Rx CARE

COMPOUNDING INTEREST

New service helps pharmacists mix drugs more easily and get paid for them

Recent events surrounding a Kansas City pharmacist who allegedly adulterated some chemo drugs have, unfortunately, turned the media spotlight on all compounding pharmacists. While this incident will undoubtedly put into question the Food & Drug Administration's position and definition of compounding once again, what is certain is that every day pharmacists around the country continue to mix complex pharmaceuticals that are not available in already prepared branded form.

And while compounding in the traditional sense of mixing different pharmaceutical ingredients into a finished product appeals to the secundum artum side of many pharmacists, proper third-party reimbursement for these compounded prescriptions continues to be a challenge.

Concerned about these issues, Indu Muni, Ph.D., set out to start a company that would not only help pharmacists prepare the most commonly written compounded prescriptions more easily, but also get them properly reimbursed.

"Many pharmacists I know don't like to do compounding," said Muni. Even though the demand for certain compounded products remains high, he said the primary reason pharmacists shy away from compounding is "they are not reimbursed by third parties properly, so there is no real incentive at the store level." He added that it is not economical for pharmacists to order the bulk chemicals needed in compounding prescriptions "because inevitably [the pharmacist] uses only a small amount in a compounded prescription, and the rest of the bottle stays on the shelf for months and even years," which eventually leads to outdated ingredients and loss in sales.

Muni is a pharmacist who has worked in many practice settings over the years, including hospital and retail. During that time, he noticed a need for someone to manufacture a kind of kit that contained all the pre-weighed ingredients for commonly compounded prescriptions. Then, all pharmacists would have to do is open the packaging and mix the ingredients together to form a finished product.

"I spent several years investigating the possibilities. I visited several PBMs [pharmacy benefit managers] and insurance companies for their input, as well as the FDA, both locally and in Washington," explained Muni. "I also spoke to several pharmacists, and they were all receptive to the idea."

Determined to develop such a kit, in 1999 Muni created CutisPharma Inc., headquartered in Beverly, Mass. He conducted his research and development at the Massachusetts College of Pharmacy & Health Sciences, where he fine-tuned formulas for his first two products. Once he was satisfied with the finished products, he contracted with Lyne Laboratories, Brockton, Mass., to manufacture them under strict cGMP guidelines so as to ensure minimal quantitative variations.

The final products were referred to as compounding kits and branded under the name FIR_xST. Two FDA-approved kits are currently available, 10% Hydrocortisone in Topical Gel and 2% Testosterone in White Petrolatum. "We initially identified some seven or eight compounded prescriptions that are more or less standardized all over the country," said Muni. "The two we started with are among the most widely prescribed."

According to Muni, the nice thing about the testosterone-compounding kit is that testosterone is a Schedule III drug. Under normal conditions, a pharmacist who is compounding this product from scratch would have to use only a portion of the testosterone ampule and discard the rest. Since testosterone is a controlled drug, that could pose a problem with the Drug Enforcement Administration.

Since everything in the kit is premeasured, it avoids the hassle of the extra legal paperwork involved in destroying a controlled drug, and there is no waste. He estimates that would save 60% to 70% of the time it takes to fill a single prescription, since there is no weighing and/or measuring. Both kits have a two-year expiration date.

Since each product has its own national drug code number (NDC), average wholesale price (AWP), and wholesaler acquisition cost (WAC), reimbursement is less of a hassle than submitting for a reimbursement based on individual chemicals used during the compounding process. "Pharmacists like the concept. Not only do we have a standardized product, we have a standardized reimbursement as well," said Muni. During times of an audit, compounded prescriptions that are based on individual ingredient costs are most subject to close inspection. "Prices are ultimately negotiated, and pharmacists could be getting back less than what the product is really worth," he added, referring to a prescription that is compounded not using the kit.

Edward Heckman, president of the Pharmacists Auditing Assistance Service (PAAS), agreed. PAAS is a membership organization headquartered in Madison, Wis., that helps with third-party audits its pharmacist membership believes are questionable. He said that because CutisPharma's products are so new, it is too early to tell whether or not they will trigger an audit.

But when it comes to prescription audits in general, "there is no doubt that submitting an NDC that already has an assigned AWP is a much safer bet for pharmacists than submitting 'usual-and-customary' pricing when it comes to compounded prescriptions," said Heckman. He said occasionally PAAS sees some very high figures when it comes to questionable prescriptions on a third-party audit, and it is not unusual that many of the audits contain products that were compounded.

Muni admitted that marketing his products has been a challenge. As with any new product, buyers had to be converted to the concept of a premeasured compounding kit since there was nothing like it on the market.

"I personally called on executives at major chains and showed them the product," said Muni. "Many were impressed with the concept and decided to stock the item." But he said for the product to have successful distribution, he would have to convince the wholesalers as well as independents and hospital purchasing groups. So far his tenacity has paid off. "Our goal for this year is to be blessed by at least 20,000 stores among the major chains," he said. "Our goal for independents is 7,000 to 8,000 stores primarily through buying groups. Our hospital goal is at least 4,000 hospitals through the end of the year, also primarily through buying organizations that represent those hospitals."

To address the problem of convincing individual pharmacists, Muni said that once he identifies pharmacists who frequently compound these particular products, he plans on shipping them a free starter kit. "We will be selecting those who receive a free sample based on their compounding history," he said.

CutisPharma currently has several other compounding kits in the pipeline. These include 10% ketoprofen in PLO Gel, used topically as an anti-inflammatory agent. "I feel this would be a good market because there are currently no ketoprofen products approved for topical application in the United States," he added. The other products are chemotherapeutic mouthwashes, which Muni and other pharmacists often refer to as "magic mouthwashes," used to combat mouth sores that are common following many chemotherapy treatments.

Muni's marketing goal is two-pronged. First, he wants to make sure his compounding kits are available to any pharmacist who wants to order them through either a warehouse, wholesaler, or buying group. Then he plans to actually apply for NDAs on other compounded prescriptions that would be difficult to present in the form of a kit. "I have talked to many different pharmacists, and I believe there is an opportunity to manufacture products that pharmacists do not wish to compound because of their cost and/or time constraints."

Harold E. Cohen, R.Ph.

Harold Cohen. New service helps pharmacists mix drugs more easily and get paid for them.

Drug Topics

2001;19:18.