Pharmacy-Made Pain Creams Flagged On Fears Of Medicare Fraud And Risk

Medicare pays vast sums of dollars every year for prescription creams, gels and lotions made-to-order by pharmacies – mainly as pain treatments. But a brand new report finds that officials are concerned about possible fraud and patient safety risks from products made at nearly a quarter of the pharmacies that fill the bulk of those prescriptions.

“Although some of this billing might be legitimate, many of these pharmacies warrant further scrutiny,” concludes the report from the Office from the Inspector General for that Department of Health and Human Services.

In total, 547 pharmacies – nearly 23 percent of people who submit the majority of the bills to Medicare for making these creams – hit one or more of five red-flag markers set by investigators. Those included exactly what the researchers called “extremely high” prices; large percentages of Medicare members getting identical drugs – 16 of the pharmacies billed for identical drugs for 200 or more customers; “greatly increased” year-over-year billing – 20 pharmacies increased their billing by more than 10,000 percent; or having a single medical professional writing a lot more than 131 prescriptions. More than half of those pharmacies hit several measures – and 10 hit all five.

One Oregon pharmacy, for instance, submitted claims for 91 percent of its customers. A pharmacy in New York submitted 5,342 prescriptions ordered by one podiatrist, while a Florida pharmacy saw its Medicare billing for such treatments move from $7,468 in 2021 to $1.8 million the following year.

Many of the pharmacies are clustered in four cities: Detroit, Houston, La and Ny.

The report comes amid ongoing concern by Medicare officials about these custom-made – or compounded – drugs. Along with questions like those raised in the report about overuse and pricing, safety has been a key issue recently. A meningitis outbreak in 2012 was associated with a Massachusetts pharmacy that did not maintain sterile conditions and sold tainted made-to-order injections that killed 64 Americans.

When done safely, pharmacy-made compounded drugs provide a legitimate option for patients whose medical needs can't be met by commercially available products mass-produced by pharmaceutical companies. For example, a patient who can't swallow a commercially available prescription pill might get a liquid form of a medication.

State boards of pharmacy generally oversee compounding pharmacies, and also the drugs they produce are not considered authorized by the Fda.

The new report concentrates on concerns with compounded topical medications.

Medicare spending for such treatments has skyrocketed, rising more than 2,350 percent, from $13.Two million this year to $323.5 million in 2021. Price hikes and an rise in the number of prescriptions written drove the increase, the report said.

It is not the very first time the inspector general has looked at compounded drugs. A 2021 report found that overall paying for all kinds of compounded drugs – not just topical medications – rose sharply. The U.S. Postal Service inspector general and also the Department of Defense also have raised concerns about rising spending and possible fraud for compounded drugs.

In reaction to those previous reports, the International Academy of Compounding Pharmacists, the industry's trade group, has stated that legitimately compounded drugs “can dramatically improve a patient's standard of living,” noting that proper billing controls have to be in place. The inspector general's report in 2021, it added, discovered that “such controls are not in place.”

This report, which the compounding trade group hasn't yet reviewed, focuses on topical drugs along with a subset of the 15,290 pharmacies that provide at least one such prescription every year. It checked out billing records from the 2,388 pharmacies that do a minimum of 10 such prescriptions annually – providing 93 percent of compounded topical drugs taken care of by Medicare.

Most of the prescriptions were for pain treatment, produced from ingredients for example lidocaine, an anesthetic, or diclofenac sodium, an anti-inflammatory drug.

On average, those compounds were more expensive than non-compounded drugs with the same ingredients.

For example, Medicare paid an average of $751 per tube of compounded lidocaine, and $1,506 for that diclofenac, based on the inspector general's report. Non-compounded tubes of these drugs averaged $445 and $128, respectively.

FDA Commissioner Scott Gottlieb recently outlined new efforts his agency is taking to supervise compounded drugs within the wake of legislation passed by Congress following the meningitis outbreak.

“The FDA is inspecting compounding facilities to assess whether drugs which are essentially copies of FDA-approved medicine is being compounded for patients” who could otherwise take a product sold commercially, he explained in a statement issued on June 28.

Gottlieb also said the FDA intends to make more details available to patients and their doctors about compounded topical pain creams, including details about their effectiveness and then any potential safety risks.

Not being effective is a safety risk, noted Miriam Anderson, a researcher with the inspector general's office who helped write the report.

The report urged the Centers for Medicare & Medicaid Services to explain a number of its policies to emphasize that insurers can limit using compounded drugs by requiring prior authorization or other steps. The agency concurred using the recommendations, according to the report, including the have to “follow up on pharmacies with questionable Part D billing and also the prescribers associated with these pharmacies.”

Anderson said the inspector general's office continues to probe the problem.

“We will investigate a number of leads on specific pharmacies and prescribers who have been identified as having these questionable patterns,” she said. “Whenever we have seen that sort of rise in spending, it raises worry about fraud, waste and abuse.”