To no one’s surprise, a recent study indicates the vast majority of patients for whom Vioxx, Celebrex et al were prescribed would have been fine with older NSAIDS – (non-steriodal anti-inflammatory drugs). In fact;
“only 2% of participants were at “high risk” for gastrointestinal side effects and should have taken COX-2 inhibitors rather than older nonsteroidal anti-inflammatory drugs (Dai et al., Archives of Internal Medicine, 1/24).”
Recall that the main benefit of COX-2s was their alleged benefits for those patients at risk for gastrointestinal side effects. Price was no benefit, as the COX-2s are much more expensive than a common substitute, ibuprofen (Advil).
California HealthLine summarizes the findings succinctly:
“Randall Stafford, a Stanford University internist and an author of the study, said that marketing efforts by Merck, which in 2000 spent $161 million to promote Vioxx, contributed to the increased number of COX-2 inhibitor prescriptions. Stafford said, “There’s an assumption that newly approved drugs somehow have proven themselves to be better than what’s already available” (USA Today, 1/24).
G. Caleb Alexander, a University of Chicago professor and an author of the study, said, “What we saw was widespread, rapid adoption of an interesting and promising but expensive and largely untested medication by millions of people with little or nothing to gain from long-term use” (Los Angeles Times, 1/22). ”
So, Merck paid $161 million in a single year to
–get people to take drugs which were not demonstrably better than much cheaper alternatives;
–get doctors to greatly over-prescribe to many people who would not benefit from their main selling point:
–thereby increasing health care costs by
—-forcing insurers and patients to pay more money for drugs they did not need;
—-selling a drug that causes cardiovascular problems (requiring treatment, not to mention killing patients) when used at high dosage over a long period of time; and
—likely leading to litigation against insurers, managed care firms, physicians, and employers brought by workers comp patients who received COX-2s for treatment of a WC injury.
An executive at a top-five WC TPA told me that their legal department is keeping a “very close eye” on COX-2s. Undoubtedly, so is the plaintiff bar.
The impact of California’s workers comp reforms is already being felt in insurance rates, as premiums are dropping by between 13.9% and 16.6%.
The reforms, which have included drastic reductions in reimbursement for prescription drugs, a tougher definition of disability, a requirement to utilize clinical guidelines, and the authorization of employer-directed care to certified networks, have been at least in part, responsible for the rate reductions.
Interestingly, perhaps the most significant component of reform, the Medical Provider Networks (MPNs) have only just come on the scene. The first batch was recently approved by the State, and rumor has it that the next batch is due out next week, with Liberty Mutual among those to receive notice.
Sources indicate that the State has over 300 applications pending, and is being quite the stickler on some of the applications, rejecting one because part of the documentation was on the wrong form.
If other states’ experience is any guide, once the State and the payers get comfortable with the process, things will flow more smoothly and quickly. For now, patience is the watchword if you’re waiting for your notice.
January 28th is the date set for the First Health shareholder vote on the proposed acquisition by Coventry. With regulatory approvals out of the way, the vote should be a formality.
The last remaining obstacle was the outstanding shareholder lawsuit demanding more information about the deal, which executives get what benefits, and may even lead to a public airing of FH’s financial adviser.
The reasoning behind the lawsuit appears to be FH shareholders’s (and Coventry owners as well) objecting to FH executives’ payouts under the deal, coupled with a perception that FH may not have marketed itself effectively.
Regardless, the deal is done. The next, and much more interesting phase, will be to see what Tom McDonough, the Coventry exec tasked with managing the acquistion, does next.
HSA will be conducting the second Annual Survey of Prescription Drug Management in Workers’ Comp.
For those unfamiliar with this issue, here are a few factoids.
— Pharma costs are the fastest growing component of WC medical expense
— Pharma costs are now 12% of total WC medical dollars, up from less than 4% ten years ago.
— Last year’s survey indicated most payers were searching for answers, and most vendors were not supplying the answers payers wanted.
HSA conducted the first survey on drug costs in workers’ comp last year.
Robert Vonada, a judge in the Pennsylvania WC Office of Adjudication, publishes a blog on all things PA WC related. The topics tend to focus on legal and statute interpretation matters, as one would expect from a judge dealing with these issues on a daily basis.
Judge Vonada also notes developments in areas as diverse as back pain, WCRI reports on PA. If your job includes any responsibility for PA WC, put this blog on your favorites list.
The FDA announced today that Pfizer’s Celebrex significantly increases the risk of cardiovascular problems. What does this have to do with Workers’ Comp?
Celebrex, approved by the FDA for treatment of arthritis, has been one of the most popular drugs for treatment of musculo-skeletal injuries common in workers’ comp. Now, those patients who have been treated with Celebrex for a workers comp condition may find themselves with a heart condition, and that heart condition may be due in part to Celebrex.
While attorneys, researchers, and others argue over the causality issues, adjusters, insurers, and reinsurers will find themselves faced with claims for heart problems from patients with bad knees. Unfortunately, there does seem to be a strong linkage between Celebrex and cardiovascular problems, and these problems may not be limited to Celebrex and Vioxx…
“”We do have great concern about this product and the class of products,” said acting FDA Commissioner Lester Crawford. “ Commissioner Crawford’s concerns arise from the FDA’s analysis of the study, which indicates:
“800 milligrams of Celebrex had 3.4 times greater risk of cardiovascular problems compared to a placebo. For patients in the trial taking 400 milligrams the risk was 2.5 times greater.”
The good news is the marginally better outcomes delivered by these medications was far outweighed by their additional cost. Now, physicians can return to prescribing naproxyn, Tylenol, and ibuprofen for these conditions. Leaving aside the point that the docs should have been doing this all along, perhaps the tragedy (financial and personal) that has been and will be caused by these two over-hyped and under-researched drugs will lead doctors to practice more conservative prescribing behavior.
