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Capitol Connections June 13, 2014
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June 13, 2014  

ESI and CVS/Caremark Announce Plans to Curtail Compound Coverage

Express Scripts (ESI)

On June 3, Express Scripts launched its new “Compound Management Solution” and began contacting its clients through sales force calls and a national webcast on Tuesday, June 10.  ESI’s “solution” to a growing number of claims for compounded preparations is simple:  they won’t pay for them.

ESI’s clients – individual companies, insurance firms, unions, self-insured businesses of all sizes – are being told that ESI has created a list of excluded ingredients which ostensibly would only cover those medications that the PBM deems “clinically acceptable and reasonably priced.”  What’s on that list?  Nobody knows.  Even ESI admitted that the “list” isn’t yet available when directly questioned by its clients.  No information was provided that describes the process by which clinically acceptability was determined.  And, most importantly, in statements made to clients, ESI alleges that participating in their new “Compound Management Solution” will eliminate almost 95% of all compound claims.

Clients are being told that they can implement this new “solution” effective July 15 by notifying Express Scripts’ account management by July 3, 2014. If the client does not respond at all, they will be automatically enrolled in the “solution” effective September 15.  Although most clients already provide coverage with a prior authorization management system, the new program will eliminate that entirely and drugs on the so-called-to-be-determined-we-don’t-know-yet list will be automatically rejected with a “Not Covered” rejection code.

“Rather than establishing a workable and logical ‘prescription benefit management’ program for compounds, Express Scripts is taking the easy way out and saying ‘just don’t pay for these’ medicines,” says IACP President Pat Stephens.  “That is detrimental to patient health and, given the ridiculously short notice and implementation timeline they’ve proposed, it’s clear that the impact on patients wasn’t even addressed.”


On May 30, CVS/Caremark announced plans to their provider manual related to copayment collection and claims for compounds. Click here to see the copy of this announcement obtained by IACP.

As with many other PBMs and insurance plans, participating pharmacy providers are expected to collect the full amount of the copayment from the beneficiary – no discounts, no waivers, not “copay coupons” – unless otherwise permitted by either Caremark or state law.  PBMs are auditing copayment collection documentation and it looks like Caremark may be considering the same.  Failure to collect the full copayment could lead to termination of a pharmacy’s network contract.

While documentation of copayment collection is an important “must do” in your pharmacy, Caremark is now requiring a completely different and onerous type of documentation for any and all compounded preparations submitted for reimbursement.  

Effective immediately, compounders not only have to include the NDC number of each ingredient use in the compound they must also have “at least two (2) scientifically valid studies in peer-reviewed journals supporting the clinical efficacy of the additional ingredients” for each of those ingredients and have those studies available if Caremark requests them.

“This is nothing more than an administrative hurdle designed to deny coverage for legitimate prescriptions and keep beneficiaries from obtaining the medications they need,” says IACP Executive Vice President David Miller.  “It’s discrimination… pure and simple.”  With an estimated fifty percent of all prescription drugs used for extra-label purposes, Caremark has an established track record of reimbursing for medications for which no clinical studies exist.  Yet, the PBM has not nothing to address extra-label dispensing or reimbursement.  Only compounds are singled out.

Of particular concern to IACP is that the peer reviewed medical literature on compounded preparations and their individual ingredients is scant.  While the IACP Foundation has supported research into some ingredients and preparations – most notably BHRT – there are literally thousands of APIs, inactive ingredients, bases, flavorings, dyes, etc. for which studies have never been completed.  Even the profession’s most referenced peer-reviewed journal, the International Journal of Pharmaceutical Compounding, doesn’t have the extent of information as Caremark is requesting.

Protect Your Patients from PBM Abuse

The latest draconian move by ESI and CVS/Caremark to eliminate compound prescription coverage is just the latest in a series. Blue Cross/Blue Shield of Tennessee, Prime Therapeutics, US Healthcare, and others have all taken steps to severely limit coverage or created barriers for pharmacists to submit claims for needed medications.

