In early 2011, the RAND Corporation published a paper (PDF) that looked at compound drugs, along with other newly popular medical products, at the behest of California’s Commission on Health and Safety and Workers’ Compensation. The paper noted that “some parties face significant financial incentives to promote use of these products in questionable situations.” It also noted that the compound drug surge was limited to the workers’ compensation system.
“Other health programs have adopted policies that provide more assurance that drugs are medically appropriate and payments are reasonable,” the paper said. “As a result, they are not experiencing comparable issues related to use of these products.”
Critics say the timing of the compound drug surge was not an accident. In 2007, California’s Division of Workers’ Compensation revised a pharmacy pricing system to discourage physicians from directly dispensing marked-up “repackaged” drugs to workers’ compensation patients. (The New York Times recently covered the issues surrounding repackaged drugs.) People who know the California system suggest that those who were taking advantage of the repackaged drug loophole moved on to compound drugs, among other things, when it was shut. And it was around the time of the repackaged drug clampdown that Ahmed learned about compounding.
Ahmed said a “marketer” introduced him to the concept of compound drugs in 2006 or 2007, and convinced him of their benefits. Ahmed then suggested the idea of prescribing compound drugs to doctors he knew.
“I … talked to some of my doctors, I said, ‘You know, why don’t you try it?’” Ahmed said. “And they tried it on themselves and the doctors loved it. They said, ‘Oh, we’re going to start using this.’ And that’s how I got involved.”
Billing companies like Landmark also benefited from a 2006 decision to repeal a $100 filing fee for workers’ compensation liens — the formal process by which disputed payments are sought in the California system. Gideon Baum, a staff member for the California Senate’s Committee on Labor and Industrial Relations, explained in an interview that “as soon as you got rid of the filing fee, well then you can file a lien on anything.”
“Let’s say someone liens for $70,” Baum said. “You can buy that lien for maybe a dollar or two, and then if you settle it for $10 or $15 or $20, you’re up. And then if you multiply that over thousands of dollars, you suddenly see how it is that these guys are just — I mean, they are printing money.”
Last year, lawmakers in California made a push to remove some of the financial incentives associated with compound drugs in the workers’ compensation system. The bill was known as AB 378.
“Drug compounding — a legal but rarely necessary practice — has exploded as a physician profit-center in Workers’ Comp,” Assemblyman Jose Solorio, then chairman of the Assembly Insurance Committee, said in a statement released in September 2011, a month before the bill he sponsored was signed into law by Gov. Jerry Brown (D). “That practice must be stopped.”
Landmark fought Solorio’s bill. The company paid tens of thousands of dollars to a lobbying firm to oppose it and dispatched Bruce Curnick, who until recently worked as a Landmark vice president, to the state capital.
One of Landmark’s earliest employees, Curnick is a former attorney who was disbarred in 2000, after the State Bar Court found that he had committed 18 violations of professional rules, including the misappropriation of about $40,000 of client funds, making misrepresentations to clients, disregarding the welfare of seven clients, and acts of moral turpitude. During its coverage of his disbarment, The North County Times newspaper reported that Curnick had received three years probation in 1998 “after pleading guilty to battery and disturbing the peace in a plea agreement stemming from his arrest for allegedly trying to have sex with his 17-year-old baby-sitter in December 1997.” In an interview with TPM, Curnick spoke about his past in general terms, and acknowledged that he had made some “bad decisions,” but said he had put those days behind him. He said he was hired by Ahmed several years ago, after Ahmed offered him enough money that Curnick’s friends started to tell him, “‘Hey Bruce, that’s pretty good money. You ought to go.’”
Curnick claimed credit for organizing the opposition to Solorio’s bill. He spent a year in Sacramento working on the issues related to the legislation, meeting with officials, and being quoted in the industry press that covered the debate.
Like Ahmed, Curnick has spent several decades in fields related to workers’ compensation, and he too believes in the widespread advantages of compound drugs. In a 2010 op-ed written for the website Workers’ Comp Executive, Curnick wrote, “We should congratulate our medical profession on taking the time to place patient care first and become innovative in the practice of medicine,” while acknowledging that “[s]ome legitimate cost controls need to be implemented to prevent opportunists from trying to capture excess profits from this practice.”
According to Curnick, he and his allies helped force a renegotiation of Solorio’s bill when it reached the state Senate.
“We were able to convince the entire Republican bloc in the Senate to not vote on the bill,” Curnick said. “There wasn’t enough Democratic votes to pass the bill. And that forced everybody back to the negotiating table, and then we were able to work something out.”
It is unclear what effect Solorio’s bill has had on the compound drug trends in the workers’ compensation system, or how exactly Landmark’s business was affected. Curnick suggested that doctors had already found a way around the restrictions the law tried to put on the direct dispensing of compound drugs from doctors to patients.
“The bill didn’t really affect the compounders as much as [the insurance industry] thought,” Curnick said. “They couldn’t legislate against administration of the medication. So now all the doctors had to do is administer the compounds in their office, and all of that law didn’t apply anymore.”
Lachlan Taylor, acting executive officer for California’s Commission on Health and Safety and Workers’ Compensation, said in an interview that it was too soon to tell.
“We will need to come back and look at the situation again to determine whether AB 378 actually accomplished its purposes or if there’s more that needs to be done to finish that job,” Taylor said.
And Rakich, the Assembly Insurance Committee staff member, sounded a more pessimistic note.
Eric Lach is a reporter for TPM. From 2010 to 2011, he was a news writer in charge of the website’s front page. He has previously written for The Daily, NewYorker.com, GlobalPost and other publications. He can be reached at ericl(at)talkingpointsmemo.com