After all, the docs who wrote the scripts may have some liability as well…
The recent disclosures related to Vioxx’ impact on cardiovascular disease should be raising some big concerns amongst financial folk at WC payers. Here’s why.
Vioxx was commonly used to treat musculoskeletal injuries – sprains, strains, and the like. These happen to be very common WC injuries, and thus lots of WC claimants received scripts for Vioxx.
The law in most states holds that WC is liable for treatments for conditions arising from occupational illness or injury. This has been consistently intrepreted to include liability for conditions arising from the treatment itself – whether that be pain meds after surgery, PT after surgery, Viagra to combat the ill effects of other meds, etc.
The implications of Vioxx for WC are thus obvious. WC payers are potentially liable for cardiovascular conditions for WC claimants who have incurred cardiovascular conditions, and especially those claimants who had CVD prior to receiving Vioxx.
While WC payers have the right to subrogate those claims back against Merck (manufacturer of Vioxx), this will be a long, messy, and expensive process.
Coventry’s acquisition of First Health represents a critical point for the WC managed care business.
As the market leader with some $190 million in annual revenues in WC bill review and network services, FH has long been a strong, and somewhat self-possessed, “vendor”. Carriers and TPAs have found FH to be inflexible, and in some cases dictatorial, regarding terms, conditions, pricing, and services. Some are hoping that the new management will adopt a more “customer-friendly” approach. Early reports from FH customers are that their FH contacts and account managers are saying the right things, but have no in-depth information about Coventry’s future plans for Workers Comp.
Coventry’s latest presentation may shed a little light on this issue. In it, Coventry notes the growth opportunities inherent in WC, the strong “bench strength” of FH WC management, strong growth opportunity in WC (mid teens to low twenty percent range), and potential for reform-driven growth.
I am highly skeptical. FH has, if not poisoned the waters with the market, at least rendered them highly distasteful. Their product offerings are primarily a large, deep discount network and a bill review system that they do not own nor effectively manage. Many payers, facing rising medical costs despite their long relationship with FH, are looking elsewhere for the next generation of managed care.
In the final analysis, Coventry’s future in WC will depend as much on the analysts’ opinions, and therefore the stock price, as anything. If analysts see no synergies, Coventry may decide to “pursue other options” with the WC assets.
The Workers’ Compensation Research Institute is one of the leading research organizations focused on WC. Their annual conference in Cambridge MA just concluded, and once again WCRI produced some interesting and thought-provoking studies.
This year’s conference used a slightly different format, focusing on individual states rather than comparing several, or many, states in a single presentation. Stakeholders from TX, TN, and CA presented after summary data presentations by WCRI staff.
Here’s the highlights as I saw them.
1. Drs. Peter Barth and David Neumark discussed the impact of Provider Choice on Costs and Outcomes. Interesting findings included:
— Costs were lower, and outcomes better, when the employer chose the provider, than when the injured worker chose a provider they had not previously seen.
–When an injured worker chose to use a provider they had previously seen, costs and outcomes were equivalent to those delivered by the employer-selected provider.
–The “new provider”‘s outcomes and costs were significantly worse.
2. The CompScope 4th edition was previewed; this is a summary of medical costs, disability duration, benefit amounts and other outcomes for lost time claims (and others, but we’ll only discuss LT claims) in 12 states. Items of note include:
–Of late, medical costs have been growing rapidly; with costs in all but 3 of the 12 states increasing by more than 10% from 01/02 to 02/03. California saw the highest increase at about 17%. Considering that CA is the largest WC state, that is a truly frightening number.
–There appears to be a strong correlation between medical costs and medical cost containment expenses, with most states favored by low medical costs also enjoying low cost containment expense, and high cost states also burdened by high cost containment expenses. My take is this may be heavily influenced by the percentage of savings model used in PPO deals; the higher the medical costs, the greater the “discounts”; the greater the discounts, the larger the PPO fees; and thus the greater the “cost containment expense”.
So, the higher the medical expense, the more money the deep-discount, percentage-of-savings PPOs make. Interesting incentives…
3. Disability duration factors – Worker age, education level, part-time and/or seasonal workers, and employee-supervisor trust factor were all key factors influencing disability duration. Workers over 60 had much worse return-to-work results than younger workers. There was also wide variation among states, with Texas hampered by RTW rates substantially lower than the median. Regarding education, workers with high school diplomas returned to work much sooner than drop-outs.
The full CompScope 4th edition will be available from WCRI in 2005; while somewhat weighty, it is a “must-read” for managers and executives involved in WC.
Underwriters should also pay close attention to the report; there are a wealth of “indicators” that the insightful underwriter can use to better select, and de-select, risks.
Why do doctors contract with large networks to provide care at a deep discount? Do they expect to get more business from those relationships? If so, does that additional business ever arrive at their examining room? How many other physicians in their area are also contracted with that network? If there are many, are they merely joining to maintain their patient base?
Have they actually done the math to determine the impact of the discount on their finances?
Here’s an admittedly simplistic analysis of the financial impact of a discounted patient visit.
- The “non-discounted” price would be $100
- The discount is 20%
- The net profit on the average patient visit (non-discounted) is 30% (an unreasonably high number, but easier to work with for our purposes)
The doctor makes a profit of $10 per discounted patient visit, and therefore must see three times as many patients to justify that 20% discount. And that’s before one factors in the additional fixed costs associated with the larger patient load – more parking, more staff, a larger waiting room, more examining rooms, and more of his/her professional time.
Perhaps more physicians are “doing the math”, and that is why managed care firms are having a much tougher time getting discounts.
The network deep discount model has other fundamental flaws, flaws that are only now beginning to be fully appreciated.