But, if you are a participating pharmacy provider in any third-party plan, you have to know what you can and cannot do before telling your patients about the ramifications of a plan’s changes. “What many pharmacists don’t realize is that their network contract or the provider manual itself strictly prohibits telling a patient about changes to coverage, speaking out publicly about a third-party insurer or PBM, posting alerts or messages on social media or list-serves,” says IACP Vice-President of Government Affairs and General Counsel Cynthia Blankenship.  “It seems like a restriction of an individual’s freedom-of-speech but it’s not.  By signing a contract and agreeing to abide by that contract’s terms, a pharmacist may have unknowingly given up the right to criticize or say anything to anyone about that third-party.”

IACP has already noticed many postings on listserves and blogs by compounding pharmacists speaking out against a specific third-party program. All members should be aware that such action in direct defiance of a contract could result in termination from the network for not only compounded prescriptions but also all prescriptions and pharmacy services. Before taking any action – even something as simple as telling your patient that their plan is changing --  read  your contract and the provider manual to see whether or not you are permitted to do so.

What can you do to protect yourself but, at the same time, get the message out about PBM and third-party attempts to deny coverage?  

IACP is working with a coalition of compounding pharmacy industry leaders, patient advocacy groups, consumer groups, and others to reach out directly to consumers and inform them of their rights and how to raise their voices to employers, union leaders, payors, state and federal legislators, and state insurance commissioners. Watch for a major announcement next week with specific action items you can take to protect your patients and your business. 

Congress Continues to Question DQSA Implementation


As part of this year’s Compounders on Capitol Hill, attendees visited House offices asking for support of a letter from Congressman Bilirakis (R-FL) to the Food and Drug Administration (FDA) that raised questions about the agency’s interpretation and implementation of the Drug Quality & Security Act. In addition to concerns about how the FDA views office-use dispensing in those states that permit it, repackaging of medications, the impact on patient access, and the promotion of 503B outsourcing facilities before the agency has completed the promulgation of regulations, Congressman Bilirakis and others signing onto the letter are specifically querying why the FDA appears to be ignoring specific Congressional intent. More and more House members are signing onto the letter and IACP expects it to be forwarded on to the FDA by the end of June. To see a copy of the Bilirakis letter, please click here. To view the IACP “Ask” document explaining it, click here.

A second letter from Congressmen Griffith (R-VA), Green (D-TX), and DeGette (D-CO) raising many of the same issues has also been released. This week, IACP worked with Congressman Griffith’s staff to advise House offices of the importance of signing on to this letter as well given that these leaders on the House Energy and Commerce Committee were directly involved in the 2013 hearings in which the FDA claimed that they did not have sufficient authority to take action against the New England Compounding Center even when the agency was aware of significant deficiencies and violations dating back to as early as 2005. Congressman Griffith had introduced HR 3089 in the summer of 2013 to clearly delineate the role and responsibility of the FDA in overseeing compounding without impinging on the authority of state Boards of Pharmacy.

Watch for a special IACP Action Alert next week. Just a few clicks will enable you and your staff to send an e-mail to your Representative asking for his or her support of these two important letters. Holding FDA accountable for correct and appropriate implementation of the DQSA is IACP’s number one priority.  

FDA Budget Request Slashed… But On Hold

As previously reported, the FDA requested $25 million in the 2015 budget to “enhance compounding oversight activities in FY2015.” Due to the fact that the registration by outsourcing facilities (OFs)  -- a new registration type included in the Drug Quality & Security Act -- is not mandatory, FDA protests in its budget request that it cannot rely upon the fees that OFs might provide. In addition, the DQSA specifically states that fees obtained through the registration of OFs may only be used to oversee OFs. FDA is not supposed to use these funds to oversee compounding pharmacies that do not choose to register with FDA as an OF. Not satisfied with an extra $25 million, the FDA Office of Regulatory Affairs also asked for almost $7 million in additional funding for field activities including “conducting additional inspections of high-risk human drug compounding pharmacies including sterile compounding facilities that seek to qualify for the exemptions under section 503A and facilities that register as OFs under section 503B.”

This is completely unacceptable. The intent behind the DQSA was to draw a clear line between those compounding pharmacies overseen by the individual state Boards of Pharmacy and outsourcing facilities overseen by the FDA. IACP’s leadership targeted this “money grab” as a top priority for protecting our members. Beginning in early March, language that  reduces and restricts appropriations money for the FDA was taken by your IACP staff to House and Senate offices seeking their support.

