Balancing the DOD’s compounding equation

It seems like when it comes to the healthcare equation in the U.S., there are three constants that ultimately dictate everything else:  access, quality and (most prominently) cost.  The importance of these three factors was evident when the Department of Defense (DOD) recently announced that changes would be coming to how the compounded medication benefit would be managed for members of the military’s healthcare program and their dependents.

By way of background, compound medications are prescriptions formulated by pharmacists to meet an individual patient’s needs, either by altering a dosage, eliminating an allergen or changing the medication’s delivery method.  In 2013, in response to a rise in costs that the DOD was seeing from these medications, its health plan Tricare moved to stop covering them.  The uproar from patients was loud and swift, and Tricare correspondingly moved to delay a decision on how to manage the benefit until further research could be done.  

{mosads}In discussing the rationale behind the new approach, which is set to go into effect by May 1, 2015, DOD has cited ballooning cost increases and safety and quality concerns as issues that have to be addressed in order to sustainably manage the compound benefit.  And they are right.  A host of factors, including inconsistent regulation, reimbursement changes and simple unscrupulous business practices, have all contributed to the compounding industry developing a reputation akin to the Wild West.  While the vast majority of the industry is made up of pharmacists who simply want to get paid a fair price to make medications that help patients, a minority of bad actors have given compounding a bad name and made new management strategies a necessity. With this in mind, the DOD should be applauded for demonstrating a clear determination to fix this problem and save money for taxpayers. 

However, successful management of compounding pharmacies requires deep knowledge about how compounding pharmacies operate to meet the needs of the beneficiaries, and some elements of the DOD’s plan raise questions.  For example, they have made clear that compounded medications adhering to FDA regulatory guidance on coverage will be an important factor – but by definition these medications are patient-specific and haven’t gone through FDA approval.  They also have suggested that disruption for patients who have tried mainstream options but only found relief through compounds will be minimal – but it is unclear how this process will work and how it will be fully communicated to Tricare beneficiaries. 

The bottom-line is there was a reason why so many current and former armed services members and their dependents cried out when they were almost denied access to these medications in 2013, and while it may be tempting to make a unilateral decision here, this is one of these moments when it makes sense to pause and survey the options.   

Notably, United Compounding Management (UCM) was recently formed to address the very issue that the DOD is struggling with. UCM’s goal is to ensure patients have access to safe and high-quality compounded medications – at prices that make sense for plans like Tricare.  UCM achieves this by bringing together and managing a high-performance network of industry-leading compounding pharmacies that meet strict safety, quality, and pricing standards, and also utilizing proprietary technology to process client claims on behalf of plans.  It’s also an independent solution – with no ties to manufacturers and the ability to avoid doing business with any of the bad actors.  Working with UCM would provide the compromise needed to maintain access for patients at a price health plans like Tricare can swallow.

The benefits of using UCM as a partner for Tricare would be substantial, and would hit all three elements of the healthcare equation: UCM works collaboratively and seamlessly with pharmacy benefits managers which means there would be no disruption of access for patients.  In addition the quality of the benefit would improve, as members could be assured they were receiving medications from pharmacies that are industry-leaders.  And of course, last but not least, the cost issue would be addressed – with UCM able to save Tricare and DOD roughly $100 million dollars a year based on initial estimates.

As healthcare in the US continues to evolve and the focus on addressing the three-pronged challenge of quality, access and cost increases, it will be tempting for policy and decision makers to bring to bear traditional and unilateral solutions.  But instead, we should all call on those in Washington and positions of influence to appreciate that innovation is a vital ingredient to our healthcare system, and that carefully considering all solutions is in the best interest of all stakeholders.  Otherwise, we risk unnecessarily unbalancing the healthcare equation – not to mention disappointing thousands of algebra teachers across the country.   

 Ott is chief executive officer of United Compounding Management.