Medicare Part D and Compounding Pharmacies

How do Part D plans work with compounding pharmacies?

I have a client, Kate, who is turning 65 soon and uses a compounding pharmacy for her medications. Over the years, Kate realized that medications in hard pill form are not absorbed by her body, so she uses a compounding pharmacy that puts her medications into a capsule, and this works for her.

Kate gave me a list of her medications, taken from the labels on her pill bottles. I went to and used the Plan Finder to see which of the 26 Part D plans in Arizona would work best for her.

Part D plans have networks

I also had to make sure there are Part D plans that have compounding pharmacies in their network. You see, Part D plans have networks, and if a person goes “out-of-network”, the Part D plan will not work. Most pharmacies are “in-network”, but smaller, local pharmacies might not be contracted with Part D plans.

I always wondered why the Plan Finder requires me to put in a pharmacy, and now I know.  Most of the pharmacies are national chains, but I recognized Avella on the list as being a compounding pharmacy in Tucson. Avella used to be known as The Apothecary Shop. So I chose Avella as the pharmacy Kate would use with her Part D plan.

The list of 26 Part D plans was sorted from least expensive to most expensive.  But since Kate’s medications are all generic, there wasn’t a lot of difference in co-pays. But there were wide variations in premiums and deductibles. However, most of the plans did not have Avella in their network.

The plan that did have Avella in-network was First Health Value Part D. I am not contracted with this company, but I told Kate to call them and tell them her situation and give them her list of medications, so they can confirm that their plan will work for her.

Kate made the call and was disappointed. She called me to say the First Health representative told her they do not work with compounding pharmacies. He could not find her drugs on their formulary. And he said information on is often wrong.  Yikes!

I told Kate she might have been unlucky to get an inexperienced rep.  I decided check the first Health website and then  called First Health.  I was fortunate to talk to a more experienced person who told me about their pharmacy network, which includes “preferred pharmacies” and non-preferred pharmacies”.

I told the First Health rep that their website shows Avella as a “non-preferred pharmacy”, which means Kate would pay $7 for each generic prescription rather than $0. The rep assured me that Avella is “in-network” and can be used with the First Health Part D Value plan.

The rep then told me to talk to a pharmacist at Avella because that person would know how Avella works with Part D drug plans. So I called Avella in Tucson and spoke to a very helpful pharmacist whose quick and concise answers gave me confidence she knew what she was talking about.

The Avella pharmacist said they had experience working with Part D plans, and she told me how two medications that are put together in one capsule are priced by Part D plans.  When I mentioned Kate’s prescriptions, which Kate said were E-2 and E-3, she knew right away the drug names.

This last point is important to the story because the inexperienced rep at First Health did not find “E-2” or “E-3” when he searched on the plan formulary. He did not know that E-3 is Estradiol, which he would have found on the formulary.  There were three other drug names Kate had given me that the Avella pharmacist knew how to translate into the actual drug names – which are on the First Health formulary.

So maybe the First Health rep wasn’t at fault, because only a pharmacist would be able to translate “E-3” and “T-4” to actual drug names.  But this points out another challenge for finding a Part D plan:  Pill bottle labels may not provide information that matches what is in a drug plan formulary, or choices provided on the Plan Finder.

Anyway, my conversation with the very helpful pharmacist at Avella gave me confidence that Kate would be able to use this compounding pharmacy if she enrolls in the First Health Part D Value plan.

Most of my work for clients who need a Part D plan is pretty straightforward.  Kate’s situation is quite a bit more complicated. But I learned something new this week about Part D and compounding pharmacies. It’s always good to learn something new.

UPDATE, May 2013:  Kate called up First Health and enrolled with them over the phone. She told them the drugs she takes and her need to use a compounding pharmacy.  When she got her prescriptions filled, she got a big surprise. First Health says they won’t pay for the compounded drugs!

Kate has filed a complaint with Medicare because she is enrolled in a Part D plan that does not work for her – and she was given wrong information when she talked to First Health on the phone and enrolled with them. Kate is stuck with this Part D plan until the end of the year – unless her complaint to Medicare results in a change.  First Health will have to cover her compounded drugs, or Medicare should let her change to another Part D plan. Of course, if she changes plans, she may run into the same problem again.

This is another reason why I hate Part D. It should not be this complicated – and the people who work for First Health should know how their plan does or does not work.


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4 Responses to "Medicare Part D and Compounding Pharmacies"

  1. Erika Fallon says:

    Medicare part d will not cover medications compounded from “bulk chemicals”, which means unless the formulation is made from an FDA approved, manufactured drug, it will not be covered under any part D plan, by law. Also, E3 is estriol and E2 is estradiol.

  2. Todd says:

    We appreciate the article on this topic and on Avella. We encourage any patients or healthcare providers to learn more about Avella or contact one of our locations by visiting

  3. Denise_Early says:

    Can you explain further? I was told by two Part D plans that as long as the drugs are on their formulary, they can be combined by a compounding pharmacy and will be covered.

  4. justinhaddin says:

    Does a compounding pharmacies have special training?

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