HHS OIG Finds Dramatic Increases in Medicare Part D Spending on Compounded Drugs

27 Jun 2016
Mark Josephs

The HHS Office of Inspector General recently released the results of a study examining trends in Medicare Part D spending, particularly in terms of dangers of fraud and abuse. Key findings of this study include a large increase of $4 billion in Part D spending on commonly abused opioids in 2015 and a dramatic increase in spending on compounded topical drugs of more than 3,400 percent since 2006. The opioid increase is obviously a serious issue that warrants much more extensive treatment, but gratefully there is now some evidence that prescriptions of dangers opioids has decreased recently.

The compounding spending increase is startling, particularly in the context of the negative attention directed at the compounding industry following the deaths that resulted from the compounded products distributed by New England Compounding Company. Those tragic deaths led Congress to enact legislation enhancing federal oversight of the compounding industry and caused states to redouble their efforts to monitor a traditionally state-regulated area. One would expect that this Medicare spending increase on compounded products would cause regulators at both the federal and state levels to maintain close scrutiny of compounders in an effort to ensure that products are manufactured safely and that so-called compounders are not truly acting as drug manufacturers.

I obtained substantial expertise in the compounding regulatory scheme while at the Department of Justice, including supervising a key prosecution in this area. I am available to provide assistance to compounders in need of legal compliance advice or facing government attention.

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