Compounding pharmacies balance patient needs, insurance coverage

Tara Roberts//July 2, 2012

Compounding pharmacies balance patient needs, insurance coverage

Tara Roberts//July 2, 2012

Medicine Man intern Korey Kreider prepares a sterile solution using the sterile isolator in the lab at the pharmacy’s Hayden location. Pharmacy owner Barry Feely said the pharmacy often compounds sterile solutions for hospice patients. Photo by Tara Roberts.

The generic antacid Lansoprazole is often prescribed to infants with acid reflux, but the medication is only available in baby-unfriendly tablets or capsules.

Compounding pharmacies offer patients another option: adapting the medication to fit specific needs. In one of these pharmacies’ labs, Lansoprazole can be mixed as a cherry-flavored liquid in a dosage tailored for a small child.

A few dozen Idaho pharmacies specialize in compounding. While most pharmacies stock drugs mass-produced in factories, compounding pharmacists measure and mix ingredients to transform medications, or make them entirely from scratch.

The practice has its roots in the days of apothecaries, but compounding pharmacies also employ new techniques and laboratory equipment to customize drugs by altering their forms, dosages and inactive ingredients.

Pharmacists at these businesses say their abilities help customers and should be accessible. However, some people are finding it harder to afford compounded medications because insurance companies provide limited coverage for them.

“Most of the compounds out there … the cost is reasonable, but if you’re used to paying a $5 or $10 copay, and all of a sudden you’re having to be responsible for prescription costs in their entirety, then it can be stressful for the customer,” said John Bronsell, a pharmacist at Medicine Man Pharmacy’s Hayden location.

Bronsell said the insurance billing process for compounded medications has become more difficult in the past three to five years.

Some insurance companies place compounded drugs in the top tiers of their pharmacy plans, which require a higher copayment from customers than generics or many brand-name medications. For example, compounded drugs fall under the highest tier of PacificSource customers’ pharmacy plans, according to the company’s website.

Other insurance companies consider compounded drugs on an individual basis. Scott Thompson, Regence BlueShield of Idaho media relations manager, said Regence evaluates specific compounds to determine whether they fit on the company’s formulary list – the list of drugs they will cover – because “compounded medications are by definition a broad range of medications.”

He said Regence looks at things such as the amount of active ingredient in a compound, if a compound is similar to a commercially available drug, and whether or not the drug is considered medically necessary. In general, Regence determines which drugs are on its formulary based on clinical evidence, effectiveness and relative cost.

Idaho Medicaid covers compounded drugs, with some exceptions. Idaho Department of Health and Welfare spokesman Tom Shanahan said the federal Centers for Medicaid and Medicare Services requires state programs to pay for many compounded drugs.

Some pharmacies use bulk chemicals, which would not be covered, but Medicaid covers common compounds such as flavored medication for children.

“We can pay for any active ingredient in a (medication) that’s a commercially available product,” Shanahan said.

Compounded drugs are not FDA-approved, and the FDA warns on its website that there have been cases of flawed or contaminated compounds in the United States.

Chad Merrill, manager of Mike’s Pharmacy in Idaho Falls, said he’s recently encountered some insurance companies that evaluate the individual ingredients in compounded drugs. If even one ingredient in a compound isn’t covered, he said, the insurance company won’t pay for the drug at all.

“It is making it harder for us, because … we have to list all those ingredients every time we make a compound,” he said.

Still, he said, his pharmacy has been able to work through the difficulties with its customers and the insurance companies.

Some pharmacy associations are lobbying for increased freedoms for compounding pharmacies and the patients who wish to use them. However, Bronsell said, large chain pharmacies tend to have more sway with insurance companies because they serve more people.

“There’s definitely a lot more big-box pharmacies than there are compounding pharmacies out there,” he said. “You see it in some regard as a dying art, and yet there’s such a potential for it that it justifies having some.”

Compounding pharmacies require more space, supplies, time and money than typical pharmacies, Bronsell said.

“The benefits of taking that risk and making that investment greatly enlarge, broaden our scope of practice,” he said.

Merrill estimated startup costs for a pharmacy to begin full-scale compounding would be about $50,000. Adding a sterile room and equipment to make certain customized injections, as Mike’s Pharmacy does, requires even more time and money.

Merrill said the ability to compound gives pharmacies access to a niche market that makes up for the investment and losses in other areas, such as reduced payments in general from insurance plans.

“I don’t know that we’d ever be able survive without it,” he said.

Bronsell said a sufficient number of customers are willing to pay cash for compounded medications. Patients who have difficulty swallowing pills may seek to have their medication infused into a lozenge, a lollipop or a gel to apply to the skin. People with allergies to common preservatives or dyes in drugs can have the offending ingredients removed. Customers who need a specific dosage that isn’t commercially available can have pills made to meet their needs.

“The only thing that will keep (compounding pharmacies) alive is what’s always kept them alive: There is a market share, perhaps a small one, but there is a need out there for this,” he said.

In addition to creating custom medications, many compounding pharmacies have tapped into other markets, such as making bioidentical hormones for replacement therapy and mixing compounds for veterinarians and dentists.

Most compounding pharmacists learn their skills on the job, though special training is available. Merrill said learning to work with chemicals and complicated formulations is part of the joy of the job.

“It’s fun to do. We love to compound,” he said. “The old pharmacies, back 100 years ago, that’s all they did. There was no commercial tablets available, no commercial pills. … It’s really taking it back to where pharmacy actually began.”