The Los Angeles Times article noted that "Critics of the use of compounded drugs point to a sharp rise in the bills submitted to the State Compensation Insurance Fund, the state's biggest workers' comp insurer. Billings for compounded drugs reached $28 million, or 24% of the fund's total prescription billings last year — from a number so low the previous year that State Fund didn't bother to track it." Rand Corporation is compiling a study on this issue.
An effort last year to discourage the use of compounded drugs — especially those concocted by pharmacists, given by doctors to their patients and billed to insurers — failed to get through the state Legislature. Doctors were among those lobbying against it.
One of the focal points of this bill will be the third party pharmacies that are involved in providing the compounds to the physicians and chiropractors and billing the workers' compensation carriers. According to the L.A. Times article there are concerns about medical necessity and "[s]uspicions of abuse have been fueled by advertisements for compounded drugs on Craigslist two years ago that offered 'doctors who see work comp patients … $20K a month dispensing meds.'" The ad supposedly said: "There are no legal issues, no billing — we do the billing, no costs or risks to the doctor," the ads said. "We have over 400 doctors in California." The ads further stated that "we have a great product an Anti-Inflammatory Cream that's compounded and has spectacular results" and that doctors could make a $141.60 profit on every prescription.
The L.A. Times article discussed one leading compounding pharmacist Robert Nickell, president of HNP Pharmaceuticals in Torrance. According to the article, Nickell and HNP have been part of a network of dozens of related pharmacies and third-party medical billing companies, many registered at the same Torrance address as HNP.
