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How Will State Boards of Pharmacy Respond to Senate Committee’s Compounding Inquiry?

December 13, 2012

On November 19th, Chairman Tom Harkin (D-IA), Ranking Member Mike Enzi (R-WY) and members of the Senate Health, Education, Labor and Pensions Committee sent letters to all fifty state boards of pharmacy, the entities responsible for maintaining registries of pharmacies operating within their state. The HELP Committee is investigating the New England Compounding Center (NECC) for its production of tainted drugs that caused the recent outbreak of fungal meningitis, which has resulted in 33 deaths and more than 480 illnesses.

The letters were sent as a follow up to a hearing on November 15th in which Senators heard a very troubling account of NECC’s oversight record, which highlighted the gaps and grey areas that complicate the law establishing regulatory authority over such companies. In the course of the investigation, committee staff found that compounding pharmacies like NECC are required to register with their state of residence, and not with the U.S. Food and Drug Administration. This inquiry will help lawmakers to assess the scope of these companies nationwide. Today’s letters will also assist the committee as it determines what changes need to be made to ensure that compounded drugs are safe and available for patients and hospitals who need them.

“The outbreak raises serious questions about the level of oversight that a large-scale compounding pharmacy was subject to, both by state and federal regulators, and what if any additional steps need to be taken to prevent such a tragedy in the future. Therefore, as part of our investigation, we write to request information regarding general oversight of compounding pharmacies in your state and what actions you have taken to address this meningitis outbreak,” the Senators wrote.

Key Points Made in the Inquiry
As foundation for its request for information, HELP noted that the Centers for Disease Control and Prevention (CDCP) linked the recent meningitis outbreak to three lots of preservative-free methylprednisolone acetate produced by the New England Compounding Center (NECC) — a compounding pharmacy in Massachusetts. According to the CDCP, the three lots consisted of 17,676 products distributed to 23 states, exposing approximately 14,000 patients since May 21, 2012. As of November 16, 2012, at least 480 patients have become ill throughout the country, of which 33 have died as a result of the contamination.
In order to better understand how states address the potential issue of compounding pharmacies distributing large quantities of drugs throughout the country and whether additional federal oversight may be necessary, HELP requested that each state’s board of pharmacy provide information responsive to its requests as noted below:

Does your agency require compounding pharmacies to identify if they produce large volumes of drugs, if they compound sterile injectable products and/or ship their products across state lines? Do your inspection procedures vary based upon the production of sterile drugs, or large quantities of drugs, or drugs shipped across state lines?
Does your state require that pharmacies engaged in sterile compounding comply with USP and if so what is your procedure for ensuring compliance with the standard?Are compounding pharmacies in your state required to have a patient-specific prescription prior to producing a compounded drug or are they able to produce batches of products without a prescription?
Please provide the name and address of all pharmacies in your state that hold licenses or waivers or other exceptions that permit the pharmacy to operate in the absence of providing a full service retail pharmacy and meet all of the following three criteria (to the extent that you have information that allows you to identify pharmacies this way):
- engage in sterile compounding;
- hold licenses in other states; and
- engage in compounding as opposed to dispensing.

Assuming the states responded, information should have been available no later than Friday, December 7, 2012. Unfortunately, no responses have been published at this point, but it will be interesting to see how each state views its responsibilities to oversee compounding pharmacies at the state level.

Medicare Advantage Plans – A New Layer in the Conditional Payment Process?

November 8, 2012

Over the past few years, much has been written about the mandatory reporting requirements associated with MMSEA Section 111 and the increased interest in ensuring that Medicare is reimbursed for any conditional payments made for a workers’ compensation injury. Unfortunately, under this same backdrop of focused attention on recovery, very little, (i.e. no) attention has been given to the unique issues raised when settling a case with a Medicare beneficiary who receives Medicare Part D benefits, or is enrolled in a Medicare Advantage (MA) plan. This changed overnight when, On June 28, 2012 in the case of In re Avandia Marketing, Sales Practices and Products Liability Litigation, 2012 WL 2433508, the Third Circuit Court of Appeals became the first Circuit Court to recognize that a Medicare Advantage Plan has a private cause of action under the Medicare Secondary Payer Act (“MSP”). So what are the recovery rights of MAP’s and how do we make certain the interests of both the payer and Medicare are appropriately considered when settling a case with a Medicare beneficiary who is enrolled in such a plan?

Background

In 1980, Congress enacted the Medicare Secondary Payer (MSP) statute in an effort to reign in the burgeoning costs of the Medicare program. Under the MSP statute, Medicare makes “conditional” payments, and Medicare has a right of reimbursement if it determines that a third-party primary payer bore responsibility for those payments. 42 U.S.C. § 1395y(b)(2)(B) (2006). The MSP also created a private cause of action to enforce the right to recover payments made by Medicare that are the responsibility of a primary plan. 42 U.S.C. § 1395y(b)(3)(A).

In 1997, Congress created Part C of the Medicare law, now known as the Medicare Advantage program, as an alternative to the traditional Medicare program under Parts A (hospital insurance) and B (medical insurance). MAP’s are offered by private companies and provide all coverage provided by Medicare Part A and Part B and typically offer additional coverage, such as vision, hearing, dental, etc. MAP’s are essentially Medicare HMOs operated by private insurers. The statute creating these plans contains an independent secondary payer provision, which references but does not fully adopt or incorporate the MSP statute. 42 U.S.C. § 1395w-22(a)(4).

