PHARMACY BENEFIT COVERAGE GUIDELINE
Medical Necessity Criteria for Compounded Medications
Compounded medications may be considered medically necessary when ALL of the following criteria are met:
Coverage for compounded medications will not be covered under the following circumstances:
Medical policies are systematically developed guidelines that serve as a resource for Company staff when determining coverage for specific medical procedures, drugs or devices. Coverage for medical services is subject to the limits and conditions of the member benefit plan. Members and their providers should consult the member benefit booklet or contact a customer service representative to determine whether there are any benefit limitations applicable to this service or supply. This medical policy does not apply to Medicare Advantage.
Applies to all pharmacy benefit contracts that include Point of Sale/Prior Authorization Edits.
Applies to all medical benefit contracts.
Pharmacy compounding is the practice in which a licensed pharmacist combines, mixes, or alters ingredients in response to a prescription to create a medication tailored to the medical needs of an individual patient. Pharmacy compounding, if done properly, can serve an important public health need if a patient cannot be treated with an FDA-approved medication. The end product of the compounding practice is referred to as a compounded medication or compounded formulation.
Compounded medications may replace those that are temporarily unavailable due to drug shortages, or those that are not commercially available in terms of dosage forms or combinations of medications. These forms may serve a useful function for patients who are unable to swallow standard oral dosage forms and may require liquid forms to continue their therapy.
Unlike FDA-approved medications, compounded medications are not clinically evaluated for safety or efficacy. Compounding pharmacies are not subject to statutes governing good manufacturing practices. They are may be required to comply with United States Pharmacopeia Chapters 795 and 797 which specifies conditions for safe compounding practices for non-sterile and sterile compounded medications. The FDA generally defers to state boards of pharmacy to enforce these guidelines.
Coverage is subject to the coverage limitations and exclusions of the member’s contract. Medical necessity of covered medications is governed by approved FDA indications as well as Policy 5.01.549, Off-Label Use of Drugs and Biologic Agents. (See Related Coverage Guidelines / Policies)
New policy added to Prescription Drug section. Policy approved with 90-day provide notification hold. The policy is effective February 11, 2013.
Policy effective date delayed and is now April 1, 2013.
Replace policy. Policy updated within the Policy Guidelines, clarifying criteria added, removed and rearranged; Description section removed; Rationale section significantly updated; references added, removed, renumbered and updated. Policy effective date remains 4/1/13.
Minor Update – Clarification was added to the policy that it is managed through the member’s pharmacy benefit; this is now listed in the header and within the coding section.
Annual review. Covered to Benefit Coverage Guideline template. Coverage information added to address hormone pellets; considered investigational. Notation in header section removed indicating coverage is managed by the pharmacy benefit.
Disclaimer: This medical policy is a guide in evaluating the medical necessity of a particular service or treatment. The Company adopts policies after careful review of published peer-reviewed scientific literature, national guidelines and local standards of practice. Since medical technology is constantly changing, the Company reserves the right to review and update policies as appropriate. Member contracts differ in their benefits. Always consult the member benefit booklet or contact a member service representative to determine coverage for a specific medical service or supply. CPT codes, descriptions and materials are copyrighted by the American Medical Association (AMA).