Insurance Company Drug Managers Now Deciding What’s Medically “Necessary”

chemistery labCompounded medications aren’t being covered—which means FDA-approved drugs will own the marketplace. Action Alert!
Pharmacy benefit managers, or PBMs, are companies that process prescriptions for insurance companies and corporations, and use their size to negotiate low prices with drug makers and pharmacies. They act as an intermediary between the payor and everyone else in the healthcare system.
One major PBM, Express Scripts, is dramatically decreasing its coverage for some bulk ingredients of compounded drugs. They’re citing high prices, and arguing that “by and large, compounded medications do not provide any additional clinical value over what is currently available.” The company will block coverage for approximately 1,000 active ingredients.
Three other PBMs—Optum Rx (part of the insurance company United Health Group), CVS Caremark, and Catamaran—have placed restrictions on compounded drug ingredients. Harvard Pilgrim Health Care, the largest insurer in New England, ended coverage for compounded drugs altogether except for children and medically necessary drugs for adults.
Note the language these PBMs are using: “They don’t provide any additional clinical value.” “Only medically necessary drugs.” Why in the world are insurers—or worse, their drug purchasing managers—determining what is “medically necessary” rather than one’s personal physician? Pharmaceutical companies and insurance companies are negotiating prices and profits between themselves, without a single thought to the best interests of patients. And, as we have noted before, attacking compounded medications gives more of a monopoly to FDA-approved drugs.
Recently enacted legislation already restricts access to compounded drugs—though everything will hinge on what finally ends up on the “FDA-approved” list—and the new limits on interstate commerce for traditional pharmacies have already driven up compounding costs. With access to compounded medication being restricted by government regulation, and with insurance company PBMs cutting coverage, demand for compounded bulk ingredients will naturally decrease and prices will almost certainly rise further. This greatly threatens the existence of the small compounding pharmacies for whom we advocate.
A new coalition of patients, patient advocacy groups, pharmacists, physicians, pharmacies, and healthcare organizations has arisen to fight these changes. Patients and Physicians for Rx Access is seeking to raise awareness about access to compounded medications. They explain just how important compounding is to American healthcare—and how safe the medications really are.
Action Alert! Write to the pharmacy benefit managers Express Scripts, Optum Rx, CVS Caremark, and Catamaran. Tell them to preserve coverage for compounded medications. Explain that they have no authority to override a doctor’s healthcare directive with their own assessment of what is “medically necessary.” Show them how important compounding is to families like yours. Please take action immediately!


  1. I just encountered this! My health insurance is through Optum Rx and they denied coverage for medically required LDN for multiple sclerosis! A 30day supply is $120!!

  2. Please do the right thing and allow a truly free market for citizens health choices. Closing down the ability for people to choose they pharmacy and medications is socialist!

  3. Please act to preserve coverage for compounded medications. Why should insurance companies have the authority to override a doctor’s healthcare directive with their own assessment of what is “medically necessary.”

  4. I’m fed up with AMA approved medicine. I was tricked into gastric bypass in 1999. Insurance paid for that. Insurance wouldn’t pay for nutritional counseling/help afterward with a RD. Doctor had me on cyanocobolomin shots. No intrinsic factor; couldn’t use cobolomin because with no stomach I wasn’t able to convert it to methylcobolomin. For 11 years this went on as I got worse. I found out why, quit the doctors, and started getting better with methylcobolomin pills. They almost killed me (same thing killed my Mom 2 years ago) and it still might. As a result I now spend half of what I get in disability each month on supplements. I need help, but can’t afford it. Medicare primary, Cigna secondary. We spend a small fortune each month for insurance that doesn’t help.

  5. Hi, I have a comment regarding the headline: Insurance companies have been making coverage decisions based on their assessment of medical necessity since at least the 1970s, when my father was doing that exact thing for a living–he’s a medical doctor, btw, Internal Medicine and Cardiology, and the people hired to do that job are generally well qualified. Aside from that, I wholeheartedly agree with the concerns raised. I have had to take compounded prescriptions before, and it was a hardship since they weren’t covered.