Enacted in 2007, the Medicare, Medicaid, and State Child Health Insurance Program (SCHIP) Extension Act (MMSEA) expanded the ability of the federal government to recover sums owed under the MSP statute by imposing strict reporting requirements and penalties for noncompliance. 42 U.S.C. § 1395y(b)(7), (b)(8). Under MMSEA section 111, all insurers as well as self-insurers, collectively referred to as “responsible reporting entities” (RREs), must report information regarding payments made to Medicare beneficiaries and other data to ensure proper coordination of benefits with the Medicare program. 42 U.S.C. § 1395y(b)(7)(A); 42 U.S.C. § 1395y(b)(8)(A). This reporting requirement applies irrespective of whether the beneficiary is enrolled in traditional Medicare or in a MA plan.

What Are the Recovery Rights of MAP’s

Medicare conditional payments are a potential cost that must be considered in any claim involving a Medicare beneficiary. Medicare has the right to be reimbursed, and the power to enforce that right, under the Medicare Secondary Payer Act (MSPA) to the extent that Medicare has already paid for injury related medical treatment. What some do not appreciate, however, is that the conditional payments referenced in the standard Conditional Payment Letter from the Medicare Secondary Payer Recovery Contractor (MSPRC) are only those that have been made under Medicare Part A (inpatient and some outpatient care) and Part B (physician’s fees, therapy, durable medical equipment, etc.), sometimes referred to collectively as “traditional Medicare”. MSPRC presently does not track, and does not attempt to recover, those payments that have been made under Part C (Medicare supplemental plans) or Part D (drug coverage) and very often these other payments are quite substantial.

Part D payments are made by private insurers, and third party pharmacy suppliers, approved by, and under contact with, Medicare and Part C payments are made by private insurers who have been approved by Medicare to write policies that cover items that are either not covered by Medicare under Parts A and B (this is Medicare supplementary coverage) or which replace traditional Medicare completely and which provide additional medical benefits as well. These Part C comprehensive plans are known as Medicare Advantage Plans (MAP’s) and the insurers or sponsors are referred to as Medicare Advantage Organizations (MAO’s). It should be noted that some, but not all, MAP policies also replace Part D coverage.

While there is a general agreement that MAP’s have a contractual right to seek recovery of expenses paid to a Medicare beneficiary, the existence of a private right of action to enforce that claim in federal court under the MSP statute has been less straightforward. MAP’s contend that they have rights as a secondary payer under the MSP statute to seek recovery of paid expenses. Beneficiaries and primary payers, on the other hand, contend that the MSP statute does not confer a private cause of action on MAP’s. Prior to 2012, federal district court cases lend support to the position that MAP’s do not have a private right of action to enforce their reimbursement rights under the MSP statute; instead leaving MAP’s to enforce their rights as secondary payers under state contract law. However, the more recent Third Circuit of Appeals opinion In re: Avandia Marketing, Sales Practices and Products Liability Litigation, 2012 WL 2433508 (6^th Cir. 6/28/12) marks a departure from earlier decisions and will no doubt create uncertainty and debate surrounding the reimbursement rights of MAP’s going forward.

Third Circuit Opinion–In re: Avandia Marketing, Sales Practices and Products Liability Litigation

In In re: Avandia Marketing, Sales Practices and Products Liability Litigation, No. 11-2664, 2012 WL 2433508 (3^rd Cir. 6/28/12), the Third Circuit Court of Appeals held that a MAP has a private right of action under the MSP to recover payments it has made that are the responsibility of a primary plan. In doing so, the court reversed the district court, which had dismissed the claims of the involved MAP on the basis that the MSP does not grant a MAP a private right of action to enforce its rights as a secondary payer.

In sum, the Third Circuit found that MAP’s have the same recovery rights as traditional Medicare based on a plain reading of the MSP statute, given the legislative history and policy goals of the Medicare Advantage program, and considering due deference owed to Medicare’s interpretation of the MSP statute and related regulations.

Tower MSA Partners – Proactive in Pursuit of Resolution

Regardless of whether an injured worker / plaintiff received Medicare benefits through a MAP or traditional Medicare, compliance with MMSEA Section 111 MIR mandates that the responsible reporting entity report the settlement to CMS. This reporting obligation is separate and distinct from a MAP’s recovery rights under the MSP statute. In addition, Primary payers may not be aware that during a March 22, 2012 teleconference call, CMS stated that they are now sharing MMSEA Section 111 Data with MAP’s. Therefore, MAP’s are now armed with settlement information concerning Medicare beneficiaries in the same manner as traditional Medicare.

Today, about 13.3 Million People are enrolled in Medicare Advantage Plans. There are close to 50 million Medicare beneficiaries, so more than 1 in 4 is on a Medicare Advantage Plan compared to traditional Medicare. Furthermore, Medicare Advantage Plans are gaining members – almost 10% more enrollees over the last year. In terms of Part D Prescription Plans, the number of enrollees for 2012 is estimated it to be around 10.6 million. There are approximately 1,041 plans available from both traditional and Medicare Advantage Plans to choose from.

From a practical standpoint, the Avandia decision creates several challenges.

How are Medicare’s interests protected in a Medicare Advantage case? Is the primary plan now exposed to repeat double damage claims any time the Part C or Part D plan makes payment that was part of a settlement? It would appear that an approved Liability Medicare Set Aside Arrangement (LMSA) would help, but rules are still yet to be developed by Medicare.
Will the Medicare Advantage Plan negotiate or hold at 100% recovery rate? Now more than ever, we have an important reason to support Hadden v. U.S.
How will Medicare contractor enhancements, such as the $300 exemption, Fixed Payment Option, or Self Calculate Option work in this arena? It is unknown, as MAP’s do not use Medicare contractors to pursue its recovery.

