Drug prices and the power of consensus.

We Americans pay much more for drugs than anyone else.

Those very high prices are a major contributor to increasing health insurance premiums and Federal and state budgets.

Across the political spectrum, Americans support more government regulation of drug pricing.

Good news is Medicare is now actively negotiating drug prices with manufacturers. That will save patients and taxpayers billions of dollars.

What does this mean for you?

When we agree on what is the right thing to do we get things done.

And will save families and taxpayers lots of money.


Here’s some of the good stuff happening these days…

The number of workers with paid sick leave has jumped…lowest-wage workers’ access to paid sick leave has nearly doubled from 20% to 39% since 2010 – driven by more states enacting paid sick leave laws, according to a new Economic Policy Institute report. Overall, almost 4 out of 5 U.S. private-sector workers have paid sick leave, up from 3 of 5 in 2010.

Home care workers’ pay is going up...almost every state has bumped up wages for home care workers, a long-needed change that might help ease the hone care staffing crisis.

Know those yellow pill bottles that have been around forever…and will be around almost forever? Almost 200 billion are added to landfills and trash every year… CabinetHealth is pioneering recyclable – and refillable – glass pill containers…a way better way to get your meds.

Ok, leaving aside the obvious positivity – this is definitely facepalm worthy…there’s this NEW THING among Gen Z’ers...a “silent walk”…aka going for a walk without your phone!!

Who woulda thunk it? Just…walking? And yes, a TikTok’er discovered this revolutionary new idea, and it is…trending!!!

Next up…Silent Walking athleisure wear, shoes, hats, and rain gear, maybe logo that says “don’t disturb – Silent walking”.


Medicare drug price negotiations – implications abound!

Medicare will negotiate drug prices, Big pharma’s really upset…AARP is really happy…what’s the REAL story?

Briefly…One of the key parts of the Inflation Reduction Act authorized Medicare to negotiate drug prices for 10 medications. Those 10 meds have been identified, and the howls of protest from big pharma are deafeningbut our profits!!!!!

chart credit arsTechnica

(Pharma is the most profitable sector in the economy with a gross profit margin double that of non-pharma companies)


for taxpayers, Congressional Budget Office (CBO) reports taxpayers will save $160 billion by reducing how much Medicare pays for drugs

for millions of Medicare recipients, drug prices and out of pocket expenses for those 10 drugs will drop by thousands of dollars…seniors currently pay up to $6,497 in out-of-pocket costs per year for these meds.

(due to the Inflation Reduction Act, starting in 2025 Medicare beneficiaries’ annual out of pocket drug costs will be capped at $2000)

for payers, the picture is pretty very complicated...netting it out, “these steps would lead to a higher MFP [maximum fair price] and less or no impact on the drug’s…commercial net prices [after rebates]…” [emphasis added]

lest you feel sorry for big pharma, you should know that the ten medications are “older drugs and drugs that have really been blockbusters in the Medicare program. So the companies that have made these products have really reaped handsome profits from those drugs for many years, before they’re even eligible for negotiation.” cite

oh, and about Pharma’s complaint that this will hamper innovation, experts disagree…overall changes to Medicare’s Part D drug program “will probably have a positive impact on drug innovation, especially in areas that address the unmet health needs of high-cost Medicare beneficiaries”


Physician dispensing in work comp is roaring back

mostly because insurers and employers have a been asleep at the switch.

Republishing a post with minor edits from two years ago…LOTS more on the sleazy business of physician dispensing here

WCRI’s latest report finds:

  • Physician-dispensed drugs (PDDs) accounted for more than half of drug costs per claim in Q1 2020 in four states – Florida, Georgia, Illinois, and Maryland.
  • In 12 states, doc-dispensed dermatological agents accounted for most payments for this drug class.
  • Louisiana is worst-off, with employers paying $190 per claim for dermo drugs in the 1st quarter of 2020…Illinois is right behind at $181.
  • Kansas and Connecticut saw payments for those dermo drugs triple from Q1 2017 to Q1 2020.

