Friday, October 26, 2012

Random Thoughts on Drugs, Penalties and Compounding

Sometimes the news is serendipitous in the confluence of unrelated events centered on the same issue or topic.

This morning the topic seemed to be drugs. From carrier denial of medication to injured workers, and penalties for doing so, to pharmaceutical misfeasance.

In Texas, carriers were given warning by the Insurance Council of Texas hat the state Division of Workers’ Compensation (TX DWC) is investigating complaints that some adjusters are improperly denying prescription drug refills.

Apparently some adjusters have been failing to distinguish between claims that are currently subject to TX DWC's closed formulary for prescription drugs, and legacy claims that are not subject to the rules.

The TX DWC adopted a closed formulary for prescription drugs, effective Sept. 1, 2011, for claims on and after that date. However, the closed formulary does not apply to “legacy claims” – those dating prior to Sept. 1, 2011, until Sept. 1, 2013.

Matt Zurek, DWC executive deputy commissioner for health care management and system monitoring, said doctors have told him some adjusters and carriers are improperly requiring preauthorization for legacy claim prescriptions. Those claims fall under the former “open” formulary, Zurek said.

The volume appears to be small according to Zurek, but nevertheless the complaints point to a likely education issue on the part of claim adjusters.

The TX DWC, Texas Medical Association, Insurance Council and other organizations have been working to educate workers’ compensation system participants on the legacy claims issue. Carriers must send letters by next March 1 to doctors who treat patients with legacy claims that might be affected by the change next year. 

In California, a recent Workers' Compensation Appeals Board panel opinion imposed the maximum statutory penalty against a carrier for what it said was an unreasonable delay in the approval of psychotropic medications for an injured worker.

In Ferro v. Edgewater Motel Inc. et al., Nos. ADJ6958585, ADJ6958588, Ferro had admitted injuries to his back, jaw and psyche due to a car accident in 2009.

The psyche complaints seem to me to be pre-existing, but if the industrial accident contributed or exacerbated them then under California law they are compensable - and frankly, I'm of the opinion that most people have some psyche component to their workers' compensation claim and that regardless of etiology it should be treated right along the physical issues (but that's another column).

Regardless, Ferro's testimony, which the WCJ deemed not entirely reliable, had corroboration with some documentary evidence in the form of medical reports and other letters. Probably the one deciding factor in the case is that the carrier offered no evidence whatsoever to dispute any claim of delay or denial in the provision of a pharmacy-full of various medications.

A split WCAB panel voted to penalize the carrier the maximum amount under Labor Code 5814 - 25% of the total cost of the medications up to $10,000. All of the drugs are of the expensive variety, so the penalty could be quite substantial.

In the meantime, news circulated around the nation yesterday that members of Congress are requesting a criminal investigation into the compounding pharmacy whose products have been linked to 24 deaths and promising legislation that would strengthen federal oversight of the compounding industry.

The U.S. Centers for Disease Control and Prevention (CDC) said as of Thursday afternoon, 328 people have been infected with fungal meningitis after receiving a steroid injection manufactured by the New England Compounding Center in Framingham, Mass.

New England Compounding Center has recalled all of its products. The Boston Globe reported that the company is expected to file for bankruptcy.

Officials in Massachusetts, Michigan and Oregon have revoked the company’s pharmacy license after finding that it ignored restrictions that allowed it to produce medications only when requested by a physician. The company was also warned in 2006 by the U.S. Food and Drug Administration that it was acting in the manner of an unlicensed drug manufacturer, rather than a compounding pharmacy.

The Massachusetts Department of Public Health on Tuesday released a report of preliminary findings from an ongoing investigation saying the compounding pharmacy produced large batches of drugs for general use rather than requiring a prescription for an individual patient. Bulk manufacturing of drugs was not allowed under the terms of its Massachusetts license.

Additionally, the Massachusetts health department said the New England Compounding Center failed to follow standards to ensure its products were sterile, and distributed two lots of medication before completing sterility testing.

According to a report by the Wall Street Journal, compounding pharmacies are regulated by the states in which they operate, with little or no oversight by federal authorities.

Legislation drafted in 2007 that would have given more authority to the FDA to regulate compounding pharmacies was killed in the face of a strong lobbying campaign launched by the International Academy of Compounding Pharmacies.

Lobbying data from the Center for Responsive Politics shows the academy has spent $1.1 million on lobbying activities between 2001 and 2012. Political spending peaked at $260,000 in 2007, according to the center’s data.

Federal legislators are now promising to return legislation to license and monitor compounding pharmacies at the federal level.

So what have we learned? Honestly I'm not sure. These same fact patterns will likely repeat over time. But we can't say we haven't heard these stories before.

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