Senators, Consumer Group Seek Answers On Medicare's Link to Drug Compounding

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Several Democratic senators Nov. 19 announced that they have sent a letter to the Centers for Medicare & Medicaid Services requesting information about how compounded medications are regulated and reimbursed in federal health programs.

The letter to acting CMS Administrator Marilyn Tavenner was signed by Sens. Richard Blumenthal (D-Conn.), Debbie Stabenow (D-Mich.), Al Franken (D-Minn.), and Dianne Feinstein (D-Calif.). Specifically, the senators requested information about how payment denial is coordinated between CMS and the Food and Drug Administration for compounding pharmacies found to be in violation of the Federal Food, Drug, and Cosmetic Act.

Traditionally, compounded drugs are medications that are custom-made for a patient with a prescription. The large-scale production of drugs by compounding pharmacies, and associated safety problems, has drawn the attention of lawmakers due to the recent deadly outbreak of fungal meningitis caused by contaminated compounded drugs.

“The recent outbreak of this dangerous disease indicates a need for more information about how drug compounding practices are regulated and reimbursed at the state and Federal level,” the senators said.

Specifically, the senators asked for information on the following questions:

• What coordination does CMS have with FDA to determine which companies have received citations for violations linked to large-scale compounding of drugs, and how is this information given to regional offices and carriers?

• How often has CMS stopped payment of compounded drugs in the Medicare and Medicaid programs?

• How often have Medicare regional offices and carriers reported potential violations of compounding? How is this information shared with FDA, and across federal health programs?

• Within Medicare Part D, does CMS review prescription drug adverse event data to track use of compounded drugs?

• Within the Medicaid program, what guidance has been given to state Medicaid directors regarding the use of compounded drugs?


“We appreciate any information that you can provide on this issue, and any activities that CMS has taken with respect to compounded drugs,” the senators said. “We look forward to working with you to better assure the safety and quality of health care delivery across our nation.” The senators' letter is dated Nov. 15.

Public Citizen Requests Investigation.

Consumer group Public Citizen Nov. 19 also sent a letter to Health and Human Services Secretary Kathleen Sebelius, requesting an investigation into whether Medicare reimbursement policies help fuel large-scale drug compounding.

Public Citizen said the HHS Office of Inspector General should investigate whether financial incentives created by CMS's drug compounding reimbursement policies, combined with inadequate action by FDA, fostered the recent fungal meningitis outbreak from tainted compounded drugs.

The letter said that CMS, through its inconsistent Medicare drug reimbursement policies concerning compounded drugs and decisions allowing routine coverage for such medication, appears to have created inadvertent financial incentives that helped large-scale production of compounding pharmacies to flourish.

Like FDA, CMS has authority that, if appropriately used, could greatly restrict, or even eliminate, the widespread, large-scale production and distribution of standardized drugs by compounding pharmacies, a practice that falls outside the intended scope of traditional compounding and violates FDA drug manufacturing regulations, Public Citizen said. In fact, CMS has exercised this authority in the past.

In 2007, all four regional durable medical equipment Medicare Administrative Contractors, covering the entire country and acting on behalf of CMS, issued a denial of coverage for compounded inhalation drugs administered through a nebulizer, Public Citizen said. In statements following those denials, the local Medicare carriers noted that while “compounded drugs may be made starting with a medication approved by the FDA, the final product is not approved for safety and efficacy by the FDA and is not manufactured to strict federal standards.” The statements noted that the absence of safety testing can put patients at increased risk of injury or death, Public Citizen said.

“By failing to use this same authority to deny coverage for many other compounded drugs since then, CMS essentially has encouraged pharmacies to produce such medications at dangerously large scales,” Michael Carome, deputy director of Public Citizen's Health Research Group, said. “An independent investigation is necessary to determine exactly how these policies contributed to the current meningitis outbreak and to prevent a similar tragedy from happening in the future.”

Topics to Investigate.

Public Citizen requested that the investigation address the following areas of concern:

• CMS guidance documents on compounded drugs are ambiguous and conflicting, stating first that all compounded medications manufactured in violation of FFDCA are excluded from coverage, but then, in seeming opposition to this, instructing Medicare carriers to continue reimbursing for compounded medications unless FDA and CMS take specific actions to notify carriers to deny reimbursement.

• CMS appears to have no mechanism to implement this ambiguous guidance, as CMS has stated that it has “no regular form of coordination with FDA” to allow CMS to identify when the FDA has determined that particular compounded drugs have been produced in violation of the law and to notify carriers to deny coverage.

• CMS has failed to extend its well-reasoned and justified basis for denying coverage for compounded inhalation drugs in 2007 to other compounded drugs being produced and distributed on a large scale by many compounding pharmacies.

• At least one CMS local carrier, covering Iowa, Kansas, Missouri, and Nebraska, previously has stated that it will cover certain high-risk compounded drugs for administration into the area around the spinal cord via an implantable pump under some circumstances.


Congressional Probes.

The letters seeking more information follow recent congressional hearings on the meningitis outbreak tied to compounded drugs. Members of the Senate Health, Education, Labor, and Pensions (HELP) Committee said during a Nov. 15 hearing that they intend to pursue legislation to ensure the safety of compounding pharmacies (221 HCDR, 11/16/12). In addition, a group of House Democrats has asked for a Government Accountability Office review of whether the use of group purchasing organizations is causing drug shortages that lead to increased use of compounding.

Also on Nov. 19, House Energy and Commerce Committee Republican leaders announced that they asked FDA to provide internal documents related to the deadly meningitis outbreak by Nov. 30. In a statement, the panel noted that while testifying before the Oversight and Investigations Subcommittee on Nov. 14, FDA Commissioner Margaret Hamburg repeatedly assured members her agency would provide the documents, “which were originally requested one month ago, in a timely manner.”

By Bronwyn Mixter  

The senators' letter is at Public Citizen's letter is at

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