While these questions remain, Tower MSA Partners recognizes and will pursue conditional payments from MAP’s based on the following understanding:

Tower MSA Partners will assist clients in recognizing a Medicare Advantage Plan and its demand letters.
1. MAP demands are issued from the MAP directly, i.e., if the MAP is Humana, the demand will be issued on Humana letterhead. This is unlike traditional Medicare conditional payment demands which are issued directly from CMS and on MSPRC letterhead.
2. Forward all demand letters from MSPRC, as well as from any MAP or Part D provider when presented.
Tower MSA Partners will be proactive in determining whether a MAP demand exists.
1. Request enrollment/benefit history from claimants/plaintiffs prior to settlement. As a Medicare beneficiary can move between traditional Medicare (Part A & B) and Medicare Advantage (Part C), the parties will need to clear both Medicare and Medicare Advantage, including Part D, for every case.
2. Contact both MSPRC and MAP for conditional payment information.
3. Follow the same protocols as are in place with traditional Medicare conditional payments to satisfy the interest of the MAP

Proactively addressing the claims of MAP’s in this manner will relieve much of the uncertainty surrounding their reimbursement rights. For questions regarding conditional payment lien negotiations, MAP’s and Medicare Part D recovery, please contact Tower MSA Partners @ info@towermsa.com.

What Can Workers’ Comp Learn About Compounds From the Meningitis Outbreak?

October 29, 2012

As of Tuesday, the Centers for Disease Control and Prevention reported 317 meningitis cases across several states, including 24 deaths. According to a preliminary report released on Monday, investigators from the Massachusetts Department of Public Health found “serious health and safety deficiencies” at the compound pharmaceutical lab (NECC) tied to the fungal meningitis outbreak.

Investigators also found a leaky boiler adjacent to the clean room with a pool of water creating unsanitary conditions inside the Framingham, Mass.-based New England Compounding Center. Culture results from that potential contaminant are still pending, the report states.

Tacky mats used to trap dirt and other contaminants from workers’ shoes prior to entering a clean room “were visibly soiled with assorted debris,” according to the report from Massachusetts’ Executive Office of Health and Human Services.

Investigators also reported the compounding center distributed large batches of products in bulk, which was not allowed under the terms of its pharmacy license.

Managed Care Matters – Killing Compounds Update

According to Joe Paduda, “Although the FDA’s ability to regulate compounders is very limited, the agency studied compounds produced by12 different pharmacies a decade ago; a third of the products failed one or more standard quality tests. Another test in 2006 found the same results.”

We know that compounding is regulated at the state level as it is considered to be “the same” as any other form of pharmacy practice, all of which are state controlled. What is different about compounding, however, is that regulation of the compound itself, unlike FDA approval and regulation of standard drugs, is virtually non-existent. In his recent post, (http://www.healthstrategyassoc.com/wordpress/2012/10/killing-compounds/ ) Joe Paduda also notes, “Only two states – MO and TX – test compounded drugs, and their findings are alarming indeed. The strength of the potions concocted by compounders can vary greatly, with Texas determining a quarter of the compounds they tested were “too weak or too strong” and MO finding the potency is as much as three times higher than the compound was supposed to be.

What Can Workers’ Compensation to Do Protect Its Patients?

Compounds represent one of the most dangerous and fraudulent forms of medication dispensing. That being said, compounds can also be extremely beneficial when medically necessary, and in the right environment of audits and controls.

Compounds are difficult to analyze value and benefit. As such, they are never indicated for pain management in Evidence Based Medical (EBM) guidelines such as the Official Disabilities Guidelines (ODG). Compounds are not approved or regulated by the FDA, but are allowed based on individual state pharmacy regulations.

While there are exceptions, as a general rule compounds should never be authorized and/or covered without consideration of the following intervention strategies:

If Utilization Review (UR) is a part of the state regulatory landscape, compounds should be sent through UR before being authorized for fill the first time.
If the UR reviewer deems the compound to be unnecessary, immediately direct your PBM to exclude it from the patient’s formulary.
If UR isn’t an alternative, escalate the authorization request to a nurse, clinician or physician to request a determination of necessity and appropriateness based on the state’s designated treatment guidelines.
As an example, for states that follow ODG, compounds would be indicated as necessary and appropriate ONLY in the following situations:
1. An indicated first line therapy was tried and failed,
2. The patient has an allergy to an inactive ingredient of a more traditional form of a medication.

At the claim level, we cannot protect our patients against every danger, clinical oversight and scam artist seeking to benefit financially from the workers’ compensation system. By consistently following the guidelines available, however, and encouraging more states to implement treatment guidelines like ODG, we can better position our companies and our patients to achieve the best in care, cost and compliance.

