Three States of Drug Issues

Whack-A-Mole!

Boy - I've used that phrase a lot in this blog, but it so aptly describes what happens in the highly regulated world of workers' compensation. Plug one hole, another opens, and so on, and so on, and so on ad nauseum.

The California Workers' Compensation Institute (CWCI), a non-profit research group funded by the insurance industry with headquarters in San Francisco released early statistics that not only did the highly touted law regulating compound drugs, medical foods and durable medical equipment that took effect January 1, 2012 not result in decreased costs, but in fact the costs of compound drugs increased 86%!

What the heck?!

Assembly Bill 378 (Solario- D) was signed into law by Governor Jerry Brown on October 7. The Assembly Appropriations Committee estimated AB 378 would save about $50 million a year, with some of those savings coming from a provision stating that compound drugs must be billed at the ingredient level and reimbursed at the Medi-Cal rate for each ingredient as identified by its national drug code (NDC), and included compound drugs, medical foods, co-packs and durable medical equipment to the list of goods for which physician self-referral is prohibited.

The drug industry didn't waste any time figuring this one out.

Alex Swedlow, research director for CWCI, noted that the manufacturers just increased the number of drugs compounded, and increased the price of each drug included.

Consequently the average cost per compound drug increased to $956, 2012 in January from $514 in 2011, according to Swedlow. The average price per ingredient increased to $264 in January from $158 in 2011, and the number of ingredients per compound drug increased to 3.6 from 3.3.

Certainly the data is incomplete and can not be taken out of context since CWCI is dealing with only one month of data.

Still, the monumental increase in overall cost is alarming.

The problem, in the opinion of Swedlow reported this morning in WorkCompCentral, is that AB 378 set only a unit price, but did not regulate the number of units.

“There’s a whole library of research that says when you just focus on one, you can’t really control the overall cost,” he said.

Drugs in workers' compensation take on so many different cost permutations because of the pervasive nature of medication in the treatment of work injury or disease and the broad spectrum of applications. In fact three of the top four headlines this morning in WorkCompCentral News are about drugs.

Texas is still trying to figure out opioid controls. The Texas Division of Workers' Compensation (DWC) proposes to review opioid prescribing by doctors in a plan-based audit of treating doctors.

The audit would look at initial treating providers who have prescribed opioids to injured employees less than 10 days from the date of injury and instances in which the total supply of opioids on a claim from any health care provider is greater than 30 days.

The top 15 providers who served as the first prescriber for opioids in at least five cases would be selected for audit.

The audit would consider the medical necessity and appropriateness of the prescriptions based on established treatment guidelines.

The Texas DWC is proposing to use cases with dates of injury during calendar year 2010, and opioid prescriptions dispensed between Jan. 1, 2010, and Aug. 31, 2011.

A summary of the audit results would be furnished to Workers' Compensation Commissioner Rod Bordelon and presumably would lead to formulary changes and regulations to deal with these drug issues.

Will Whack-A-Mole bedevil Texas? Only after new regulation and formulary changes are introduced will we find out.

In New York, the Senate Labor Committee took a step backwards in my opinion by moving a bill that would repeal the part of the state's 2007 workers' compensation reforms that requires injured workers to use pharmacies selected by carriers and self-insured employers when one is available.

In fact the panel voted 16 to 0 without discussion on Tuesday to approve Senate 3749, which would allow injured workers to use any pharmacy that follows the fee schedule established by the New York State Workers' Compensation Board.

The fee schedule, adopted in July 2008, caps reimbursements at 88% of the average wholesale price for brand-name drugs and 80% of AWP for generic drugs, with a 25% upward adjustment for drugs dispensed in controverted cases.

Opponents of the bill argue the change would all but eliminate discount contracts between insurance carriers or employers and pharmacy benefit managers (PBMs).

Pharmacists who support the bill argue the reforms require injured workers to abandon pharmacies that maintain complete profiles of their medications. The group argues the switch to carrier-mandated pharmacies can lead to conflicts among medications.

George Rontiris, co-owner of Titan Pharmacy in Queens, N.Y., said he and other independents are pushing the legislation to help workers whose prescriptions are being turned down by pharmacies in carrier networks.

"We're not asking that the carriers stop issuing network cards," Rontiris said. "This (bill) is just to help the patients who fall through the cracks," he told WorkCompCentral.

So there you have it. Another day in workers' compensation. Another day of demonstrating just how difficult it is to meet the fundamental goal of having the employer provide for injured workers in an economical way.