There are signs that drug marketing is beginning to change, as the FDA focuses on off-label use and some of the big pharmas cut back on their sales forces. This may well be as part of big pharma’s efforts to defuse some of the harsh criticism leveled at them by physicians, consumer groups, and health plans frustrated with pharma’s aggressive marketing tactics.
David Wilson’s Health Business blog notes that Wyeth and Pfizer have both announced plans to cut sales staff. The reasons are:
1. “Mirrored sales teams –the practice of sending multiple sales reps to the same doctor to talk about the same drug– are causing a backlash from doctors and also making it hard to measure the effectiveness of individual sales people
2. There is little new to talk about –because of fewer product launches and in the case of Wyeth the curtailment of uses for its hormone replacement therapy. (Could it be that the more a doctor knows about hormone replacement therapy the less they will prescribe?)
3. The availability of efficient, effective outsourced sales forces available from Ventiv, Innovex and PDI have enabled pharma companies to reduce fixed costs.”
The issue of pharmaceutical detailing has been extensively addressed in DB’s MedRants, a highly entertaining and informative blog authored by physician Robert Centor. Centor has also commented on the recent decision by Bristol-Myers-Squibb to impose “a ban on advertising its new drugs to consumers in their first year on the market, adopting voluntary restrictions that go further than what is anticipated in an industrywide advertising code to be announced next month.” Centor notes
“The optimist in me hopes that the outcries from physicians has influenced their policy. The skeptic in me believes that they understand the DTC drug advertising carries both risks and benefits. Big Pharma has a major image problem. TV drug ads generally hurt their image. ”
As to the issue of off-label use, this is a significant area of concern for many payers, including workers compensation insurers. In my firm’s “Second Annual Survey of Prescription Drug Management in Workers’ Compensation”, payer respondents noted off-label use as a significant concern. Typical was the use of Actiq as a pain med for musculoskeletal pain. Actiq is a brand drug used for break through pain associated with cancer; thus its use in workers comp is the very definition of “off-label”.
What does this mean for you?
If big pharma is finally getting the message, that bodes well for a “decrease in the rate of increase” in pharmaceutical inflation. However, these companies are the ultimate capitalist organizations (that is not intrinsically bad) so they will seek to maximize their returns. And we all know who pays for those “returns”.
Ohio’s workers compensation scandal continues to grow, heading off in ever-more-interesting and bizarre directions every day. The fallout is both political and financial, and has reached the governor’s office.
Here’s the latest information from our friends at “Workers Comp Insider” and other sources. It appears the Bureau of Workers Comp, the entity that oversees the state’s monopolistic workers comp insurer, has lost somewhere around $215 million in funds. These losses were due to investments in rare coins (!); with shady investment manager Alan Brian Bond; and in a hedge fund that was amazingly adept at losing large sums and charging high fees for that ability.
In one of the more entertaining chapters of this growing story, one of the key players suffered an alleged burglary at the home of Michael Storeim that resulted in the loss of significant
The growing scandal in Ohio surrounding the Bureau of Workers’ Compensation‘s wildly inappropriate behavior has officially hit the big time. Initially surfaced by local press, and blogged on several occasions at Workers Comp Insider, the mess has just hit the national press. BWC’s investments in rare coins, affiliation with a politically-connected investment manager, apparent desire to hide losses totaling over $200 million, and perhaps even worse is covered in Paul Krugman’s column in today’s New York Times (free registration required).
Here’s one of Krugman’s more trenchant observations:
“We’re not just talking about campaign contributions, although Mr. Noe’s contributions ranged so widely that five of the state’s seven Supreme Court justices had to recuse themselves from cases associated with the scandal. (He’s also under suspicion of using intermediaries to contribute large sums, illegally, to the Bush campaign.) We’re talking about personal payoffs: bargain vacations for the governor’s chief of staff at Mr. Noe’s Florida home, the fact that MDL Capital employs the daughter of one of the members of the workers’ compensation oversight board, and more.”
