Work comp drug spend is going down

On average payers’ drug spend dropped 6.5% from 2014 to 2015.

And the bigger payers saw bigger reductions, with several cutting spend by double digits.

Those are the results for 30 large and mid-sized work comp payers I surveyed for CompPharma’s annual Prescription Benefit Management in Workers’ Compensation Survey.  State funds, large and mid-sized insurers, TPAs, self-insured trusts, and very large employers all participated in this, the 13th annual Survey.

The big question is – why?

Before we jump into that, allow me to address a potential criticism of payers’ drug management efforts.  This reduction is NOT because payers want to prevent their patients from getting the care they need.  Rather, payers – and their PBM partners – are focusing on ensuring patients get the drugs they need quickly and with minimal hassle, while blocking potentially problematic drugs.

This effort has paid off in the near term in lower costs for employers and taxpayers, and will almost certainly result in quicker healing and return to functionality; patients who don’t get unnecessary opioids get better a lot faster than patients prescribed these dangerous and often-misused drugs.

The Survey report, which will be out in August, will have details.  At this point in our analysis, several drivers seem to be at play here.

By far the most significant is the depth and breadth of pharmacy clinical management programs now in place at most payers.  The vast majority of payers rely on their PBM partners for most clinical management functions, with responsibility delegated to PBMs for some/most/all functions including:

  • patient enrollment
  • formulary development and management
  • prior authorization
  • pharmacist review of claims
  • prescriber outreach and follow-up
  • peer review and interaction
  • reporting
  • high cost claim assessment and intervention

This is somewhat unique in the work comp medical management world.  Unlike surgery, hospitalization, and other service types, most payers have delegated pharmacy management to PBMs.  There are several reasons for this.

  • Unlike other medical services, pharmacy is highly automated, requiring a unique electronic communication capability and expertise to accept, approve, process, and pay for the service.
  • Few payers want to invest the funds and management resources necessary to effectively manage pharmacy.  With the continued focus on reducing administrative expenses, overhead is an evil word at most insurers, so outsourcing it just makes financial sense.
  • PBMs have a lot more knowledge about pharmacy management as this is their core business.  Insurers, TPAs, and state funds have many other priorities on their collective plate, priorities that most view as more central to their core business.  They are insurers and claims handlers, not pharmacists.

That said, a handful of large payers have internalized pharmacy management – hiring pharmacists and nurses, instituting workflows specific to drug authorization, focusing on long-term opioid users, and tightening up drug formularies and approval processes.  These entities are also seeing solid payback on that investment, with costs dropping by double digits for these big payers too.

A final point that bears consideration.

Work comp PBMs, most of which are members of CompPharma (I am president of CompPharma), are doing a really good job and thereby reducing their income and profits.

They do this because this is how they win additional business; their value proposition is to ensure patients get the right medications and don’t get the wrong ones.

What does this mean for you?

PBMs are getting it done.

Work comp pharmacy – different indeed

The US spent $322 billion on outpatient drugs in 2015 – an 8.1% increase over the year before. (subscription required)

Over the next decade, CMS expects drug spending increases to outpace overall health care inflation by a significant margin at an average annual jump of 6.7%.

Things look remarkably different in the work comp world.

I’ve been surveying workers’ comp payers (insurers, state funds, TPAs, and large employers) for 13 years and the latest data indicates most are seeing a year-over-year decrease in drug spend.  I haven’t finished aggregating the data and checking the details, but this year looks like a continuation of the decreasing drug cost trend we’ve seen over the last several years (past Surveys available here).

More than 2/3rds of payers surveyed reported a drop in drug costs in 2015, and those that saw increases usually cited unique situations as primary drivers for those increases. Conversely, payers with decreases generally attributed their success to the same factors:

  • a strong focus on clinical management 
  • particular attention paid to opioid usage
  • ongoing, concerted effort to drive generic utilization

One other key driver – payers that work closely with PBMs on a variety of programs – retail network penetration, high risk patient identification, peer review, and outlier-prescriber outreach are seeing significantly better results.