When NOT to Authorize an Additional MRI

October 24, 2012

Additional MRI States that follow the Official Disability Guidelines (ODG) do not need to authorize an additional MRI
unless there are specific changes in pathology.
The ODG states that ³MRI¹s are test of choice for patients with prior back surgery,
but for uncomplicated low back pain, with radiculopathy, not recommended until after at least one month conservative therapy,
sooner if severe or progressive neurologic deficit. Repeat MRI is not routinely recommended,
and should be reserved for a significant change in symptoms and/or findings suggestive of significant pathology
(eg, tumor, infection, fracture, neurocompression, recurrent disc herniation).² (Bigos, 1999) (Mullin, 2000)
(ACR, 2000) (AAN, 1994) (Aetna, 2004) (Airaksinen, 2006) (Chou, 2007)

CMS New WCMSA Decision Memo: TENS Units: Not Appropriate for Chronic Low Back Pain

October 5, 2012

Tens units not appropriate for low back pain

The Centers for Medicare and Medicaid (CMS) issued a new memorandum that will affect pricing determinations for TENS (Transcutaneous Electrical Nerve Stimulation) units for the treatment of Chronic Low Back Pain (CLBP) included within the Workers’ Compensation Medicare Set-Aside (WCMSA) that have been submitted to CMS for approval.

On June 8, 2012, CMS issued a new Decision Memo that defined CLBP as “an episode of low back pain that has persisted for three months or longer; and is not a manifestation of a clearly defined and generally recognizable primary disease entity.” CMS further stated that a TENS unit was not “reasonable and necessary for the treatment of CLBP under section 1862(a)(1)(A) of the Social Security Act.”

TENS is the use of stimulating pulses across the surface of the skin produced by a device to stimulate the nerves for therapeutic purposes. TENS help stimulate your body to produce higher levels of Endorphins. The TENS units are small, battery operated devices that deliver these stimulating pulses across the surface of the skin. It has been an ongoing dispute over the years as to whether TENS units do more than act like placebo’s, and whether they actually treat and cure CLBP.

CMSs New Pricing Determination will affect the WCMSA’s proposal as follows:

Workers’ Compensation cases settled prior to June 8, 2012:
“For those Workers’ Compensation cases settled prior to June 8, 2012, and where the settlement included pricing for TENS for CLBP, CMS will consider funds spent for TENS for CLBP by beneficiaries and claimants as being an appropriate expenditure of funds as part of the WCMSA.”
Workers’ Compensation Cases Settled After June 8, 2012:
“For those Workers’ Compensation cases that were not settled prior to June 8, 2012, and where the WCMSAs proposal includes funding for TENS for CLBP as part of the WCMSA, CMS will re-review the cases and remove pricing for TENS for CLBP. (Regional Offices shall obtain from Submitters requests for a case re-review, along with a signed statement indicating a settlement had not occurred prior to June 8, 2012.)”

It is important to note that in the event CMS does re-review a WCMSA for removal of a TENS unit for CLBP, the claimant may NOT use the funds from their WCMSA to pay for the TENS for CLBP. If a claimant uses the funds for the TENS, this would result in an inappropriate expenditure of funds.

For additional questions on the use of TENS units as treatment for chronic low back pain, and its implications on future medical treatment and the WCMSA, please contact Tower MSA Partners at 888-331-4941 or email us at info@towermsa.com. For the full text of the CMS Decision Memo, see Decision Memo for Transcutaneous Electrical Nerve Stimulation (TENS).

Request to FDA to Change Opioid Labels

October 1, 2012

To those who may not know, PROP (Physicians for Responsible Opioid Prescribing) http://www.supportprop.org/ is an organization comprised of practicing physicians whose mission is “to reduce morbidity and mortality resulting from prescribing of opioids, and to promote cautious, safe and responsible opioid prescribing practices.” I follow PROP regularly and use many of their resources to educate my staff on opioid use as it relates to long term prescribing and the MSA.

As a PROP follower, I recently received the email below asking for my support. I responded immediately and am forwarding to each of you in the hope that you will do the same.

Dear Friends and Colleagues,

As you may know, PROP filed a request to FDA for changes to opioid labels. Specifically, we asked them to add a suggested duration of use, a suggested upper dose and to limit (on-label) use to severe pain. You can read about this here: http://supportprop.org/advocacy/index.html.

If FDA implements our request, opioid manufacturers will be prohibited from advertising long-term use of opioids for chronic non-cancer pain and the medical community will be informed that this practice has not been proven safe and effective. (However, clinicians will still be permitted to prescribe long-term opioids). We believe that this will help reduce overprescribing of opioids. And since it’s overprescribing that’s harming pain patients and fueling the opioid addiction epidemic, the label change could help bring this unprecedented public health crisis under control.

FDA is seeking public comment about the Petition. Thus far, they have received about 200 comments supporting the petition and 130 opposed to the petition. Not surprisingly, industry-funded pain groups (and pain patients misled to believe that this is an effort to ban opioids) have weighed in against the Petition.

Submitting comments to FDA is easy… just click here: http://www.regulations.gov/#!submitComment;D=FDA-2012-P-0818-0001.

A couple of sentences is all you need. Please make sure to state clearly in the first or second sentence that you support the petition.

For example, you can write:

I support this petition. Drug companies should not be permitted to advertise long-term and high dose opioids for moderate chronic pain because this treatment has not been proven safe and effective. The medical community should be informed by a revised label that risks may outweigh benefits when opioids are prescribed long-term.

Please try to do this ASAP. As soon as FDA takes an action on the Petition (which could be very soon), they will close the comment period.

If you are interested in reading comments that have already been posted, you can do this here:
http://www.regulations.gov/#!searchResults;rpp=25;po=0;s=fda-2012-p-0818.

Thank you for your support!

