Section 9789.40.7 - [Operative 7/1/2025] Compounded Pharmaceuticals Dispensed By a Physician on or after July 1, 2025(a) The maximum reasonable fee payable for a compounded drug dispensed by a physician is the lowest of: (1) Three hundred percent (300%) of the sum of the documented paid cost of the compounded drug ingredients, but not more than $20.00 above the sum of the documented paid cost, or(2) The sum of the drug ingredient costs as determined pursuant to subdivision (c), calculated based on units used in the compound, plus the dispensing, compounding, and sterility fees applicable to a physician pursuant to section 9789.40.4, or(3) The physician's usual and customary charge for the compounded drug to patients under the physician's care.(b) "Documented paid cost" means the price paid by the physician for the drug ingredients, net of discounts and rebates, evidenced by documentation of the price actually paid by the physician for the drug ingredients. Documentation shall consist of invoices, proof of payment, and inventory records as applicable. The physician must submit documentation of paid costs and prospective authorization to support a bill for a compounded drug at the time of billing.(c) For purposes of subdivision (a)(2), (1) The drug ingredient cost for a compounded drug means the lower of the billed amount for each ingredient or the drug ingredient "lowest cost", or "no substitution cost" (where requirements in sections 9792.27.7 and 9792.27.8 are fulfilled), as set forth on the Pharmaceutical Fee Data File.(2) The metric decimal quantity/units billed for each ingredient is the total amount within the compound regardless of the number of containers.(d) Each ingredient shall be identified using the applicable National Drug Code (NDC) of the ingredient and the corresponding quantity.(1) Ingredients without a valid NDC are not reimbursable.(2) An NDC is presumed to be valid if the NDC is listed in the FDA's National Drug Code Directory as either a finished or unfinished drug product, and does not appear on the excluded drugs database file. The presumption may be rebutted by a showing that the product is not a drug product legally eligible for assignment of an NDC. The National Drug Code Directory may be accessed on the FDA's website.(e) A sterility fee is only included in the calculations set forth in (a)(2) if the physician's performance of sterile compounding is allowed by state and federal law and complies with the requirements of California Code of Regulations, Title 16, Division 17, Article 7.(f) A compounded drug that is essentially a copy of a commercially available product is not reimbursable. The status of a compounded drug as "essentially a copy of a commercially available drug product" is determined pursuant to applicable federal law and regulation.Cal. Code Regs. Tit. 8, § 9789.40.7
Note: Authority cited: Sections 133, 4603.5, 5307.1 and 5307.3, Labor Code. Reference: Sections 4600, 4603.2 and 5307.1, Labor Code.
1. New section filed 12-11-2024; operative 7/1/2025. Submitted to OAL for filing and printing only pursuant to Government Code section 11340.9(g) (Register 2024, No. 50).