One has to admit, this is lots of fun for outsiders. Perhaps now that Michael Jackson has returned to his devoted fans and home/amusement part/daycare center, and Scott Peterson has left the headlines, the press will focus on this mess, bringing notoriety and “human interest” to our little corner of the world. Imagine, workers comp will be the center of the cocktail party or soccer sideline discussion, enabling the cognoscenti (that’s us) to dispense our wisdom and hard-won knowledge to listeners eager to get in on the latest. I can see Peter Rousmaniere on “NightLine”, Tom Lynch on “Larry King Live”, Larry Dorman on Greta van Susteren, Jon Coppelman on “The Daily Show”…
There are several signs that indicate a growing awareness of the importance of the physician in managing workers comp injuries. While many in the industry have paid lip service to the treating physician, their actions have been louder than words. Utilization review requirements, onerous communications protocols, invasive medical management procedures, requirements that physicians provide care at a discount to an already-low fee schedule are representative of the way physicians have been treated by the community.
Now, that is starting to change. Here’s the evidence.
–a major workers comp insurer is considering using a PPO network that includes physicians paid above the workers comp fee schedule. This despite their long-held and loudly trumpeted historical attachment to large discount-drive networks.
–another carrier is closely examining its data to identify the physicians with the best outcomes. The plan is to pursue a contractual relationship with those physicians that is predicated not on discounts but on results.
–large employers such as Supervalu have been working directly with certain providers in specific locations that they deem to deliver excellent care. Again, outcomes, not discounts, are the measure of quality.
–a large Longshore-Harbor Workers insurer has arrangements with many physicians where they pay a negotiated rate that is typically above the fee schedule. This gets them prompt, effective treatment, speeds communications, etc.
—Choice Medical Management, the fastest growing workers comp care management firm in the Southeast (also a client) has been recognizing the physicians of the year for several years. This year the number of physicians nominated and the volume of nominations have been significantly higher than in years past, forcing the company to adopt a more streamlined method of evaluating nominees.
This is great news, but a few items do not a trend make. The encouraging sign is that this growing recognition appears in large carriers and small carriers, in TPAs and at employers, among adjusters and execs.
What does this mean for you?
If you don’t have a physician-centric approach to managed care, it is time to start thinking about how you are working with the people who have the most influence over your claimants.
Workers’ Comp Insider has a fascinating post on workers comp in Iraq. Jon Coppelman discusses safety issues, premium rates (as high as $80 per $100 of payroll, for people making $100k a year!), the “competitive bidding” situation between AIG and ACE, and other intriguing points.
I highly recommend it.
Another interesting post discusses the costs and benefits of Ambulatory Surgery Centers, with particular attention paid to safety issues. An issue not covered in the post or resources on the post is the issue of ASCs siphoning off the profitable, private pay patients from hospitals, leaving hospitals with sicker, poorer patients. The result, hospitals’ outcomes go down, costs go up, and profits disappear.
Another post in Medpundit lead me to a great article about an American’s experience in the British health system. One quote from the article (originally in the Wall Street Journal) in the Medpundit post is particularly telling:
“There is much better teamwork among doctors, nurses and physical therapists in Britain. In fact, once a week at Queen’s Square, all the hospital’s health workers–from high to low–would assemble for an open forum on each patient in the ward. That way each level knows what the other level is up to, something glaringly absent from U.S. hospital management.”
Although the firm Market Scout contends that the workers compensation market is not softening, critics question their data, objectivity, timing, and conclusions. Market Scout provides quotes for property and casualty lines, including workers comp, to agents and brokers. For those not immersed in the arcane world of insurance, a “softening market” is one where prices are dropping and coverage expanding as carriers seek to build market share, often at the expense of sound underwriting (risk selection) principles.
Evidently, one of the carriers that they use most often is the primary source of their data. At the least, this calls into question Market Scout’s conclusions; one carrier does not a market make.
There are two other potential concerns with Market Scout’s information and conclusions.
