With the news that Aetna has entered into the work comp pharmacy benefit management business, there are now officially a bazillion WC PBMs doing business. Maybe even two bazillion.
Aetna has been in and out of the WC business in the past, and now appears to be in it, at least as a managed care vendor. Aetna Workers Comp Access is the brand name for the company’s PPO network, one that is gaining some traction in certain jurisdictions. The new PBM venture appears to be an attempt to use Aetna’s group health-oriented PBM to deliver drugs to comp patients. But the WC PBM business is much much different than group health. There are no deductibles or copays in comp, identifying the patient’s PBM is much more of a challenge, and the country is a crazy quilt of different regulations, as each state sets its own rules, reimbursement levels, and operating standards.
The strategy is to cross sell the PBM to Aetna’s (group health) employer clients. One of the touted benefits is the ability to identify potentially harmful drug interactions across both group health and WC medical treatment. Aetna has landed their first customer, CostCo, and are also bidding on carrier business (several of the larger insurers have been or are out to bid for PBM services).
Aetna is not doing this on their own, but has contracted with Rockville, MD based CatalystRx to provide the WC expertise needed to operate in the comp market. This is a somewhat puzzling choice; Catalyst is not a big player in WC and does not have a lot of experience in the space. Their contribution will be key if Aetna’s newest venture is to become a viable option for comp drug buyers.
What does this mean for you?
Another option in the already-crowded WC PBM industry, albeit one with a different twist.

The Hartford’s annual study of drug costs provides insights into what drugs are driving costs, and the results a carrier can expect if they work hard at managing drugs. The big insurer enjoyed a reduction (!) in drug costs year-over-year of one percent, driven largely by the demise of the COX-2 drugs and the emergence of generics for Oxycontin and Neurontin.
Heavy-duty pain med Actiq continues to be a big problem for the Hartford, as it is for other payers. Of note, one payer I work with has been able to sharply curtail the use of Actiq through a targeted clinical management program involving physicians doing peer review. And, Actiq is coming off patent next year, which may reduce the price per dose. (but the manufacturer has developed a “new and improved” version that will likely be used as a substitute…)
The Hartford’s results are not surprising. Payers with aggressive, integrated approaches to managing drug costs are experiencing modest increases in drug expenses, while those without a strong focus on managing pharmaceutical expense have been hammered by costs increasing upwards of 15% annually. The Hartford participated in my firm’s third Annual Survey of Prescription Drug Management in Workers Compensation; their results, and the results of several other large payers, helped keep the industry’s overall inflation rate to 10%.
The keys to success? Managing utilization. A strong clinical management approach. The intelligent use of prior authorizations. And a company-wide commitment, backed up by the resources needed to attack the problem.
What does this mean for you?
You too can control drug costs – by focusing on utilization and clinical management.

News reports indicate Amerisource Bergen (ABC), the hospital supply firm, is unloading its Pharmerica subsidiary. Actually, it is forming a joint venture with Kindred Healthcare to combine both companies’ long term care businesses in a new entity.
These companies provide drugs and supplies to nursing homes around the country, have annual combined sales of $1.9 billion and rather thin profits of $75 million.
Pharmerica also was the parent company of workers comp PBM Tmesys/PMSI, which evidently is staying within the ABC company fold.
Last week PMSI/Tmesys also made several changes in management, including promoting Mark Hollifield to president to replace Dave Weidner, who moved on to another senior position within the parent company. Hollifield, who was promoted to COO at the end of March 2006, is a well-regarded manager. Tamara Wagner, the long-time head of sales departed as well, and an interim sales leader was appointed from within.
Other sources indicate Coventry’s First Health unit is looking into entering the WC PBM business, likely by going the acquisition route.

Drugs account for over one-eighth of workers compensation medical expenses, and that number continues to increase. The data from NCCI’s latest research paper on workers compensation drug costs is consistent with the findings of my firm’s research, and provides additional detail on the specific drugs that account for the majority of dollars spent.
NCCI’s report includes results up to 2003; while there have been several significant changes since then (the disappearance of most of the COX-2s, patent expiration on Oxycontin, and the explosive growth of Actiq), the report’s year-over-year trend data is sobering.
Of note, experience indicates that the most sophisticated payers are holding increases in the 2-5% range through the use of clinical management programs, data mining, adjuster training, strong EDI connections, and intelligent third party biller strategies.
Their less-sophisticated colleagues are at the other end of the spectrum, experiencing 15% and higher annnual inflation rates.
What does this mean for you?
If you aren’t working hard on this, you may want to get started.

My firm’s third annual survey of prescription drug management in workers comp has been completed, and here are a few of the findings.
1. Drug costs increased slightly more than 10% last year, a “decrease in the rate of increase” over prior years.
2. Respondents, which ranged from small regional payers to the largest national insurers, are getting more sophisticated about drugs and drug management. This is evidenced by respondents’ increasing focus on clinical management programs; access to more and better data about their programs and results thereof; and greater attention on utilization vs. price.
3. Third party billers continue to frustrate payers, with almost 90% viewing TPBs as problematic. Concerns included reduced data quality, increased administrative problems and workload, and increased costs.
4. Drug repackaging is also high on respondents’ lists of problems, with particular emphasis on the California situation and physician dispensing.
A copy of the survey report can be obtained by emailing me at jpaduda@healthstrategyassoc.com