Andrew

Andrew Kolodny, MD
President, Physicians for Responsible Opioid Prescribing
www.supportPROP.org

Chair, Department of Psychiatry
Maimonides Medical Center
920 48th St., Brooklyn, NY 11219
Tel: 718 283-7557; Fax: 718 283-6540
akolodny@maimonidesmed.org

Recent Study Links Opioid Use to Escalation in Overall Claim Cost

September 23, 2012

Opioid cause of escalation in claim cost

The over-prescribing of opioids and subsequent problems of addiction, overdose and even death is a public health crisis that has dramatically impacted workers’ compensation. A startling 55 to 85 percent of injured workers receive narcotics for chronic pain.

A recent study by Accident Fund Holdings and Johns Hopkins University examined the interrelationship between the utilization of short- and long-acting opioid medications and the likelihood of claim cost escalating to a catastrophic level (> $100,000). Analyzing 12,000 workers’ compensation claims in Michigan during a four-year period, the study focused on whether the presence of opioids alone accounted for the cost increase or whether costs increased because opioids were associated with known cost-drivers, such as legal involvement and injury severity.

Controlling for factors of sex, age, time lost from work, number of distinct ICD-9 codes per claims and legal involvement, results showed that opioid use – particularly of long-acting (LA) opioids – was an independent predictor of catastrophic claims costs. Key findings:

The presence of LA opioids makes claims almost 3.9 times more likely to have a final cost of >$100,000 than a claim without any prescriptions.
Claims with only short acting (SA) opioids were 1.76 times more likely to have an ultimate claims cost of >$100,000.
Claims with non-opioid prescriptions showed no significant risk of exceeding $100,000 int total claim cost.

When assessing the price of opioid medication as it related to total medical and overall claim cost, the study found that the price of the drug itself was a minor contributor to the overall medical or total claims cost. SA opioids represented 0.3 percent of overall medical cost and 0.1 percent of overall claim cost, while LA opioids were approximately 3 percent of medical and 1.2 percent of total claim cost.

Strategies to Mitigate the Impact of Opioids

In the context of such clear and objective evidence that the use of opioid medications, particularly long-acting opioid medications, is an independent risk factor for the development of catastrophic claims, how do we now view the costs associated with proactively addressing addiction issues? Are cognitive behavioral and rehabilitation programs more reasonable strategies in light of these findings? How do we mitigate cost, facilitate settlement and provide better care?

The study’s findings reinforced Accident Fund’s decision to increase medical management on claims with opioids. “Our strategy consists of three elements: early detection, intervention and escalation,” said Jeffrey Austin White, MS, the study’s lead researcher and Accident Fund Holdings’ Director of Medical Management Practices and Strategy. “Leveraging technology solutions to identify opioid risk factors as soon as possible, establishing peer-to-peer intervention strategies based on case-specific needs and escalating internal workflows when specific triggers are met have improved patient outcomes and reduced costs.”

Applying Lessons Learned to Pre-Settlement Workflow

We at Tower MSA Partners applaud Accident Fund’s pro-active, enterprise-level approach to address opioid overutilization and applaud its success. We also recognize that the industry needs state-level pain guidelines. “Statutory support would provide a more comprehensive and general solution for managing opioid claims, until then, every opioid claim seems to require an individual approach with no guarantees,” White added.

Until states provide leadership through regulatory reform, what can payers do? While pain management is necessary, the abuse of opioids can cause hazardous, life-threatening side effects — for which payers may be held responsible.

PBM reports that identify chronic opioid use are available. Yet how do we get the appropriate information into the hands of those who can – and will – act on it? What is the appropriate action to take for each claimant? Are there jurisdictional requirements to meet when intervention is warranted? When (and by whom) should contact be made to the treating physician? How do we get treating physicians to modify drug therapy? Who follows through to verify that the drug regimen actually changes?

These are questions Tower MSA Partners addresses daily as part of its Pre-MSA Settlement Services. We work with clients to “stage” claims for settlement as early as possible. We define intervention triggers, initiate peer-to-peer contact with the treating physician when triggers are met, and obtain written agreement when treatment changes are approved. Most importantly, we stay involved to make certain positive outcomes are achieved. For information on the Accident Fund/Johns Hopkins study, “The Effects of Opioid Use on Workers’ Compensation Claim Cost in the State of Michigan,” please go to http://journals.lww.com/joem/Abstract/2012/08000/The_Effect_of_Opioid_Use_on_Workers__Compensation.8.aspx (subscription required.) For more information on Tower MSA Partners’ Pre-MSA Settlement Services, contact us at info@towermsa.com.

WCRI Report – Physician Dispensing – Increases in Cost and Frequency in Workers’ Compensation

July 24, 2012

On July 19, WCRI (Workers’ Compensation Research Institute) released its most recent study on the rapid growth of physician-dispensed pharmaceuticals for injured workers under state workers’ compensation. The study compares 23 states, including Arkansas, Connecticut, Florida, Illinois, Indiana, Iowa, Louisiana, Maryland, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Virginia, and Wisconsin highlighting changes in patterns of dispensing, as well as changes in percent of market and pricing from 2007/2008 thru 2010/2011.

