GROWING COST OF COMPOUNDED DRUGS IN CALIFORNIA WORKERS' COMPENSATION (CAWC) SYSTEM

Purpose: Given the safety and billing practices are not transparent, we evaluated the billing, reimbursement, and utilization trends for compounded drugs (CDs) in the CAWC from 2011-2013 to suggest alternative mechanism(s) for future cost control.

Methods: We used CAWC claims database of CDs and non-CDs filled between January 1, 2011 and December 31, 2013. The dataset contained unique National Drug Code (NDC) that enabled us to link individual ingredients of each compounded prescription. We measured the change in the following parameters of utilization and reimbursement from 2011-2013: 1) Average cost (paid amount) per CD prescription vs. non-CD prescription per year, 2) Average cost (billed vs. paid amount) per CD prescription per year, 3) Average cost (paid amount) per CD ingredient per year and 4) Top 3 therapeutic classes of three CD ingredients.

Results: The average paid amount per CD prescription compared to non-CD prescription per year was $59.90 vs. $81.45 in 2011, $95.11 vs. $71.49 in 2012, and $202.30 vs. $79.93 in 2013. The average cost (billed vs. paid amount) per CD prescription per year is shown in graph 1. The average amount billed per CD prescription per year increased by 12.5% from 2011 to 2012 and by 19.5% from 2012 to 2013. The average amount paid per CD prescription per year increased by 58.8% from 2011 to 2012 and by 112.7% from 2012 to 2013. The average paid amount per CD ingredient per year was $21.95 in 2011, $28.83 in 2012 and $64.67 in 2013. The top therapeutic classes from 2011 to 2013 were topical analgesics (45.51%), anti-inflammatory agents (26.34%) and opioids (10.3%).  

Conclusions: The average CD prescription reimbursement was significantly increased from 2011 to 2013 and was overall higher than non-CD prescriptions. There has been a large increase in the billing and reimbursement of CD prescriptions in CAWC system. A difference between billing and reimbursement CD prescriptions showed an over billing issue in CAWC system. The increasing trend of reimbursement per CD ingredients suggested uncontrolled cost of ingredients due to variety of factors including quantity of use, ingredient formulations and supplying manufacturers. We recommend CAWC to utilize clinical evidences to ensure the necessity of using CD over traditional FDA-approved drugs and to create reimbursement policies for only ingredients with the lowest cost.