  6. I had to make a special trip to another pharmacy, to get an oral rinse which required compounding, when I was sick w/chemo. Now, this just isn’t right!!

  7. Preserve cverage for compound medications. the public needs these just as much as regular medications so we should not be kept from getting days if we need them or want them

  8. The insurance companies I have had in the past never did cover compounding. This isn’t new for me. It’s not right. I have always just had to pay out of pocket.

  9. I am one of an estimated 10 million chemically sensitive /asthma patients whom FDA has left with no safe inhalers to protect the environment. ( We are excluded from clinical trials in a sneaky way- for if one has a heart condition one can’t be in the trial and most with a lung injury do from day one as heart begins to over compensate.My doctors have gone to using a compound in the bubble cup attached to my liquid oxygen and A BIG DISCOVERY WASMADE; The more minute amounts 24/7 are safer and maybe many of the devastating side effects of the inhaled steroids ins that patients have been getting an overdose a couple of times a day when a more minute amount 24/7 is better. Replacing all those hundreds of dollars of inhalers costs @ $25 per month. The liquid oxygen is the propellant.. So far I do get some reimbursement form my federal Blue cross blue shield for bills that are approved by federal workers compensation which is non existent being turned over to a govt contractor who is also taking over much of the workers comp in states. They ignore judges orders and play deadly games even when one has accepted conditions. But that is another horror story. My doctors say about anything can be compounded and its cheaper and works better. FDA does not work well for patients or their doctors trying to prescribe the best care which in my case is cheaper. As for those ozone emitting oxygen concentrators? deadly inflammation for one like me. Don’t forget those insurance companies are also liability insurers and if the patient dies sooner than later than they get out of paying for decades of medical bills and can just pay ones survivors a monthly stipend of some sort. But even getting the right tests run to prove what has occurred is being shutr down form when I wasinjred 1/10.Linda Joy Adams

    1. Sorry I hit enter too soon. date of injury was 1/10/ 89 and it was bad and deadly. I am the living proof that with good medical care one can live for decades , but that is getting turned back to the 1 to 5 years with what is going on with health care and lack of common sense in treatments. I’m not a doctor, but have been a patient of many excellent ones and many are published in peer journals its past time to let the doctors run health care again,. Linda Joy Adams

  10. The following is a letter my husband recently received from Express Scripts
    They are blaming the change on the FDA and the compounding pharmacy says it has nothing to do with the FDA
    “We want you to know about an important change coming to your prescription drug coverage on 09/15/2014. As of this date, your prescription benefit will no longer cover prescriptions ofr compounded medications containing the following
    VITAMIN D3 1000,000 UNIT/GM PWD
    The U.S. FDA defines a compound medication as one that requires a licensed pharmacist to combine mix or alter the ingredients of a medication when filling a prescription. The GDA does not verify the quality, safety and/or effectiveness of compound medications.
    To avoid paying the full cost of your medication you should:
    Ask your doctor for a new prescription for an FDA approved drug before your next fill
    -Be aware that this new prescription may still require further review and/or approval to the covered under your plan.
    Please understand that because the medication you’re currently taking will no longer be covered under your plan, you could pay the full cost if you continue taking it. So, it’s important that you ask your doctor for a new prescription before 09/15/2014. For any questions , please call the number on your member ID card
    Andrew R Behm, Doctor of Pharmacy
    Vice President of Pharmacy Services
    Express Scripts

  11. I suffer from Peripheral Neuropathy and cannot take any oral medications made by Big Pharma for it, as they render me non-functional.and I am a widow who lives alone, and need to function.. I have beem using a compunded lotion to rub on my very painful feet and legs and the relief given by this has made me fuctional once more. Without this my life is just m iserable and its quality is totally diminished. Why should I be forced to do without something that improves my quality of life and makes me functional once more? I am not alone in this situation…many of us have had our lives restored!

