Neb-med ruling catches industry off-guard

Sunday, March 25, 2007

WASHINGTON - CMS lobbed a nebulizer policy revision out of left field last week, informing providers that it will no longer pay for compounded versions of commercially available inhalation drugs.

The decision states that all compounded inhalation solutions will be denied as not medically necessary beginning July 1, 2007.

Wayne Vega, a consultant with Stat Vial, said the decision uses a "technicality" to justify no longer paying for pharmacy-made preparations.

"If it's under the guise that pharmacy-made versions are unapproved drugs, then we don't have to talk about whether these are effective," said Vega. "They had no substance from a clinical perspective."

While last week's announcement surprised industry insiders, it's in keeping with a series of hits the industry has taken in recent months.

In late November, CMS released new HCPC codes for compounded preparations--without a fee schedule. In December, the agency initiated a national coverage review on the use of levalbuterol in COPD treatment along with potential reimbursement cuts to brand drugs Xopenex and DuoNeb.

That review is still in play, said Joe Lewarski, vice president of clinical and government affairs for Inogen.

But does last week's ruling sound a death knell for pharmacy compounding? While pharmacies that rely heavily on compounding will no doubt be hurt, industry leaders expect many will just switch patients to pricier, commercially available drugs, namely Xopenex and Duoneb.

"They can start dispensing Xopenex and make more money than they were compounding anyway," said Mickey Letson, president of Decatur, Ala.-based Letco Companies "This only hurts the patient and the Medicare system."