Compounding pharmacies bring health plan lawsuit

Three compounding pharmacies have sued Harvard Pilgrim Health Care (Harvard Pilgrim) in Massachusetts. The lawsuit, filed in Norfolk Superior Court, alleges that Harvard Pilgrim violated state law as well as its contractual obligations by denying health insurance coverage for drug preparations compounded by the pharmacies. Harvard Pilgrim is the second largest insurer in the state of Massachusetts. 

The plaintiff pharmacies involved in the lawsuit are Bird’s Hill Pharmacy, Hopkinton Drug, and Johnson Compounding and Wellness Center. In addition to seeking an injunction to halt the coverage exclusion, the plaintiffs sought a trial by jury and damages related to lost business.

The back story

In short, in July 2013 the plaintiffs filed the lawsuit and sought a preliminary injunction to prevent Harvard Pilgrim from denying medically necessary healthcare services. Harvard Pilgrim had introduced a change in its prescription-drug policy through a policy shift in prescription-drug benefits scheduled to take effect in August 2013.

A separate federal lawsuit was filed by a Harvard Pilgrim insured individual in U.S. District Court in Boston, Massachusetts.

Bird’s Hill Pharmacy owner, Henry Abbott, was quoted in a statement as saying, “Harvard Pilgrim’s callous decision to cut off coverage is a major blow to the many patients across Massachusetts who depend on compounded medications, either because there is no commercially manufactured drug available or because they need a customized version. Many of our patients will no longer be able to afford these medications without insurance coverage, and we are worried about what this decision will mean for their health.”

Adults only

Of interest, the Harvard Pilgrim policy shift excludes coverage only for prescription drugs compounded for adults, while continuing coverage for children. Specifically, the policy change will affect only Harvard Pilgrim members over age 18; however, an appeals process is available to those adults who wish to attempt to request coverage for a compounded prescription drug once coverage is denied.

Compounded drugs are prepared by pharmacies pursuant to patient-specific prescriptions for individuals who are unable to obtain commercially available preparations or who may have allergies to one or more components of a standard drug.

Federal and state regulators, as well as payors, have increased their scrutiny of compounding pharmacies recently due to injuries and deaths arising from unsafe practices related to the preparation of compounded prescription drugs.

The argument

The substantive aspect of the legal complaint argues that Harvard Pilgrim is statutorily mandated to provide coverage for “healthcare services that are ordered by a treating physician or a primary care provider if (1) the services are a covered benefit under the insured’s health benefit plan and (2) the services are medically necessary.”

The plaintiff pharmacies claim that in many instances standard medications are not commercially available for certain conditions. They maintain that because some patients cannot take standard medications because of allergies or other health conditions, compounded prescription drugs are medically necessary.

In response to the lawsuit, Harvard Pilgrim issued the following statement: "We are in the process of carefully reviewing the plaintiffs’ allegations with our legal counsel. However, we do want to emphasize that we have an established process to approve medically necessary compounded prescriptions within a 48-hour turn-around, once all informatioinformation is received."