That profit-sucking prescribing by docs in Connecticut is why total drug spend increased 30% in the Nutmeg State – making it one of two states that had drug spend increases. Florida – the home state of PDD – was the other. (Across all subject states, drug costs dropped 41%.)

Having lived in CT for over 20 years, I’m really stumped by the precipitous increase in skin care drugs.

What could POSSIBLY be driving this massive need for occupationally-driven skin care/topicals?

  • Did sun spots create a pandemic of skin cancer but somehow only affect the second-smallest state?
  • Did a massive refinery accident expose tens of thousands of workers to burns or skin infections?
  • Did a hyper-virulent new breed of poison ivy run rampant, affecting thousands of landscaping and municipal workers?
  • Did the emerging cannabis industry fail to protect its workers from fertilizer burns, exposing thousands of workers to painful blisters?
  • Did everyone in Connecticut suddenly become unable to swallow a pill?

Of course not.

The real question is this:

why haven’t insurers, TPAs, and self-insured employers used CT’s Medical Care Plan to ban physician dispensing? Payers including the Workers’ Comp Trust of CT have pretty much eliminated physician dispensing.

It’s not just Connecticut.  PDD costs are outrageous, and all credible research indicates PDD is totally unnecessary, increases medical costs, and prolongs disability.

WCRI’s research should be a call to action.  Legislators, regulators, and payers are doing their policyholders and clients a disservice by failing to aggressively attack physician dispensing.

And those clients and policyholders are equally at fault – it is up to you to work with your PBM and payer to stop this rampant profiteering. 

What does this mean for you?

Yeah, I know it’s hard.

Stop whining and get serious.


Work comp drugs – Three things

Workers’ comp news…

After a long and litigious delay, myMatrixx has been awarded the contract to manage pharmacy benefits for the Coal and Energy programs run by the Federal Department of Labor’s Office of Workers’ Compensation Programs (OWCP). Details of the case – which involved a protest by rival PBM Optum – are here.

That’s the good news (the Feds should have had a PBM managing these programs years ago).

Now, the bad news.

The press continues to dive into the audit of the other OWCP program – the one that provides workers’ comp to all Federal employees (FECA). [audit report is free for download here]

The latest is from Leslie Small of AIS Health. [available at no cost via free trial subscription].

From Ms. Small’s piece:

  • “OWCP has been doing a poor job of both controlling the FECA programs spending on prescription drugs and implementing its own policies to ensure that prescriptions are being appropriately dispensed, said the OIG report.”
  • OWCP published a bulletin in 2011 that forbid reimbursement for fast-acting fentanyl prescriptions unless claimants had been diagnosed with a certain type of cancer…during the audit period…98.7% of the fast-acting fentanyl scripts that OWCP [and taxpayers] paid for “went to claimants without evidence of one of hte eligible cancer diagnoses” 
  • Even more troubling – if that’s possible – OWCP did not institute controls to mitigate opioid usage until the end of 2016, years after many commercial insurers, third-rate administrators, and large employees had done so…”

Here’s hoping this much-needed attention results in even-more-needed improvements.(my opinion only)

Drug costs in California are getting well deserved attention again; CWCI’s research identified 9 drugs – 3 each opioids, dermatologicals and antidepressants – that account for a significant percentage of total drug spend. CWCI members can get the full report at no cost; it’s $18 for others.

Briefly, branded anti-depressants, tapentadol/Nucynta, and the three anti-depressants make up a small percentage of scripts but a big percentage of dollars.

Of course, in the vast majority of cases the dermos are just BS drugs that should never be allowed…

What does this mean for you?

Don’t sleep on pharmacy...sure costs are down, but it still has a major influence on recovery, RTW, and claim closure.


It is not the price Dammit!

In work comp services, far too many buyers focus solely on the price of the service.

That’s the wrong metric..it isn’t the Price, it’s the Cost (we’ll leave aside the RoI/Value/…for more on that see this.)

Price is what you pay per unit.

Cost is the total expense that you pay.


Some PBMs are trying to buy business by offering amazing prices – as in AWP-80% for generic drugs.  Sounds great…right?