I would note that work comp PBMs are spending a lot of money and resources to cut their revenues.  [I am president of CompPharma, a consortium of worker’s comp PBMs]

While there’s no question work comp can learn a lot from group health and other payers, the remarkable success workers comp payers have had in reducing the utilization of opioids shows that Medicaid and group health could and should carefully study what we’ve been doing.

What does this mean for you?

We are making progress, and work comp PBMs are leading the way.

 

Purdue Knew.

According to an LATimes article, Purdue pharma knew about rampant diversion of Oxycontin for years, and never informed the DEA.  Instead, the giant, family-owned pharmaceutical manufacturer continued supplying huge quantities of its most powerful version of Oxy to pharmacies, racking up $31 billion in revenues in the process.

Sure, Purdue eventually informed officials – years after “the clinic was out of business and its leaders indicted.”

In the interim, just one physician, in one clinic, in just the first few months it was operational, prescribed 73,000 80 mg pills.

This from the LATimes:

A sales manager went to check out the clinic and the company launched an investigation. It eventually concluded that Lake Medical [the clinic] was working with a corrupt pharmacy in Huntington Park to obtain large quantities of OxyContin.

“Shouldn’t the DEA be contacted about this?” the sales manager, Michele Ringler, told company officials in a 2009 email. Later that evening, she added, “I feel very certain this is an organized drug ring…”

Purdue did not shut off the supply of highly addictive OxyContin and did not tell authorities what it knew about Lake Medical until several years later when the clinic was out of business and its leaders indicted.

By that time, 1.1 million pills had spilled into the hands of Armenian mobsters, the Crips gang and other criminals. [emphasis added]

LATimes reporters Harriet Ryan, Lisa Girion, and Scott Glover have done a remarkable job chronicling the devastation wrought by the flood of Oxycontin into California, a flood that spread pills across the country and directly contributed to the 194,000 deaths from opioid painkillers since 1999.

According to the article, Purdue knew about this activity, delayed reporting it to officials for years, and kept supplying tens of thousands of these horribly addictive pills to pharmacies Purdue’s own representative was “very certain” involved an organized drug ring.

194,000 dead Americans.  $31 billion in revenues.  Millions of shattered families. A company owned by one of the richest families in America, a fortune built on creative ways to generate scripts – and on addiction and diversion.

Sometimes what passes for legitimate business in America horrifies me.

Where’s the class-action law suit?

Friday catch-up

A short but busy week; here’s a few “highlights”

Jobs!

Big jump in hiring – 287,000 new jobs last month. Even better, the jobless rate has stayed below 5 percent for the last nine months, AND hourly wages increased albeit by a marginal amount AND there are still 5.8 million unfilled jobs as of April.  Here’s one expert’s read:

“This report should ease any fears that a persistent slowdown or recession is coming soon in the U.S.,” said Dean Maki, chief economist at Point72 Asset Management. “The service sector is where the real strength is, with 256,000 hires, but the gains were widespread across sectors.”

But…real median household income is still below where it was ten years ago.

Off-label prescribing run wild

Fentanyl – now infamous for having killed Prince – is the subject of a devastating piece in the NYT detailing the arrest of two pharma marketers for allegedly “financially incentivizing” docs to prescribe Subsys, a fentanyl spray intended for breakthrough cancer pain.  According to Katie Thomas’ article, only 1 percent of Subsys scripts were from oncologists.

Suggestion – ask your PBM to tell you how many Subsys scripts you paid for, and what practitioners were writing them.  NDC codes here.  Thanks to Brian Grant MD of MCN for this one

How the pharma world works

From Drug Channels comes this easy-to-read flow chart showing the drug and dollar flows in the pharmacy market.  Boss Adam Fein is a must-follow for those interested in this business.