    1. What is the lotion that you use. I am in the same position you, alone and not able to tolerate oral mind altering drugs, and am currently using nothing. I have not heard of a lotion. Thank you

  12. Hallo.
    Since I am traveling from NYC to Cebu City, the Philippines in early September 2014. My PCP (strongly) suggests that I take an oral vaccine for Typhoid Fever called Vivotif Berna.
    My Medicare/WellCare Advantage Health Insurance refuses to bill nor to cover it entirely. It’s very pricey and cannot afford to the cost out of pocket! What would you advise?

  13. none of my compounded medications has EVER been covered by my insurance company — so i’ve known this for several years now.

  14. One of the reasons the Republicans gave for resisting President Obama’s Health Care Law was that the Government was coming betweewn patients and Doctors. Health Insurance Companies have always decided what a patient needs or does not need and now drug companies are jumping in. If a Doctor prescribes something, it should be covered, period. The major concern should not be drug companies having to pay a little more.

  15. This is unfair to the people who want coverage. Insurance companies have too much control over our health care.

  16. Evil men do not have the power to inflict much harm on anyone until they harness the collective power of the lackeys who serve them. Those lackeys are the employees of Regulatory agencies who out of a fear of losing their jobs do nothing. We need Snowdens! Men with the moral courage and the balls to do whats right and honorable. The other lackeys are the uniformed, the CIA, NSA, FBI, Justice, Supreme Court morally bankrupt justices, etc. etc. etc.
    Seize the opportunity to do something honorable for the welfare of your children, grandchildren, and future generations.
    And vote for good women (not republican or tea party members) as ALL MEN are inherently evil!

  17. Please preserve coverage for compounded medications. You have no authority to override a doctor’s healthcare directive with your own assessment of what is “medically necessary. Frankly, I am tired of my country being overrun by companies like yours that are strictly out for profit and that do not practice the Golden Rule.

  18. Shame on insurance companies and other major corporations who want to stop Americans from getting all the necessary medications they need! Patients who rely on compounded medicines are in danger of losing access to essential medications. Companies like yours are quietly cutting off payment for the vast majority of compounded medicines that physicians often prescribe for children and patients with unique needs. People with cancer, diabetes, hormonal imbalances, chronic pain, autism and other conditions may soon lose access to their most effective medications.

  19. There are many people who benefit greatly from compounded medications. I do not think it is in people’s best interest for those in the drug industry to be determining whether it is medically necessary. This is just another instance where the fox is guarding the henhouse.

  20. please leave coverage of compounded medications….you have zero authority to override a doctor’s healthcare directive with you own”assessment” of what is “medically necessary”. how can you determine what is needed for the patient vs that person’s doctor???

  21. I have worked in the pharmacy industry and for a few PBM’s for almost a decade. Insurance companies not covering compounds are nothing new. When the Armour Thyroid shortage on certain strengths was happening, CVS would not pay for my Armour to be compounded from the higher strengths available. I had to pay cash because I wouldn’t use Synthroid. I am on 3 compounded drugs now and I just pay for them with my HSA card. So far the compounding pharmacies have made it affordable enough. The answer for me was just not to use Big Pharma products as much as possible. I certainly agree that physicians should be making the decisions for.the patient, but I guess the insurance companies and PBMs feel they can make the rules as to what they want to pay for if they are footing the bill. I certainly believe we should take action to get laws enacted for coverage of compounds. I just won’t be surprised when or if things get worse for natural medications.

  22. I ran into this years ago at age 35 post full hysterectomy when prescribed an individualized,, compounded hormone cream; I had to pay full price for what was clearly medically necessary.
    Besides starting juicing I’ve since immersed myself in natural alternatives for any condition, illness, infection etc. and have broke free of ALL Rx drugs (anti-seizure, narcotic pain meds, hormonal balance and more) for myself and my pets and we’ve never been healthier other than a massive tooth abscess (from a broken root canal pin) that went systemic but cleared with regular high doses of vitamin C, B’s, K, iodine, local honey, salt water and peroxide rinses etc. throughout the day.
    One has to research and exercise common sense but the great part about using mega vitamin doses, plants and other cost-effective home remedies like peroxide, apple cider vinegar etc is there are few or no side effects, usually just the self limiting kind that do NO HARM unlike the toxic meds people have come to accept.

