Appeal type: unknown
Decision: unknown

With respect to multi-ingredient compounds, a Part D sponsor must make a determination as to whether the compound is covered under Part D and establish consistent rules for beneficiary payment liabilities for both ingredients of the Part D compound that independently meet the definition of a Part D drug and non-Part D ingredients.A compound that contains at least one ingredient covered under Part B as prescribed and dispensed or administered is considered a Part B compound, regardless of whether other ingredients in the compound are covered under Part B as prescribed and dispensed or administered. Only compounds that contain at least one ingredient that independently meets the definition of a Part D drug, and that do not include at least one ingredient that would be covered under Part B, may be covered under Part D. For purposes of this paragraph, these compounds are referred to as Part D compounds.For a Part D compound to be considered on-formulary, all ingredients that independently meet the definition of a Part D drug must be considered on-formulary (even if the particular Part D drug would be considered off-formulary if it were provided separately  that is, not as part of the Part D compound). For a Part D compound that is considered off-formulary, transition rules apply such that all ingredients in the Part D compound that independently meet the definition of a Part D drug must become payable in the event of a transition fill under Section 423.120(b)(3), and all ingredients that independently meet the definition of a Part D drug must be covered if an exception under Section 423.578(b) is approved for coverage of the compound.For low income subsidy beneficiaries, the copayment amount is based on whether the most expensive ingredient that independently meets the definition of a Part D drug in the Part D compound is a generic or brand name drug. For any non-Part D ingredient of the Part D compound, the Part D sponsor's contract with the pharmacy must prohibit balance billing the beneficiary for the cost of any such ingredients. [42 Code of Federal Regulations Section 423.120]Compounded prescription drug products can contain: 1) All Part D drug product components; 2) Some Part D drug product components; or 3) No Part D drug product components. As defined in 42 Code of Federal Regulations Section 423.120(d), only compounds that contain at least one ingredient that independently meets the definition of a Part D drug, and that do not contain any ingredients covered under Part B as prescribed and dispensed or administered, may be covered under Part D. Only costs associated with those components that satisfy the definition of a Part D drug are allowable costs under Part D because the compounded products as a whole do not satisfy the definition of a Part D drug. For a Part D compound to be considered on-formulary, all ingredients that independently meet the definition of a Part D drug must be considered on-formulary. Bulk powders (i.e., active pharmaceutical ingredients for compounding) do not satisfy the definition of a Part D drug and are not covered by Part D. For any non-Part D ingredient of the Part D compound, the Part D sponsors contract with the pharmacy must prohibit balance billing the beneficiary for the cost of any such ingredients. Sponsors treating compounds as non-formulary products should be applying the cost sharing associated with an exceptions tier, regardless of whether the compound contains brand name or generic products. For a Part D compound considered off-formulary, transition rules apply such that all ingredients that independently meet the definition of a Part D drug must become payable in the event of a transition fill and be covered if an exception under 42 Code of Federal Regulations Section 423.578(b) is approved for coverage of the compound. The labor costs associated with mixing a compounded product that contains at least one Part D drug component can be included in the dispensing fee (as defined in 42 Code of Federal Regulations Section 423.100). For compounds containing all generic products, the generic cost-sharing should be applied. If a compound contains any brand name products, the Part D sponsor may apply the higher brand name cost-sharing to the entire compound. For low income subsidy beneficiaries the copayment amount is based on whether the most expensive ingredient that independently meets the definition of a Part D drug in the Part D compound is a generic or brand name drug. [The Centers for Medicare & Medicaid Services Internet-Only Manual, Publication 100-18, Medicare Prescription Drug Benefit Manual, Chapter 6, Section 10.4]