Sure, until you have to explain to your boss why drug spend went up even though your discounted price went down…

While workers comp payers have (mostly) figured out that the price of the pill is a lousy way to decide on a PBM, every now and then I get a call from a payer who’s just been offered a GREAT price from a PBM, and is either a) gleeful that they have been so smart and such a cunning negotiator; or b) panicked because their boss wants to change PBMs and the vendor manager knows it’s going to blow up.

Okay, let’s walk thru this.

The price of the pill is important, but it is only ONE part of the equation. Which is as follows:

Price per pill x number of pills per script x percentage of scripts processed in the PBM’s network.

Price per pill is determined by the definition of generic and brand, discount below AWP, brand:generic mix, and, most importantly, by the type of pills dispensed.  If a PBM does a crappy job managing the clinical aspects of the pharmacy program, you’re going to pay for far too many pills, and for the wrong kind of pills.

I’ve also read PBM contracts with quite creative definitions of “generic”…some so creative that what any normal person would say is a generic is – for price purposes – a “brand” drug.

Since brand prices are typically AWP-10-15%, a mis-categorized generic is going to be super-profitable.

Next, if the price is too good to be true, it isn’t.

A PBM cannot afford to pay for pharmacist support, bill review fees, call center costs, compliance/state reporting, IT connections and customer service if it is charging AWP-80% for what are REALLY generics.

So, it’s safe to say you’ll be paying for lots of opioids, fenoprofen, convenience kits, and other highly-questionable-if-not-downright-harmful-drugs.

But hey, at least you’re getting them for cheap!

Lets say you don’t care about the kind and volume of pills, you just want the deep discount.  Even then, you will likely find the cheap PBM delivers crappy results.  Here’s why.

PBMs that pitch really low per-pill pricing are likely using a group health-contracted pharmacy network, which leads to big-time problems with paper bills and administrative hassles for adjusters.  You may not see these costs as they are buried in bill review “savings”, and may not show up in your pharmacy report.

But they are most definitely there.

Oh, and Rule #1 in work comp services – do NOT piss off your adjusters.

Regardless, the network penetration for the cheapo PBMs tends to be pretty low compared to real WC PBMs.  There’s a bunch of reasons for that which I won’t get in to here.

What does this mean for you?

Do you want to explain to your boss why drug spend – and the combined ratio – are higher even though you got a great price from your PBM?



Drugs and worker’s comp, part 2

Yesterday we posted on top takeaways from our 18th Survey of Prescription Drug Management in Workers’ Comp.

Today, I’M responding to several readers’ questions about physician dispensing (PDD) and mail order pharmacies (twin sons of different mothers) and why they are rearing their unfathomably ugly heads once again.

Mostly because payers have pretty much neglected the issue for more than a decade. Meanwhile the profiteering dispensing industry has been contributing big dollars to politicians, coming up with new and ever-more creative ways to get around regulations, and learning how to get reimbursement from payers – one at a time.

The work comp payer industry is fat dumb and hugely profitable for insurers and some (non PBM) vendors/service entities. Why expend energy on PDD when you’re making bank, employers aren’t complaining, and claim counts are going to continue to decline?

Unfortunately, injured workers are the victims, as are employers and tax payers.

  • PDD are rarely subjected to utilization review (by the time the payer finds out a drug has been prescribed and dispensed by PDDs, it’s way too late to do anything about it.
  • PDDs may conflict with other medications, duplicate other medications, or be contra-indicated for the patient.
  • PDDs are hugely expensive – and often unnecessary or duplicative. Profit margins likely exceed 90%.

The net is payers are usually demanding PBMs “fix” the problem of PDD – instead of partnering with PBMs, employers, and other stakeholders to build and implement a long-term strategy to stop PDD.

What does this mean for you?

If you aren’t fighting the good fight, you are the problem.




