FDA Compounding Guidance

The FDA has released a welcome new policy guidance document surrounding compounded drugs that will equip PBMs and Carriers with some much needed objective standards by which to exclude certain illegitimately compounded products from coverage. Many pharmacies have gotten into the business of creating what amounts to copies of commercially available products, usually at outrageously high prices. The new FDA guidance establishes a clear line of demarcation between legitimate, pharmacy-based, ad hoc compounding and illegitimate, for-profit, de facto manufacturing operations.

In its new policy the FDA identifies two criteria that assist PBMs and Carriers in identifying illegitimate compounding that essentially crosses the line into de facto manufacturing operations. They are:

  1. If an entity is creating what is essentially a copy of a commercially available drug product, and,
  2. If an entity is creating these compounded products on a regular basis, or in inordinate amounts.

If these two conditions are deemed to exist, then PBMs and Carriers have an objective basis upon which to exclude such high-cost products from coverage, as well as to further consider the exclusion of such manufacturing facilities from their respective pharmacy networks.

All in all, this new guidance, while non-binding, finally establishes an objective set of criteria by which the distinction between legitimate and illegitimate pharmacy compounding may readily be made.

Please reach out to your Excelsior Solutions account team for assistance in discussing the implementation of this FDA guidance with your PBM or Carrier as soon as possible.

This new FDA policy can be found on the FDA website at https://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM510154.pdf.

Bob has more than 30 years of diverse experience in the pharmacy industry. Over the course of his career, Bob has led clinical and PBM operations teams in successfully managing more than $4 billion in annual drug spend. This was also while limiting per-member-per-year spending growth to levels that have simultaneously drawn industry acclaim and consistently high levels of member and payer satisfaction.

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