When commercially available medications’ standard dosage forms or amounts don’t quite fit a patient’s particular needs, the patient may benefit from customized compounded drugs. Medicare Part D, the prescription drug program, allows the private company sponsors that administer the benefit to cover compounded drugs under certain circumstances.
In recent years, Part D reimbursement to pharmacies for compounded drugs has increased significantly. A 2016 report by the Office of the Inspector General for the Department of Health and Human Services (“OIG”) found that from 2006 to 2015, payment for compounded drugs under Part D had grown more than sevenfold—compared to a less-than-threefold increase in Part D spending as a whole over the same period. Topical compounded medications in particular, the 2016 report noted, drew over 34 times as much Part D funding in 2015 as in 2006.