Hat Tip to WorkCompWire for the head’s up on the news that Minnesota’s Department of Labor and Industry just published their 2014 system report. A couple of not-obvious takeaways:

Medicare’s physician fee schedule is new and improved – a brief synopsis courtesy of HealthAffairs is here.  Couple of key points:

  • Until 2019, Medicare will give physicians a fee increase of 0.5 percent per year.
  • After 2019, there will be no additional fee increases; providers will have to pick one of two reimbursement methodologies

States adopting the MACRA (new acronym for the fee schedule) for workers’ comp are going to have to figure out what to do after 2019…

Enjoy the weekend – hope we get some rain.  Not used to drought in upstate NY…

You broke it, you own it.

A bill before the US House and Senate would have required physicians and pharmacists to check state databases before prescribing or dispensing opioids.

All available research shows this is the single most effective step to reduce opioid abuse and kill fewer people.

Now, thanks to “doctors and pharmacists groups”, that requirement has been stripped from the bill.  What’s left is some – but nowhere near enough – money for treatment and the hope that, against all evidence to the contrary, docs who are writing the scripts that are causing the opioid disaster will take the time to check the databases before they write the script.

Not going to happen.

I am sympathetic to the claim that mandatory Prescription Drug Monitoring Program (PDMP) checking can be time-consuming. States have to do a better job of figuring out how to streamline the process while protecting patient confidentiality – and many have done so.  Moreover, the four states with mandatory PDMPs have figured it out, and it is working pretty well.

I am a whole lot less sympathetic to the argument that somehow a moment or two of a doctor’s or pharmacist’s time is too much to ask, for the simple reason that these medical professionals’ failure to properly prescribe and dispense opioids is the proximal cause of the opioid public health disaster.

Pretty much every independent research organization studying the issue has recommended mandatory PDMP checking.  Here’s one.

More bluntly, that behavior is killing people, and the lobbying to strip mandatory use of PDMPs shows that’s not that big a deal.

Kentucky, New York, Ohio, and Tennessee all mandate prescribers access PDMPs – and all have seen dramatic reductions in doctor shopping and opioid script volume.

There’s a wealth of supporting data here.  Briefly, here’s what mandatory PDMP use does.

  • after Ohio ER docs checked the PDMP, they changed their treatment plan for 41% of patients; 61% had fewer or no opioids prescribed, 39% had more.  And doctor shopping dropped by over 2/3.
  • In Tennessee, doctor shopping dropped by 50% and the volume of opioid scripts decreased by almost half a million scripts.
  • Kentucky doctor shopping was cut in half, 30% fewer patients received the “holy trinity” drug cocktail, and benzo and opioid scripts dropped significantly.
  • in New York, doctor shopping was cut by 90%, and treatment admissions rose by 20%.

After spending a fruitless hour searching the web for an actual policy statement or testimony regarding mandatory PDMP use by the AMA, my conclusion is the giant medical society wants it both ways.

They don’t want their members to have to check PDMPs, but they don’t want to be public about that opposition.

What does this mean for you?

Refusing to support mandatory PDMP is unconscionable.  At some point an enterprising class-action firm is going to figure out how to make a shipload of money off the intransigence of “doctors and pharmacists groups.”

 

Work comp pharmacy – early results of 2016 Survey

I’m up to my eyeballs in the 13th (!!) Annual Survey of Prescription Drug Management in Workers’ Compensation; the response from payers willing to devote time to the project has been gratifying indeed.

Previous Survey reports are available here; note these are the Public versions; respondents get a much more detailed and comprehensive version.

A bit of background first.  I conduct these surveys telephonically, speaking to the individual at the insurer/self-insured employer/state fund/TPA/trust who is directly responsible for the pharmacy program. In addition to asking their opinions and views, we get data on a variety of key metrics including:

  • drug spend for 2015 and 2014
  • opioid spend for 2015
  • compound drug volume
  • generic fill and efficiency rates
  • mail order usage

A few early findings.