Increases in Frequency and Cost for Physician Dispensed Drugs

Key findings in WCRI’s study year over year include the following:

Physician-dispensed drugs became increasingly common in most states that permit physician dispensing. In Florida, Illinois, pre-reform Georgia, Maryland, Connecticut and post-reform Arizona and California, physicians dispensed 28-53 percent of all prescriptions, representing 28-63 percent of total spending on workers’ compensation claims.
Prices paid for physician-dispensed drugs were substantially higher than if the same drugs were dispensed by a retail pharmacy. In 2010/2011, the price / pill when dispensed by a physician was 60-300 percent higher than the same prescriptions dispensed at a retail pharmacy.
Prices paid to dispensing physicians rose rapidly for medications that were commonly dispensed by physicians, while the prices paid to pharmacies for the same drugs changed little or fell. As an example, Physician dispensed Vicodin, Mobic and Ultram, all commonly prescrbed in workers’ compensation, saw a average price increase of 52 percent while the same drugs dispensed in a retail pharmacy setting either remained at the same price or experienced a price decrease.
Dispensing physicians wrote prescriptions for and dispensed certain drugs (e.g., omeprazole [Prilosec®] and ranitidine HCL [Zantac®]) that are available without a prescription in a drug or grocery store at a much lower price. When they did so, prices were 5-15 times higher than MSP retail prices.

With this trend of increased price and frequency of physician dispensed drugs , it is no surprise that several states have either banned the practice altogether, have initiatives in place to limit or prohibit, or are in the process of implementing reforms directed at reducing the cost of physician dispensing. The study examined the results of specific state initiatives, as well as highlighting baseline data for states with legislation currently in play.

States That Prohibit Physician Dispensing

In the United States, five states have prohibited physicians from dispensing drugs in general, by law. These include Massachusetts, New York, Texas and Montana and Utah. The first three are included in the study. In all other states, issues related to physician dispenisng are more or less addressed through state workers’ compensation policies on state fee schedules, which set maximum reimbursement rates for prescrption drugs dispensed at pharmacies and physician offices.

Where Physician Dispensing is ‘Allowed’

Several states allow physician dispensing, but in some states, such as Arkansas and Minnesota, medical practices appear to be restrictive. Arkansas, physician dispensed drugs are subject to the same fee schedule as pharmacy dispensed drugs. In both settings, the provider (whether pharmacist or physician) is required to report acquisition cost, and physicians do not receive a dispensing fee for drugs dispensed from their offices. In Minnesota, physicians are allowed to dispense, but must register with the Medical Practices Board before doing so. The physician must also disclose to the patient that the he/she profits from the dispensing of medications, and that the patient may choose to obtain prescriptions from another source.

Louisiana limits physician dispensing of narcotics to a 48-hour supply, but allows for non-narcotic drugs to be physician dispensed for longer periods. In Florida, as of June, 2011, physicians are prohibited from dispensing Schedule II and Schedule III narcotics.

Five states (Arizona, California, Tennessee, South Carolina and Georgia), allow physician dispensing, but have adopted reforms intended to limit the price markups for physician dispensed prescriptions. Also, in Illinois, one of the largest noted in the study for cost increases associated with physician dispensing, the Workers’ Compensation Commission members voted Tuesday, July 24, 2012, to move ahead with a proposed rule to regulate the price of repackaged drugs, dispite a recommendation by the Medical Fee Advisory Board not to proceed. For the rest of the states, policies are either permissive or silent as they relate to physician dispensing.

In the state of Florida, while physician dispensing is prohibited for Schedule II and Schedule III narcotics as of June, 2011, the study still showed that 62 percent of all prescription drug spending in Florida for injured workers was paid to physicians for drugs dispensed at their offices—not to pharmacies. This doesn’t mean 62 percent of all prescriptions….just 62 percent of the cost. That’s the issue.

Certain drugs were prescribed and dispensed by physicians in Florida that were infrequently prescribed in other states where physician dispensing was not common. For example, 11 percent of the injured workers in Florida received prescriptions for either Prilosec® or Zantac® as compared to less than 2 percent in most other states. When physicians dispensed, the average price paid per pill was $7.07 for Prilosec® and $4.81 for Zantac®, compared to $0.64 and $0.42 per pill when the same drug was purchased over-the-counter at Walgreens.

In other states that allow physician dispensing of all prescriptions, as a result of drug repackaging, prices paid to physicians were typically much higher than what was paid to pharmacies for the same drug. For example, the price for the most commonly used drug, Vicodin®, more than doubled when dispensed by physicians compared to the pharmacy—an average of $1.08 per pill at the physicians’ offices versus $0.43 at the pharmacy.

“There is a great discrepancy between what doctors and pharmacies charge for dispensing the same drug,” observed Dr. Richard Victor, WCRI’s Executive Director. “One question for policymakers is whether the large price difference paid when physicians dispense is justified by the benefits of physician dispensing. Policymakers can learn from the California reform experience, which is also analyzed in this study.”

Pricing at WC Fee Schedule – Lessons Learned in California

One of the key findings of the report, the results of the California fee schedule reforms (physicians who dispensed were required to submit and price using the same NDC as that used in retail pharmacies), provided evidence of the impact of physician dispensing on the following:

Prices paid for physician-dispensed prescriptions;
Patient access to physician-dispensed prescriptions;
Physician prescribing and dispensing patterns for certain drugs.

Approximately 1/2 of all drugs dispensed in CA remain as physician dispensed. Following fee schedule reforms, however, the number of repackaged drugs dispensed in CA dropped from 43 percent to 11 percent. In effect, the average price / pill for physician-dispensed prescriptions decreased to that for pharmacy-dispensed prescriptions.