That was successful!  The House not only cut the FDA request in half, it also took the unusual step of including report language that prohibits the FDA from using that money or any other budget money they may have or receive to take regulatory action against traditional compounders. The Senate also included language expressing its disappointment in FDA's implementation of the DQSA and stating that implementation should not continue until FDA has sought input from stakeholders and worked closely with pharmacists.  The current appropriations bill moving forward from House and the Senate keeps that IACP language intact.
The loss in this week’s primary House Majority Leader Eric Cantor (R-VA)  in a surprising upset coupled with the administration’s efforts to deal with the growing Veterans Administration scandal has thrown all the schedules out the window.  While IACP believes the Senate appropriations bill will move to a full vote next week, the change in leadership, concerns about Iraq, mid-term elections, and the VA issue may delay House appropriations work until later this summer.

IACP’s lobbying and policy team will be monitoring both the Senate and House very carefully to retain that critical appropriations language.

FDA Issues Final Rule on the Administrative Detention of Drugs

On May 29, the FDA published a final rule on the "Administrative Detention of Drugs Intended for Human or Animal Use."  The rule provides the agency the authority to administratively detain drugs encountered during an inspection that an authorized FDA representative has reason to believe are adulterated or misbranded.

This authority is intended to protect the public by preventing distribution or subsequent use of drugs encountered during inspections that are believed to be adulterated or misbranded, until FDA has had time to consider what action it should take concerning the drugs, and to initiate legal action, if appropriate. The rule goes into effect on June 30.

IACP First to Submit FDA Comments on 503 Outsourcing Facilities Proposed Guidance

IACP is the first to submit comments to the U.S. Food & Drug Administration's (FDA) proposed guidance on 503B Outsourcing Facilities (FDA Docket 2014-D-0329). Specifically, this guidance addresses the fees, the due dates, and the potential consequences for not complying with the fee collection. Please click here to view IACP's comments submitted of the June 2, 2014, FDA deadline.

IACP Press Release: Implementation of DQSA Not Consistent With Intent of the Law

The International Academy of Compounding Pharmacists (IACP), citing a lack of direction from the U.S. Food and Drug Administration (FDA) regarding the implementation of the federal Drug Quality and Security Act (DQSA), as well as the FDA’s misinterpretation of Congressional intent, supports the efforts of the U.S. House of Representatives to restrict an additional $7 million that the agency has requested for inspections.

“We believe in providing FDA with the tools that it needs to do its job and ensure the quality and safety of all medications,” said IACP Executive Vice President & CEO David G. Miller, RPh.  “The fact that the agency, however, has not issued any guidelines or regulations that clearly direct the new outsourcing facility entities created under the law, so that these facilities can ensure compliance with standards, is troublesome to our profession.  Additionally, the FDA is interpreting the law in a manner that is not consistent with Congressional intent, by seeking to prohibit traditional compounding pharmacies from preparing medications for office use or from re-packaging medications, even when both practices are allowed in some instances under state law.”

Click here to read IACP's Press Release. 

State Update

Indiana Board of Pharmacy Bans Four Compounds Used in Synthetic Drugs

The Indiana Board of Pharmacy has issued an emergency rule to ban four additional types of compounds used to create synthetic drugs commonly known as “spice” and “K2.” According to the rule, any compound that contains any of the chemicals or compounds derived from them, including salts, isomers, and salts of isomers, are now classified as Schedule I substances.

The four chemicals are:

  • APDB (EMA, 4-Desoxy-MDA, and (2-Aminopropyl)-2,3-dihydrobenzofuran),
  • THJ-2201 (AM2201 indazole analog, Fluoropentyl-JWH-018 indazole, and 5-Fluoro-THJ-018),
  • AM2201 benzimidazole analog (FUBIMINA, FTHJ, and (1-(5-fluoropentyl)-1H-benzo[d]imidazol-2-yl)(naphthalen-1-yl)methanone), and
  • MN-25 (7-methoxy-1-(2-morpholinoethyl)-N-((1S,2S,4R)-1,3,3-trimethylbicyclo[2.2.1]heptan-2-yl)-1H-indole-3-carboxamide and UR-12).

Under a 2012 state law, the Board has authority to ban such compounds through emergency rulemaking until the General Assembly can reconvene, indicates the Post-Tribune. According to the Post-Tribune, this is the sixth time the Board has used their authority to ban such chemicals.

