Members-only Site   |   Print Page   |   Contact Us   |   Sign In   |   Register
GAO Releases Report on Compounded Drugs
Share |

Earlier this fall, the International Academy of Compounding Pharmacists (IACP) participated in the U.S. Government Accountability Office’s (GAO) data collection process. The GAO recommendation? The GAO recommended clarifying the policy so that it is clear to providers. Medicare, Medicaid, and private health insurers have varying payment practices for compounded drugs, depending upon whether compounded drugs and their ingredients can be identified on health insurance claims, and Medicare's Part B payment policy for these drugs is unclear.

Why GAO Did This Study


Drug compounding is a process whereby a pharmacist mixes or alters ingredients to create a drug tailored to the medical needs of an individual patient. Compounded drugs make up 1 to 3 percent of the $300 billion domestic prescription drug market. Compounded drugs and some of their ingredients are not approved by FDA. Members of Congress have questioned whether federal health care programs' payment practices create incentives for providers to prescribe these drugs.

What GAO Recommends


GAO recommends that the Centers for Medicare & Medicaid Services (CMS) clarify its Medicare Part B payment policy to either allow or restrict payment for compounded drugs containing bulk drug substances and align payment practices with this policy. The U.S. Department of Health & Human Services Department (HHS) disagreed with this recommendation, stating that the Part B payment policy does not depend on drug ingredients. GAO maintains that the policy needs clarification.


Click here to read the full GAO Report.

IACP’s Response


The International Academy of Compounding Pharmacists (IACP) supports consistent reimbursement policies for compounded preparations across all third-party prescription benefit plans including the publicly funded Medicare and Medicaid programs.


The use of Active Pharmaceutical Ingredients (APIs), the raw drug chemical contained within FDA-approved manufactured drugs, is often the most appropriate choice for a compounded preparation to assure accuracy of the finished formula as well as to eliminate any excipients or other unwanted ingredients.


Physicians and pharmacists, working together to provide the most appropriate drug therapy for an individual patient, should be the primary decision makers on whether or not to use an API or a finished manufactured drug product in creating a custom compound.


IACP believes that third-party prescription benefit payers should not discriminate between coverage of compounds based upon the decision to use an API as the basis for a preparation. All patients, regardless of the type of insurance or benefit they have for prescription drugs, should be entitled to coverage of API-based compounded preparations.


Please email IACP at with any questions regarding this GAO report, and IACP's response.


Click here to read the full GAO Report.

Association Management Software Powered by YourMembership  ::  Legal