State Initiatives to Control Growth and Manage Cost

States that have either implemented reforms similar to that of California over the past year, or have bills under debate currently include Arizona, California, Georgia, South Carolina, and Tennessee. While the results of the legislative initiatives remain to be seen, California’s track record would lead us to believe that savings are possible if physicians are required to follow the same rules as their retail pharmacy counterparts when dispensing medications.

Impact on WCMSA Part D Cost Projection for Life Expectancy

As is the case in California and the other five states with reform initiatives onteh books, when physicians prescribe and dispense using the standard National Drug Code (NDC), pricing will occur at fee schedule or lower (if negotiated discounts are available). From an MSA perspective, therefore, there are no objections to physician dispensing. CMS Memos direct us to price at generic when available. As such, when Tower identifies standard, commonly prescribed drugs being physician dispensed, we utilize the GCN (Generic Code Number) to determine therapeutic equivalency. We then price at the lowest generic price available.

The Real Problem – Repackaging – Not Physician Dispensing

While physician dispensing is getting criticized, I would clarify that it is the process of repackaging medications that can be bought at much lower prices, and the egregious cost associated with repackaging, that is the real problem. Many physicians, some who dispense, and others who do not, comment that the physicians aren’t the ones making money….it is the re-packagers that are making out ‘like bandits’. While this may be true, it’s difficult to see how smart, educated physicians would continue this practice and the associated criticism if they aren’t making a nice profit.

Potential Strategies to Mitigate Cost

The first step to mitigate claim cost is to be aware of physician dispensing and to move quickly to verify what the actual drug is. Tower MSA Partners has full access to CMS mandated REDBOOK for drug pricing for all FDA approved NDC’s, as well as access to generic therapeutic equivalent drugs if they exist. Ask the question. Once you know what is being dispensed, and you understand the role the drug/compound plays in the overall treatment of the injury, the next question is whether intervention is appropriate to modify treatment and hopefully reduce cost. We can assist there as well to make recommendations for nurse oversight, physician reviews. etc.

WCRI’s announcement of the report can be found at http://www.wcrinet.org/whats_new.html. For more information on physician dispensing and ‘staging’ claims to reduce claim cost , and to mitigate settlement and MSA issues, give us a call at 888-331-4941.

Lyrica Approved for Spinal Neuropathic Pain – What Are the MSA Implications if Pfizer Extends Patent?

July 3, 2012

On June 21, 2012, the Food and Drug Administration announced its approval of Lyrica for use in the management of neuropathic pain associated with chronic, debilitating spinal cord injuries. Lyrica, the brand name for pregabalin, is manufactured by Pfizer (NYSE: PFE) and is already widely used to treat fibromyalgia pain.

Prevalence of SCI Associated Neuropathic Pain
According to Pfizer, about 40 percent of the 270,000 Americans with spinal cord injuries suffer from chronic neuropathic pain that they describe as severe or excruciating. An estimated 12,000 new spinal cord injury patients are diagnosed in the U.S.each year.

Patients may experience neuropathic pain above, at or below the level of the spinal cord injury, and it may persist for up to 25 years. The pain stems from traumatic causes, such as motor vehicle accidents, violence, falls and sports injuries; where displaced bone fragments, disc material, or ligaments bruise or tear into spinal cord tissue.

Spinal neuropathic pain can also stem from non-traumatic causes, such as congenital and developmental abnormalities, genetics, infections and inflammation, removal of a benign spinal tumor and spinal cord ischemic stroke.

Treatment Options Previously Available
“Until now, no FDA approved treatment options were available in the U.S.for people with neuropathic pain associated with spinal cord injury, a condition which can be extremely disabling,” said Steven J. Romano, MD, senior vice president of Pfizer’s global primary care unit.

The FDA’s approval was based on studies of 357 patients – some with traumatic spinal cord injuries, and some with both traumatic and non-traumatic injuries. In addition to Lyrica, patients in the randomized, double-blind, placebo controlled Phase III trials were allowed to continue taking other pain medications, including NSAIDS, opioids and non-opioids.

Pain Reduction & Side Effects
According to Pfizer, patients taking Lyrica received up to a 50% reduction in pain than did patients receiving a placebo. Some experienced relief as early as week one and continuing through the duration of the 12 and 16 week trials.

Side effects experienced by patients included somnolence, dizziness, dry mouth, fatigue and peripheral edema.

Pfizer recently halted studies testing Lyrica’s effectiveness in treating neuropathic pain caused by HIV infection or diabetes after preliminary results showed that it was no more effective than a placebo.

Potential Impact on WCMSA and Settlement Cost
Though FDA approved only for neuropathic pain associated with fibromyaligia, Lyrica has consistently been listed in the Top 5 drugs used ‘off label’ in workers’ compensation (NCCI Research Brief, Workers’ Compensation Prescription Drug
Study: 2011 Update). And, while CMS, in its May 2010 Memo, noted that off label drugs would be approved for inclusion in a WCMSA only as follows: “For a Part D drug to be covered by Medicare, and thus included properly in a WCMSA, the drug should be prescribed for an outpatient use that is approved under the Federal Food, Drug, and Cosmetic Act [21 U.S.C.A. § 301 et seq.], or supported by one or more citations included or approved for inclusion in any of the compendia described in subsection (g)(1)(B)(I) of 42 U.S.C. Section 1396r-8. “, in practice, CMS has included Lyrica as an approved drug more frequently than its has accepted its exclusion from the WCMSA based on the cited compendia.

As an added cost to those who prepare WCMSA’s, the recent FDA approval of Lyrica for spinal cord injuries allowed Pfizer to apply for an extension to its patent, and on July 19, 2012, patent rights preventing any generic substitutions of Lyrica® were extended by a district court until at least 2018.

