OCTOBER 01, 2006

To the dismay of compounding pharmacists, Medicare officials announced plans for drastic reductions in payments to pharmacies that make their own, non-FDA-approved versions of respiratory drugs used by asthmatics. The action comes on the heels of FDA charges that a number of pharmacies may be violating federal law by mass-producing "thousands of doses" of unapproved respiratory drugs.

In a letter sent to Senate Finance Committee Chairman Charles Grassley (R, Iowa), Medicare officials revealed that the program will no longer pay pharmacists the same amount for drugs made from raw ingredients as it does for finished products purchased from the manufacturer. Beginning next January, the program will use special payment codes under which Medicare will pay less for pharmacy-made respiratory drugs.

In his letter to Senator Grassley, former Medicare Administrator Mark McClellan,MD, PhD, said the payments for pharmacy-made drugs will be "significantly lower" in order to eliminate "any inappropriately large financial incentives" for pharmacies to switch patients to these drugs.

Earlier this year, Grassley alerted officials at both the FDA and Medicare of reports that some pharmacists were switching patients to pharmacy-made respiratory drugs without informing their physicians. In some cases, the pharmacymade drugs were contaminated, he said. For a related story on Medicare's reaction to compounding, visit ePharmacy Times at