New SOAH Ruling Issued on Compound Drugs

The Texas State Office of Administrative Hearings recently issued a combined decision on insurance carrier liability for compound drug charges where preauthorization was not requested. The decision was issued in SOAH Decision Nos. # 454-18-3323.M4.NP; 454-18-3545.M4.NP; and 454-18-4105.M4.NP (decided November 2, 2018).

The combined decision may apply to any outstanding claims where the drug was prescribed and dispensed prior to July 1, 2018 which is the effective date of Division adopted 134.500 and 134.530.

In the combined decisions SOAH determined that the compounded drugs in dispute were not FDA approved, that the FDA has not approved topical cream as the dosage form for any of the ingredients in the compounded drug at issue, and that the FDA has not approved the compound of the ingredients at issue. Thus the compounded drugs require preauthorization and the compound pharmacy was not entitled to reimbursement.

The decision will be applicable to any “pre-rule” case. “Post-rule” cases are controlled by Rules 134.500 and 134.530. Those rules amended the definition of closed formulary to exclude any prescription drug created through compounding, and required preauthorization for all prescription drugs created through compounding for claims subject to and not subject to certified networks.