  1. Pharmacy continues to be seen as more important than other medical ost areas, primarily due to the “downstream” effects of opioids on claim duration, return to work, and related pharmacy spend.
  2. Most respondents are seeing a decline in drug spend.  This is a bit of a surprise, as national research suggests drug costs are going up.  A possible explanation is that (most of) these payers are pretty sophisticated, have been working diligently on pharmacy issues for years, and most (but certainly not all) have employed a variety of programs to reduce unnecessary use of potentially dangerous drugs.
  3. The percentage of spend that goes to opioids varies greatly, from around 21% to over 50%.  Some of this is due to regional or state differences, but much is not. Much more to dig into here.
  4. Mail order continues to be woefully under-used, with most respondents reporting penetration rates in the low single digits.  Argh.
  5. Compound drugs are seen as highly problematic and payers have a wide variety of programs/efforts/mechanisms in place to address compounds.

Much more to come; when the Survey Report is done I’ll post a link.

Enjoy the weekend!

 

What’s your state’s prescription opioid death rate?

Utah’s is 16 deaths per 100,000 residents.

New Hampshire? 18.2.

West Virginia leads at 24.7.

Rhode Island is well into the double digits at 14.2.

Texas is among the lowest at 2.5, as is Nebraska at 2.8.

For 2014, the national death count was almost 19,000.  You can check every state here.

19,000 people died from prescription drugs – pills that a doctor prescribed for a patient. Not heroin, not crystal meth, not Ecstasy.  Pills a drug company marketed, many of them supposedly “abuse-deterrent”. Pills a stockholder profited from.

I bring this to your attention, dear reader, because the news these days includes some signs that we’re making progress, that opioid scripts are down and things are improving.

They are NOT.

In fact, don’t be surprised if the death count in 2015 hits 22,000.  That’s just a number, but it’s a number built on dead sisters and brothers and cousins and best friends, dead moms and dads and kids and BFFs and girlfriends and hunting buddies.

What does this mean for you?

Please don’t relax one bit.  Keep the pressure on, keep the focus tight, keep demanding answers, and above all, be aware,

 

Opioids and Workers’ Comp – a quick update

The rest of the world is beginning to catch up to the progress workers’ comp has made fighting the opioid scourge.  Kudos to PBMs, payers, regulators, researchers and some physicians for recognizing the incredibly negative effects of opioids years ago, and taking action to mitigate some of these effects.

That is NOT to say we’re anywhere close to getting this solved – far from it.

But we have seen some evidence of decreases in the number of new claims getting opioids in some areas and an overall decline in opioid scripts and morphine equivalents (MEDs).  We’ll have more information in a couple of months when CompPharma (a consortium of work comp pharmacy benefit managers) releases its 13th Annual Survey of Prescription Drug Management in Workers’ Compensation. (note I’m president of the organization and am conducting the research, past reports are available free for download here.)

A few factoids to give some perspective:

From CWCI’s most recent research:

  • Opioids declined to 27.2% of all scripts dispensed to California work comp patients in 2014, down from a peak of 31.8% in 2008.
  • Average number of morphine equivalents per script declined from 550 in accident year (AY) 2007 to 422 in 2012.
  • The % of work comp patients receiving opioids within 24 months of injury increased from 22.4% in 2005 to 27.9% in AY 2012
  • Express Scripts reported overall spend for opioids declined 4.9% in 2015, the fifth consecutive decrease.
  • Helios reported:
    • the percentage of work comp patients getting opioids declined by 1.6% from 2013 to 2014.
    • opioid utilization dropped 2.9% over the same period

What we have NOT seen is any significant progress dealing with the knottiest and most important problem – long term opioid users.

I can’t count the number of erstwhile start-ups, business ventures, and eager entrepreneurs I’ve spoken with who contend they’ve figured it out.

By definition, anyone who claims to have a universal solution most certainly doesn’t understand the problem.  Unlike reducing initial and secondary scripts, addressing patients who’ve been taking opioids for months is very much an

  • individual,
  • patient-by-patient approach
  • requiring flexibility,
  • a deep understanding of the disease state and chronic pain and addiction,
  • a willingness to experiment and fail, and
  • a very long term commitment to a business model that almost certainly will not be hugely profitable.

That’s not to say there isn’t opportunity – there most certainly is.

What does this mean for you?

We’re at the end of the beginning of the work to address opioids.  This will take focus, years, diligence, and unrelenting focus.