1. their data tends to lag the industry, and there are some indications that rates have begun to soften significantly since June 1.
2. other market watchers are seeing a definite, and larger, drop in WC rates than Market Scout indicates.
My sense is the market is indeed softening more rapidly than Market Scout indicates.
What does this mean for you?
If you are in the WC industry, you can either follow the numbers-challenged off the cliff or tell senior management pricing is about to cross the “stupid line”. If you choose the latter, document document document.
If you work in or provide services to a WC payer, be prepared for them to request price cuts, reductions in work force, and other means to reduce admin expense. When prices are dropping, most payers just look to cut internal expenses instead of focusing on lowering claims expense.
An article in CFO.com analyzes the complex web of transactions, relationships, and incentives that exist in the employer-TPA-managed care firm web. David Katz notes:
“risk managers, by some accounts, often hand over the management of claims and medical costs to third-party administrators (TPAs) without a clear idea of their relationships with medical and claims-services providers.
In some cases, such wholesale delegation can result in “the complete outsourcing of the risk manager’s fiduciary responsibility to the organization and its shareholders by allowing these service providers to control what should be viewed as a line of credit,” according to one senior sales executive for a managed care organization specializing in workers’ compensation. Potentially, a self-insured corporation’s lax management of its workers’ comp outlays could represent “a huge hole in internal controls,” said the executive, who asked not to be identified.”
Katz goes on to discuss some of the legal investigations now in process that may be related to these issues.
What does this mean for you?
With Mr. Spitzer et al hot on the trail of unseemly transactions in the property and casualty industry, participants would be well-served to monitor their TPA relationships closely.
Two Aon execs have published a piece on workers compensation managed care in Risk Management that is uninformed, self-serving, and reflects a lack of appreciation for the true cost drivers in comp. I try not to comment on other consultants’ work, but this article demands a response .
Briefly, the article by Charles D. Reuter, senior vice president and Heidi Mader, assistant vice president with Aon Consulting, Inc in New York office calls for workers comp insurers to either “follow the herd as the industry has become accustomed or
Texas Governor Rick Perry signed a Workers Comp reform bill into law yesterday, authorizing the use of networks for treatment of injured workers.
To quote the Dallas Star Telegram;
“The revised law will create physician networks like those in commercial health plans and provide a small boost in benefits paid to injured workers. Texas has the country’s third-highest workers compensation costs and the highest rate of injured employees not returning to work. The law replaces the Workers’ Compensation Commission with a single, appointed commissioner housed in the Texas Department of Insurance and creates an Office of Injured Employee Counsel as an advocate for workers.”
What does this mean for you?
At long last, perhaps meaningful reform of the one of the nation’s worst workers comp environments. I’ll be taking a much closer look at this legislation and potential impacts of same in the near future.
Jon Coppelman at Workers’ Comp Insider has an intriguing post about the problems at the Ohio Bureau of Workers Comp. Kudos to Jon as he appears to have scooped the New York Times, who published their article a couple days later. To quote Jon;
“The workers compensation bureau has invested $50 million in rare coins, working through Tom Noe, a man prominent in Republican fund raising circles. Indeed, Mr. Noe has been recognized by the Bush-Cheney campaign as a “Pioneer,” as he raised over $100,000 for the President’s re-election campaign.
Realm of the Coin
At this point, it appears that some of the coins purchased by the state fund are missing. Two of the most valuable, totaling a quarter of a million dollars, were “lost in the mail” according to Noe. An additional 119 coins were “misappropriated by an employee.” The coins “went missing” back in 2003, but Noe neglected to tell anyone. The initial estimate for the missing coins was $400,000. Now, according to Noe’s own attorney, the figure is somewhere between $10 and $12 million.”
Despite the very troubling implications of this debacle, it does make for highly entertaining reading. Following the comedy of errors (being kind) perpetrated (or should I say committed) by elected and appointed officials will being a chuckle and shake of the head to most readers.