Medicare to Pay Less for Compounded Drugs

August 25, 2006

The AARC has been working closely with its partner organizations for several years now to end pharmacy compounding of aqueous-based drugs for inhalation that are already on the market in formulations approved by the Food and Drug Administration (FDA).

At issue is the safety of these drugs, which are not required to meet the same strict FDA standards as commercially available products.

Earlier this month the FDA issued warning letters to three national pharmacies — Rotech Healthcare Inc., CCS Medical, and Reliant Pharmacy Services — asking them to cease the practice. Now Medicare is doing its part as well.

According to an article in the August 24 issue of USA Today, Medicare will begin using special payment codes for pharmacy compounded respiratory medications beginning in January. The new payments are expected to be significantly lower than the current payments for these medications, which are paid at the same rate as their commercially available counterparts.

Another article in USA Today also reported that one of the pharmacies, Rotech Healthcare, has already agreed to stop compounding the respiratory medications and to switch patients to FDA approved formulations instead.

For background on this issue, read this article, which appeared on the AARC web site earlier this month.