Why be a crook when you can be a dispensing doc?

WCRI’s latest report on physician dispensing confirms what we weary soldiers have known for years; the physician dispensing industry is way better at figuring out how to screw employers and taxpayers than workers’ comp payers and regulators are at stopping them.

We’ve tried eliminating the upcharge for repackaged drugs; they came up with custom-manufactured medications.

Fail.

Here’s the summary from WCRI:

the mechanism involves the creation of an opportunity to assign a much higher AWP to these new-strength and new-formulation products. Consider cyclobenzaprine HCL (a muscle relaxant), for which the most common strengths are 5 milligrams and 10 milligrams. If a new strength of 7.5 milligrams comes to market and the original manufacturer of that new strength sets a new AWP, this AWP could be much higher than the AWPs set by the original manufacturers for the existing 5- and 10-milligram strengths. These new strengths and formulation, almost all dispensed by physicians, are labeled as drugs made by generic manufacturers, not repackagers, and therefore, are not subject to the new reimbursement rules targeting physician-dispensed repackaged drugs.

Shockingly, Florida and California, two states that have attempted to control doc-dispensed drug costs with a repackaged drug cost cap have seen these “new” drugs become the most popular versions of the drug – and the most costly, with an average price of $3.01 per pill compared to $0.38 for the “regular” formulations.

Why has this 7.5mg version become so popular?

Is it better than 5mg or 10mg versions?

Of course not.

Make no mistake, these dispensing docs – and the industry that supports them, are quite clear about the money.

Proof.  More proof. And even more proof.

WCRI used data from 2 years ago; if anything it’s way worse now.

The solution is both simple in concept and difficult in execution.  Enable employer direction to pharmacies, a situation that currently exists in NY and MN (and in some cases in CA as well).

Yes, limiting doc dispensing to the first few days helps – legislation in IN and PA has been quite helpful in limiting the shameless profiteering of corrupt docs. However, the dispensing industry is quite creative in coming up with ways to circumvent regulations; don’t be surprised if:

  • docs rent a corner of their office to a “pharmacy”, and/or
  • docs get ownership in a pharmacy down the hall, and/or
  • companies are setting up vending machine-like dispensaries in medical office buildings

In fact, these all – and likely other maneuvers – are already operating in many states.  As I noted a year ago, these bad actors “will find any loophole, whether in a states’ pharmacy licensing process, medical board regulation, work comp statute or scope of practice to find a way to continue screwing employers and taxpayers.”

Because that is precisely what they are doing.

What does this mean for you?

It is long past time to stop playing nice.

Obama, Pew, Landers and Paduda

Headed to Atlanta for Operation Unite’s fifth Rx Drug Abuse Summit, an event I’ve been privileged to participate in every year (this year Mark Pew of Prium, Michelle Landers of KEMI, and I are going to discuss formularies in work comp, an issue near and dear to my heart).

This year, President Obama is also speaking.

Think about that.

The leader of the free world is taking a day to fly down, talk, and fly back.  It’s not like the guy has nothing else on his plate – the Middle East, Apple v FBI, global warming, Congress, SCOTUS nomination of Merrick Garland, Pakistan, Iranian cyber attacks, China, trade policy…

and yet Pres. Obama a) decides to go to Atlanta; b) does the prep work necessary to speak on a panel about opioid policy, the FDA, drug approvals, law enforcement, heroin, treatment v incarceration; c) make the trip with all that entails; and d) speak on the panel.

While I’m pumped he decided to make the trip, I’m equal parts disheartened that the President of the United States has to do this.  Moreover, there’s a really impressive list of speakers; Governors, Congresspeople, the US Surgeon General, head of the FDA, Senators, head of the DEA, the CDC Director…

Those of us who’ve been up to our eyeballs in the crisis for a decade are gratified indeed to see the level of attention focused on the issue, and sad beyond measure that this has risen to the level that the President is devoting this amount of time to opioids.

What does this mean for you?

I’d suggest we focus on the positive here, as the negative is just emotionally crushing.