with its PBM (which happens to be Express Scripts) and healthcare providers over the exploding cost of compounded pharmaceuticals it has been reimbursing. Press reports indicate that some compounding pharmacies have active telemarketing campaigns offering compounded products to veterans; there have also been federal false-claims settlements over improperly dispensed compounded prescriptions. Tricare’s spending on compounded drugs zoomed over tenfold, to $1.75 billion in FY2015 from FY2012, according to a Wall St. Journal article.

While these disputes play out in the courts, the industry is gradually lifting the cloud it has been under since the 2012 meningitis outbreak, traced to a now-defunct compounding pharmacy, New England Compounding Center, which led to dozens of deaths. FDA is now administering a program under which some compounding pharmacies undergo FDA inspections comparable to drug manufacturers. And an uneasy truce appears to be in place between compounders and innovator drug companies, who sometimes find their pricing undercut by compounded formulations of the drugs they sell. That situation made headlines—again—in the aftermath of the Turing Pharmaceutical imbroglio, where Turing jacked up the price of a limited-supply generic pharmaceutical, and a hybrid pharma/compounding company, Imprimis Pharmaceuticals (San Diego) began offering a lower-cost alternative. (The PBM through which Imprimis’ products are prescribed? Express Scripts.)