Will Minnesota Be the First State?

The Minnesota Board of Pharmacy considered a proposal at its June 11, 2014 meeting to prohibit its licensees from compounding drugs to be used by corrections facilities for lethal injections. Rather than taking immediate action, the Board postponed any formal decisions until September to allow each side time to make its case.

Minnesota abolished capital punishment more than a century ago and does not supply execution drugs to  death penalty states, the Associated Press (AP) says. But the pharmacy board’s executive director, Cody Wiberg, told AP after Wednesday’s meeting, “Just because we don’t have a death penalty and you might get a more sympathetic ear than a state like Texas, it does not mean it will be an easy row to hoe.”

Only a small number of Minnesota pharmacies are licensed to make the sterile preparations that are used for injected drugs. One of them is The Apothecary Compounding Pharmacy in Sartell. Owner and IACP member Steve Anderson told the AP he does not think he would make drugs for a lethal injection. “I would have a problem compounding medications for that use. Just my Christian background. It probably wouldn’t be something that I would agree to anyway,” Anderson said.

Pennsylvania Legislation Would License Out-of-State Pharmacies

Although almost every state passed legislation to license and regulate out-of-state pharmacies in the early 1990's, Pennsylvania and Massachusetts still do not. Despite being the center of the NECC tragedy, the Massachusetts legislature has yet to move forward with any meaningful legislation to strengthen their Board of Pharmacy's oversight of compounding pharmacy practice. The Pennsylvania legislature, however, is considering House Bill 1822, which will require nonresident pharmacies to register with the Board of Pharmacy every two years. Additionally, it would also require any non-resident pharmacy permit holder to report to the Board within 30 days any disciplinary action taken by the licensing agency in the pharmacy's home state.  

Pennsylvania Representative Rob Kauffman who introduced the legislation in late 2013 said, "The 89th Legislative District, which I represent, has a number of residents who have their prescriptions filled by pharmacies in Maryland," Kauffman said in a news release. "The problem arises when a Pennsylvania resident has an issue with an out-of-state pharmacy not registered with the commonwealth, thereby leaving the state with no opportunity to take disciplinary action. My legislation will ensure that, like 48 other states, Pennsylvania will require registration of out-of-state pharmacies wishing to conduct business with Pennsylvania residents."

The legislation still needs to be passed by the House and then submitted to the Pennsylvania Senate for review and approval before this will become effective. After that, the Pennsylvania Board will need to draft regulations and set up the system by which non-resident pharmacies will register.  

USP Proposed General Chapter <800> Hazardous Drugs - Handling in Healthcare Settings

The United States Pharmacopeia (USP) currently is seeking public review and comment on its proposed Chapter <800> Hazardous Drugs - Handling in Healthcare Settings. Click here to download this chapter with line numbers

All stakeholders are encouraged to submit comments with corresponding line numbers to Comments are due by July 31, 2014. 

IACP is preparing its comments to the USP, and will share with IACP members as soon as available. Please click here to view why it's important to submit comments. Please email IACP with questions at 

IACP Nominations Open for 2014 Elections

IACP officially opened the nomination process for the 2014 election at last week’s Compounders on Capitol Hill annual convention. The Bylaws of IACP set forth an open election process with nominations accepted directly from membership.

An IACP member may nominate him/herself or another IACP member by July 15, 2014 by submitting their name, the position for which their nomination is being submitted, and the individual’s biosketch or resume to Wade Siefert, RPh, Chairman of the IACP Nominations Committee at The Nominations Committee will review all nominees’ qualifications and submit a formal slate to the IACP Board of Directors for its approval at the Board’s fall 2014 meeting. The approved slate will then be sent forward to the membership for an open election in November. Elected Board members will take office on January 1, 2015. Click here to read more. 


Every week, IACP members contact our offices for questions about practice, business, legislation and other issues.  Beginning with this issue of Capitol Connections, we'll highlight a question we've been asked that affects many of our members.  If you have a question you'd like answered, send that to

This week's question comes from an IACP member in Georgia.

Are we legally required to collect copays on private insurance plans?

There are three things to consider whenever a pharmacy is considering waiving or discounting a patient copayment: the type of third-party plan, the contract or terms associated with being a network participant for that plan, and what state laws may exist.