  23. It is a crying shame that Insurance Companies think they know what is better for a patient’s medical condition than a doctor does. Where did that insurance company person get his/her medical doctor’s degree? Go back to school and study to be a doctor if that is what you want to be. Then you will be qualified to diagnose a person’s medical condition and what they need to treat it.

  24. All they are trying to do is get back at the afordable care act obama brought to everybody. they want everyone who voted for him to be sorry and the republicans to say “i told you so.” God will bring retribution to the heartless who have no love for their fellow man. KARMA

  25. Tell the drug benefit managers (as I did) that you will simply stop paying for drug benefits if they won’t allow for compounded drugs. After all we might as well use the monthly benefit $ to go towards the cost of our compounded drugs & supplements rather than their poison drugs!

  26. In my case, I’m allergic to the base used in the manufactured version of a drug my doctor prescribes. Not only do I have to pay it out of pocket, it’s very expensive. In addition, I can’t fight with the insurance company about the necessity without going back to trying the manufactured drug and going through all of the problems again. Why? Because the allergy was discovered years ago and I no longer have those records. Many years ago, no one thought to get their records and some doctors wouldn’t give them to the patient. After many moves, and many doctors retiring and moving themselves, the track is lost. It’s beyond me why I’d make up something like that when it would save me time and money to use the more easily available product, but the insurance company wants total control. That comes right up there with making people try lower cost drugs and generics. My MIL had a reaction to the generic of her blood pressure medication, due to a sensitivity to one of the ingredients. Food colors, preservatives, and other things can cause legitimate reactions.

  27. I have an injury that puts me in immense pain. and certain days eliminates my ability to work all together chronic pain
    I have an injury that puts me in immense pain. This condition effects my ability to work, certain days it eliminates my ability to work all together. I am prescribed pain medication by my primary care doctor (PCD). However, the insurance company states I don’t need all the medication prescribed unless I have cancer. Apparently cancer is the only thing that causes debilitating pain. The further ridiculousness of medical insurance is that they either cover or do not cover the prescription. They do not partially cover prescriptions. Luckily my PCD told me she is a fan of
    guerilla medicine and writes me a script for the covered amount and the non-covered amount which I am left to pay out of pocket. While this saves me money it is still expensive given that I am on medical, I don’t have much money.
    My mother is in a similar situation. She has chronic pancreatitis which is a severely painful condition which frequently immobilizes her. She takes a compound called Creon with every meal to help alleviate the pancreatitis attacks by supplementing the pancreatic enzymes. As discussed in the article compounds are not covered under insurance. Without this medicine nearly every
    meal will send her into an attack. The out of pocket cost of her monthly prescription of Creon is over $1400. Yes, this medicine is a completely necessary part of every meal.
    Why we are now forced to buy insurance but the insurance companies are able to decide what the will and will not cover is completely outrageous. We desperately need legislation to fix this issue. If a doctor prescribes it to you, your insurance company should be mandated to cover it.

  28. Yes, while they do have doctors and pharmacist making those types of decisions, in all fairness, they do not see the patients or know them. It would not be legal for a doctor and a pharmacist to look at patient records, determine what they may or may not need, then give them a script without ever knowing or seeing the patient. This is EXACTLY what they are doing. I had my pain medication cut down by 80%!!!! From 720 tabs to 120 tabs per month! When I spoke with the pharmacist at the insurance company I told her, “even if I were to wean of it right now, the amount you are allowing would still cause me to go into withdrawals.” She said, “yes, as pharmacists we are aware of that.” I said, “then why would you do that?” She told me they just needed more information from my doctor regarding the quantity. She told me to have my doctor also state that the amount they cut back on my medication will cause withdrawals. I told her that as medical professionals making decisions regarding my medications, they shouldn’t need to be TOLD that, they should KNOW that. She said, “They do, but sometimes they need to be reminded.” SERIOUSLY?!! Reminded! If they are going to be making important decisions about people’s lives and their health, they shouldn’t need to be reminded of ANYTHING! They should have a VERY THOROUGH understanding of the situation before they deny coverage.

Comments are closed.