I’ve been in workers’ comp long enough to remember when “compound meds” wasn’t a clinical conversation; it was a finance conversation. Back then, I was the guy in government affairs raising my hand (sometimes loudly) to oppose compounds in comp. Not because I thought every compound was snake oil, but because the system had turned them into a pricing loophole with a stethoscope.
Fast-forward to today, and the topic is still polarizing. Some payers hear “compound” and think “abuse.” Some clinicians hear “compound” and think “custom care.” And injured workers, who just want relief and function, get caught in the middle.
So let’s unpack where the distrust comes from, whether it’s still well-founded, and what’s actually changed.
Why compounds became a lightning rod in workers’ comp
Compounding itself is not controversial in healthcare. Pharmacists have long compounded medications to meet individual patient needs — adjusting formulations, removing allergens, modifying delivery methods, or creating options when commercial products aren’t appropriate or available. That foundation is well established and legitimate.
The tension in workers’ comp emerged in the 1990s and early 2000s, when compound medications, particularly topical pain products, became intertwined with reseller-driven pricing models. A few dynamics made comp fertile ground:
- A captive payer: treatment is covered, and disputes take time.
- Price opacity: “What should this cost?” was often unclear.
- Dispensing workarounds: physician dispensing, repackaging, and AWP games inflated prices dramatically in some jurisdictions.
- A narrative advantage: “It’s topical, it’s safer, it helps you avoid opioids” sounded great—especially during the years when everyone was trying to climb out of the opioid hole.
And to be clear: topical pain relief has real evidence in certain contexts. Topical NSAIDs, for example, have evidence for acute musculoskeletal pain and are often well tolerated.
Independent research and industry reporting at the time documented dramatic cost inflation tied not to ingredients or clinical complexity, but to billing structures and markups. Compounds became symbolic of a broader problem: financial behavior outpacing clinical justification.
That’s the environment that shaped payer distrust — and mine.
Third-party evidence: separating concept from execution
It’s also important to acknowledge the mixed evidence that fueled payer hesitation.
Clinical literature has long supported the use of topical NSAIDs for certain acute musculoskeletal conditions, showing meaningful pain relief with fewer systemic side effects than oral alternatives. Sports medicine has relied on these modalities for years to keep athletes functional and active during recovery.
At the same time, broader studies examining multi-ingredient compounded pain creams, especially those used indiscriminately, produced inconsistent results. Some large randomized trials failed to demonstrate superiority over placebo for certain compounded formulations, raising legitimate questions about overgeneralized use.
Payers didn’t invent these concerns. They reacted to them.
But here’s the distinction that often gets lost: mixed evidence does not equal no value, it signals the need for appropriate patient selection and clinical intent, not categorical rejection.
The sports world: why athletes normalize what comp argues about
Here’s the twist: in the sports community, “topical treatment” isn’t controversial—it’s routine.
Athletes (and sports medicine clinicians) look for options that can reduce inflammation, manage pain locally, and keep function moving. Topical NSAIDs like diclofenac, ibuprofen, and ketoprofen have been widely discussed in sports-related care, and the evidence base for topical NSAIDs in certain acute injuries is solid.
So why does comp get so curious about “treating injured workers like athletes”?
Because workers’ comp has always chased two outcomes that sports medicine obsesses over:
- shorter healing timelines
- reduced disability duration
- (and the comp version of “return to play” is return to work)
When comp is working well, it’s function-first: restore capacity, control pain appropriately, keep people moving safely, and avoid chronicity. In that framework, topical options feel attractive.
But here’s where comp is different from pro sports:
- In sports, the buyer is often the organization and the “cost per win” mindset is different.
- In comp, the payer is underwriting across populations, and one pricing loophole scales fast.
So, the same product class that feels normal in sports medicine can feel like a cost trap in comp—especially if the evidence and pricing don’t line up.
Has today’s compounding environment changed?
After major national safety concerns around compounding, the regulatory environment evolved. The Drug Quality and Security Act (DQSA) created a clearer framework, including 503B outsourcing facilities with expectations like cGMP compliance for certain sterile compounding operations.
Also, billing standards changed in ways that reduced some of the “black box” effect. For example, ingredient-level billing requirements and claim transaction standards have been a major theme in controlling compound cost exposure.
And states and systems have steadily tightened rules around drug management broadly, formularies, prior auth, fee schedules, and network controls, pushing comp toward more consistent pharmacy governance.
Just as important, the conversation has matured.
Topicals and compounds are increasingly positioned as:
- localized pain management options
- opioid-sparing strategies
- functional enablers that allow injured workers to stay engaged in therapy.
And when documentation clearly ties the therapy to function, recovery goals, and individual patient need, compounds become a tool, not a threat.
A more mature position for modern programs
Today’s challenge isn’t deciding whether compounds belong in workers’ comp.
They do.
The challenge is integrating them responsibly:
- as an exception-driven clinical option
- supported by documentation and functional goals
- aligned with transparent, reasonable reimbursement
- evaluated based on outcomes, not assumptions
When that happens, compounds stop being polarizing. They become what they were always meant to be: one of many tools in a recovery-focused system.
Where I land today
I once opposed compound medications because the system had earned skepticism.
I support them now because the system has evolved, and because injured workers deserve access to therapies that support recovery, not ideology shaped by outdated abuses.
Workers’ compensation improves when it holds two truths at once:
- history matters
- progress matters more
Compounds and topicals, used thoughtfully, belong in a modern comp program. Not as a default. Not as a business model. But as a clinically valid option in the right scenarios, in service of the outcome that has always mattered most: helping injured workers heal, function, and return to work.