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Compounding Pharmacies Should Expect Greater Scrutiny as Government Health Care Budgets Get Squeezed

Pratt's Government Contracting Law Report Article

As government health care funding shrinks, federal and state enforcement agencies will continue to target compounding pharmacies for potential fraud. The author of this article explains why compounding pharmacies must remain vigilant to avoid a government enforcement action and offers steps to lessen the likelihood of being investigated and/or becoming the subject of a prosecution.

As Congress continues to grapple over health care reform, there are many uncertainties. However, one thing is clear: as government health care funding shrinks, federal and state enforcement agencies will continue to target com-pounding pharmacies for potential fraud. Compounded drug use and related government spending, particularly on topical creams and ointments, has skyrocketed. Many argue that drug compounding regulation remains murky, making it too easy to prosecute traditional compounders.

Compounding advocates suggest regulation of compounders has been heavy-handed and ignores the multiple benefits associated with compounding. Arguably, these competing tensions have led to ineffective industry regulation. These tensions include:

  • Who is responsible for regulating the industry? The Food and Drug Administration (“FDA”) or State Pharmacy Boards?
  • Who is considered a compounding pharmacy as opposed to a drug manufacturer?
  • How can a regulatory scheme walk the fine line between patient safety and patient access to compounded drugs?
  • Do compounded drugs serve as an effective counterbalance to what many consider out-of-control drug prices?

Addressing these policy issues is beyond the scope of this article, but what is crystal clear is that compounding pharmacies must remain vigilant to avoid or defend a government enforcement action.

To read the full article, please click here.

“Compounding Pharmacies Should Expect Greater Scrutiny as Government Health Care Budgets Get Squeezed,” by Merle M. DeLancey, Jr. was published in the November 2017 edition of Pratt’s Government Contracting Law Report (Vol. 3, No. 11), an A.S. Pratt Publication, LexisNexis. Reprinted with permission.

This article was first published in Blank Rome’s Government Contracts Navigator blog in August 2017.