Defense Health Agency: Compound Drug Policy to Improve Patient Safety

By Army Sgt. 1st Class Tyrone C. Marshall Jr.

DoD News, Defense Media Activity

WASHINGTON, March 12, 2015 – The Defense Health Agency will begin applying current rules for prescription drug claims to compound drug ingredients, in the interest of protecting Defense Department beneficiaries, a senior health official said March 9 in Falls Church, Virginia.

During an interview with DoD News, Army Maj. Gen. Richard W. Thomas, chief medical officer and director of health care operations for the Defense Health Agency, addressed the perception some people may have that there will be a major policy change regarding compound drugs, those that contain two or more ingredients mixed together by a pharmacist.

“The changes really are not so much a policy change as really just us enforcing the regulatory guidance that we already have on our books,” he said.

“The Defense Health Agency’s No. 1 priority,” Thomas said, “is to ensure quality and safe care for all of our beneficiaries.”

Upcoming Changes

Beginning May 1, TRICARE plans to implement a screening process to ensure it covers all ingredients of a compound drug claim. TRICARE will still cover most compound drugs, and will allow pharmacists to substitute with approved ingredients to keep the process as smooth as possible. Recent system changes by the department’s pharmacy contractor allow greater visibility of these ingredients, and the ability to screen them individually.

Additionally, according to TRICARE, beneficiaries will also have the opportunity to request a prior authorization and appeal a decision to deny a compound drug claim, with appeals processed in a timely manner to support the beneficiary.

Compounding Drugs

The general explained what constitutes a compound drug and some of their practical applications in medicine.

“Compound pharmacy or compound drugs are actually very commonly used,” Thomas said. “These can be anything that includes an alteration or a change to an ingredient within a medication.

“For example,” he said, “if you’re going to give a child a flavored cough syrup, that would be compounding, because you’re adding an ingredient to make it taste better for the child.”

What people often think of when referring to compound agents are pain creams, Thomas said, and the ointments used for scars. This often includes topical creams or ointments people apply to their skin.

Safety is Paramount

In 2012, Thomas said, the department’s pharmacy contractor completed a system upgrade that allows the department to see specific types of compounds and the ingredients in the compounding drugs.

“They ran a list,” he said, “and we could see the ingredients in these compound agents -- they were not all approved [by the U.S. Food and Drug Administration] or proven to be safe and effective.”

Thomas also noted that a Government Accountability Office report from October 2014 indicated DHA was not in compliance with its own regulation to provide only FDA-approved medicine to its beneficiaries.

“We must be in compliance with the law,” he said. So, over time, what the agency has done is enforce the industry standard to ensure the ingredients in compounding agents have been proven safe and effective, Thomas said.

The general said DHA plans to ensure it is fully in compliance with existing policy and existing regulatory guidance.

“Safety is a paramount interest to us,” Thomas said. The No. 1 goal is to ensure that people receive medications proven safe and effective, he added.

Stewardship of Taxpayer Dollars

Thomas noted another aspect of enforcing the existing policies is DHA and the department’s obligation to be responsible stewards of taxpayer dollars -- about 10 percent of the DoD budget goes to medical care for all its beneficiaries.

“The past year or so,” he said, “what we’ve found is … we’re paying a lot more for these ingredients and there’s no medical or scientific evidence that they’re actually effective.”

Turning to cost, Thomas said the group of topical compounding agents specifically designed to treat pain are where the biggest increase is seen.

“I’ll give you some examples,” he said. “In fiscal year ’04, the DoD paid about $5 million for the year. By fiscal year ’14, it exceeded $514 million, and for fiscal year ’15, we’re on track to exceed $2 billion in expenditures just for compound agents.”

Significantly, he said, these compounded drugs make up only 0.5 percent of the total number of prescriptions provided through Tricare.

“However, it’s more than 20 percent of our total pharmacy expenditures,” Thomas said, “so you see a huge increase in the expenditures there.”

The Way Ahead

“We want to make sure we’re doing the right thing by our patients, so we have a Pharmacy and Therapeutics Committee that makes recommendations on drugs that TRICARE covers,” he said. “We also discussed compound drugs with the Beneficiary Advisory Panel for input on which way we should go with this, and how any change would affect our beneficiaries.”

“We solicit public feedback and we can have these open, transparent discussions, not only with members of the industries themselves, but also our beneficiaries are represented there,” Thomas said.

“There’s a lot of interest in compounded pharmacy, and I understand it,” he said. “As a physician, I like compounded drugs. They’re common used, and I prescribe compounds for my patients when it’s appropriate. So we’re not talking about eliminating compounded agents at all.”

Balancing Cost Versus Safety

Thomas said DHA’s goal is to be transparent as it communicates with all its beneficiaries through “aggressive” outreach.

“We’re actually talking about using the systems already in place -- which we already have on our book,” he said, “and actually enforcing the current guidance to make sure that the medications that we give you, your [families and] your children are safe and effective.