For public insurance programs like Medicaid and some state prescription assistance programs for the financially or medically indigent, the pharmacy provider must make a good faith effort to collect the copayment but may not deny the prescription or service to a beneficiary who cannot afford or claims they cannot afford the copayment. What does "good faith effort" mean? If a patient says "I can't afford the copay", you should document that in the profile or in your POS system and consider establishing a billing or AR system to send an invoice to the patient at the end of the month.  

For private insurance programs through insurance companies or PBMs, the network participation contract and the entire provider manual serves as your guide for making a decision to waive or discount a copayment. Many of those contracts and manuals specifically require the full collection of the established copayment. Although that has not been enforced in the past, more and more PBMs are auditing and taking disciplinary action against pharmacies that aren't following the full terms of the contract when it comes to copayment collection.  That can include being suspended from the network entirely.  

Some state pharmacy practice acts actually prohibit the discounting of copayments, the use of coupons or other financial incentives to reduce the cost of a prescription for the purpose of soliciting or obtaining business (e.g., a "discount" for transferring a prescription from another pharmacy). Not only should you check with your own Board of Pharmacy and its rules, you must also research and comply with the rules in any other state in which you are licensed.

Corporate Partner Spotlight: A.P.I. Solutions, Inc.


A.P.I. Solutions, Inc. is a specialty supplier to the compounding pharmacy industry nationwide. We are an independently owned and operated distributor and maintain state licenses and registration with the FDA. We provide superior active pharmaceutical ingredients (API’s) and innovative packaging solutions that make your pharmacy exceptional. Our in-stock supply of chemicals is constantly evolving to meet the needs of our customers and specialize in sourcing hard to find items. Our patented No-Crimp™ tops help to increase efficiency by eliminating the crimping process therefore decreasing the risk of contamination within pharmacies. Our sales & service team has over 60 years of combined experience giving them the knowledge to assist you with all your compounding needs while providing world-class customer service. At A.P.I. Solutions we understand that pharmaceutical compounding is ever-changing and we strive to ensure our customers stay on the cutting edge of the industry. For more information, please contact us at 855-878-1489.  

New Rules Regarding Reporting of CEUs to the CPE Monitor Data Base

Effective May 1, 2014 all ACPE-accredited providers have 60 days after the CPE activity participation date to upload the participant credit into CPE Monitor.  The provider must upload the participant information 60 days from the date the participant completed the CPE activity.  This applies to all CPE activities:  live, internet-based, and home-study articles.
Please click here for more information!

Registration will open August of 2014. Save the date! The ACA, IACP, ACVP Educational Conference returns to Fort Lauderdale in 2015

Don’t miss this one-of-a-kind, 3-in-1 conference that brings the pharmacy profession together in paradise. The American College of Apothecaries (ACA), the International Academy of Compounding Pharmacists (IACP) and the American College of Veterinary Pharmacists (ACVP) are joining forces again to bring you an extraordinary Educational Conference, February 25-28, 2015, at the ocean front property, the Harbor Beach Marriott Resort & Spa in Fort Lauderdale, Florida.

Click here for more details!

Reserve your hotel room now and receive the advance discount!

Start planning now!  Book your hotel room at the Harbor Beach Marriott Resort & Spa in Fort Lauderdale, Florida. The deadline to receive the hotel group rate is on or before 6:00 p.m. (EST) on Friday, January 23, 2015. 

IACP Regional Education Meeting Heading to Newark, NJ; Atlanta, GA; and Dallas, TX


The IACP Regional Education Meeting brings 2.0 contact hours (.20 CEUs) of live pharmacy law continuing education credit to pharmacists and technicians all across the United States.  Listen to David G. Miller, RPh, IACP’s Executive Vice President & CEO as he presents, Pharmacy Compounding Law and Regulations: Staying Current in a Changing World, an in-depth presentation on federal and state legislative and regulatory issues that are affecting compounders today. Click here for more information!

IACP Calendar

IACP is your one-stop resource for all things compounding! Compounder Calendar provides a comprehensive listing of compounding events and continuing education programs. Click here to view IACP’s Upcoming Events.

IACP Career Center

Welcome to the IACP Career Center! Your destination for exciting job opportunities and the best resource for qualified candidates within the Industry. Click here to view the IACP Career Center.


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