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$300M spike in TRICARE monthly spending linked to compounded drugs

Officials blame suspicious pain and scar creams with no documented benefits

Current statistics show that TRICARE spends $335 million each month on prescription medications, an eight-fold jump from the $42 million it spent each month last year, according to a CBS News investigation.

Officials believe the primary reason for that spike has to do with pain and scar creams with no verifiable benefits. The creams are marketed directly to veterans at "free lunch" events and through websites such as www.Healing4Heroes.us, which simply requires patients to fill out an online form and include their TRICARE number. Afterwards, a physician contacts the patient, writes a prescription and sends a supply of creams and supplements valued at $25,000.

"We're on track this year to spend over $2 billion unless we get our hands around this," Major General Richard Thomas, who oversees TRICARE, told CBS News.

The owner of www.Healing4Heroes.us told a CBS producer posing as a potential sales rep that most of the money goes to a compounding pharmacy called Patient Care America. The CEO of that company, Patrick Smith, provided a video statement, claiming that the creams provided a viable alternative to addictive pain medications.

However, government officials aren't so sure. Thomas said TRICARE hasn't found any discernable clinical benefits associated with the compounded medications. As a result, the government program has implemented a new claims screening process aimed at curbing spending on compounded drugs. This follows a February report from the Government Accountability Office that criticized TRICARE for its inability to identify improper payments.

Similar spending spikes have occurred among private insurance providers in recent years. In 2013, Harvard Pilgrim said they were no longer covering compounded medications because of cost and safety concerns. Last year, other payers such as UnitedHealth Group and Blue Cross Blue Shield jumped on board, announcing that they would no longer cover compounded medication thanks to a nearly $150 million spike in spending over the course of two years, FierceHealthPayer previously reported.

For more:
- watch the CBS News report

Related Articles:
GAO report criticizes TRICARE's medical claims review
Pricey compounded drugs come under scrutiny
Harvard Pilgrim drops compound drug coverage