Drugs and workers’ comp, part 1

Download the latest Survey of Prescription Drug Management in Workers’ Comp here

Key takeaways

  1. Total drug spend in workers’ comp was likely around $2.9 billion in 2021.
  2. The multi-year decline in drug spend seems to have flattened out; across all 31 respondents spend ticked up 0.82%.
  3. Opioid spend continued to drop, with 2021 figures showing a 12.5% drop over the previous year. Opioids represented 13.4% of all respondents’ pharmacy, the lowest figure in the two-decade history of this survey.
  4. Legacy opioid patients continue to be a challenge for many payers; most have adopted a “we’ll do whatever might help” approach to these patients.
  5. Physician dispensing is once again rearing its ugly head with respondents rating it the single biggest problem in workers’ compensation pharmacy after a multi-year hiatus from that august position.
  6. Payers continue to highly value PBM customer service; myMatrixx continues to lead the industry in that key category.

Media – if you’d like a much more detailed version of the report (which respondents receive) please leave a request in the comment section.



WCRI is out with its latest inventory of state regulations re prescription drug management. This is a must-have for claims execs, managed care leaders, medical directors and risk managers…pricing, utilization review, opioid management, formularies and PBM regs are all covered.

Revenue Cycle Management – aka hoovering mounds of cash from workers’ comp payers – is the focus of a “white paper” targeting hospital and health system execs. If you want to know the hooverers’ playbook, sign up and be prepared to be amazed.

A closely-related item…

From the wonderful folks at Kaiser Family Foundation comes the shocking news that facility fees are driving ER costs to the moon. As most of you (hopefully) know, regulations allow any service delivered at a facility to uncharge a facility fee. It is not hyperbole to note hospitals are wildly abusing this, taking on facility fees to services provided at

      • remote clinics
      • physician offices
      • even telemedicine visits

oh, btw, many hospitals are STILL not complying with Federal requirements to post prices…

Finally, from HBR comes this excellent advisory on how not to anger/frustrate/alienate customers…something many worker’s comp entities seem surprisingly good at. (We are NOT looking at you, LWCC…your work on patient engagement is really good stuff)

All too common is the industry’s maniacal prioritization of efficiency over everything else. From HBR:

when focusing on efficiency, many companies overlook the emotional aspect of the customer experience — how customers feel when interacting with the business.

The piece focuses on consumers – which every injured worker is.

What does this mean for you?

Tired of being hospitals’ piggy bank?… then understand facility cost drivers and techniques.

Injured worker engagement is critical to helping them return to functionality.


What we found – the audit results

Our report on the audit of the Department of Labor’s federal employee (FECA) work comp pharmacy program is now public.

Key findings…during the audit period (FY 2015 – FY 2020):

    • 1330 oral fentanyl scripts were dispensed and paid for without evidence of required cancer diagnosis (remember Actiq and Fentora?)
      • that does NOT include any such scripts that were dispensed and paid for BEFORE the audit period
    • over 25,000 scripts that should not have been filled were.
    • Agencies, Departments, and taxpayers spent $300+ million more than they should have because they didn’t use competitive pricing metrics and methods
    • DOL failed to address opioids and compounds in a timely manner…in both cases DOL was years behind the private sector and state government comp programs
    • The FECA program – which is the biggest single work comp payer in the nation – didn’t have a full time medical director OR clinical pharmacist.

Before you ask…we did not assess or otherwise study the potential impact of these findings on injured workers as that was outside the scope of the project.

The audit covers Fiscal years 2015 – 2020; the analysts and pharmacists at HealthPlan Data Solutions did the analytical heavy lifting, crunching data on millions of scripts and reimbursements. HDS handled the clinical questions as well. CompPharma provided a lot of the qualitative assessment and program operational benchmarks. (Thanks to all who participate in our Annual Survey of Drug Management in WC.)

CPA firm HRK was the lead on this (they speak Federalease and have the right credentials to navigate the Federal contracting system).

Note – Haven’t been able to post for days due to server problems (I’m blaming Putin’s hackers)…and as many of you told me (thanks!) the blog site was down for a while as well. Thanks for your patience and keep those emails re service outages coming.

What does this mean for you?

Audits can be really useful.