A generic version of Lyrica called ‘Lupin’ was approved on July 5th, 2012, which would have make it available for use in the WCMSA next summer. Unfortunately, the district court’s decision to extend the patent rights will prevent the sale of this generic until December 2018. As a result, MSA providers will be forced to price for the ‘branded’ single source version of Lyrica for an extended period of time, thus making the MSA cost projection for life expectancy much higher.

At Tower MSA Partners, our methdology, as it relates to Lyrica will continue to be as follows:

Review the appropriateness of the medical and drug treatment for the specific injury with our panel of physicians.
Identify triggers that warrant intervention and stop the WCMSA process.
Work with the adjuster to establish an action plan to change treatment.
Involve our team of physicians to review and contact the treating physician.

Combining evidentiary based medical guidelines with peer-to-peer contact, many treating physicians have been open to dialogue and willing to make changes.

As one of the most expensive drugs prescribed in workers’ compensation, we see the FDA approval of Lyricanal for spinal cord injuries to be of concern to those who seek to settle claims involving future medical for Medicare beneficiaries. Lyrica is, and will continue to be, a significant cost driver for the MSA. We do not, however, anticipate a change in our course of action when reviewing medical and pharmacy records prior to completing the MSA. We will include Lyrica among our list of pre-MSA triggers, and will work proactively with our clients to get it removed by the treating physician prior to submission of the MSA for CMS approval.

Going forward, we will continue to monitor Lyrica and the prescribing patterns followed in workers’ compensation. We will also monitor CMS’s inclusion of Lyrica as an approved drug for spinal cord injuries when reviewing a WCMSA. For more information about Lyrica, or any aspect of our pre-MSA review process, please contact us directly.

The Rising Cost of Opioid Narcotics In Workers Compensation

June 23, 2012

New studies and research on Narcotics In Workers’ Compensation.

The American College of Occupational and Environmental Medicine states, “the overuse of opioid therapy to treat chronic pain conditions is becoming epidemic in the United States,” and, “there are many treatments that should be considered before opioids”. According to this organization:

“Opioids are becoming more controversial in large part because of … markedly elevated eath risks that have paralleled increases in consumption of opioids narcotics)”
“Routine use of opioids for the treatment of chronic nonmalignant pain conditions is not recommended”
“Opioids are recommended for select patients with chronic persistent pain, neuropathic pain, or CRPS (complex regional pain syndrome).”

Two years ago, NCCI released a study on the use of narcotics in workers compensation. Findings from that study include the following:

There is a correlation between drug abuse treatments and heavy narcotic use
There has been an increase in early narcotic use
The use of narcotics can continue for many years

In the update released on June 5, 2012, changes and key trends identified by NCCI were as follows:

Per-claim narcotic costs have increased
There have been changes in which narcotics are most commonly used
Narcotic use is concentrated among a small percentage of claimants
Initial narcotic use is indicative of future use

Overall Trends

The study begins with a look at the average narcotic cost per workers compensation claim with medical transactions. NCCI found that per-claim costs grew steadily from 2001 to 2004, remained fairly flat for a few years, and then increased in 2009. From 2001 to 2004, per-claim narcotic costs grew at an average of 18 percent per year. From 2004 to 2008, per-claim narcotic costs grew at an average of 1 percent per year. While there has generally been lower growth in recent years, the narcotic cost per-claim in 2009 is 14 percent greater than it was in 2008.

Narcotic use in workers compensation is becoming more common. In 2001, 28 percent of all claimants with medical transactions received at least one prescription drug within one year following injury and 8 percent received narcotics. In 2008, these numbers increased to 38 and 13 percent respectively. This implies that in 2008, over one-third of claimants with prescriptions received narcotics, up from 27 percent in 2001.

Trends in Active Ingredients

NCCI identified seven active ingredients that account for more than 95 percent of the total cost of narcotics used in workers compensation. These include: morphine sulfate, oxymorphone, fentanyl citrate, fentanyl, oxycodone, oxycodone with acetaminophen, and hydrocodone BIT with acetaminophen.

The only major shifts in market share by active ingredient over the past few years have been a simultaneous reduction in the use of Fentanyl Citrate and an increase in the use of Oxymorphone HCL. While Oxymorphone HCL has been available through an injection since 1959, it only became available as an oral tablet in mid-2006.

Narcotic Consumption Among Claimants

Narcotic use in workers compensation is highly concentrated among a small percentage of claimants. The narcotics consumed by the top 1 percent of claimants receiving narcotics accounts for close to 40 percent of all narcotic costs; the narcotics consumed by the top 10 percent of claimants receiving narcotics accounts for about 80 percent of all workers compensation narcotic costs. While narcotic use is highly concentrated, NCCI also noted a slight downward trend in the share of narcotic costs for the top users.

Tracking Morphine Equivalent Dosage (MEQ)

NCCI first investigated the persistence of narcotic use in workers compensation in 2009 and found that, while the probability of continued use declined with time, narcotic use could continue for many years. This study expands the 2009 analysis by investigating the relationship between the amount of narcotics initially consumed and the persistence of their use by tracking each drug based on its respective morphine quivalent dosage (MEQ).

Example: According to drugs.com, the usual adult dose for time-released Oxycodone (OxyContin®) is 10 mg orally every 12 hours. Assuming a claimant consumes 10 mg pills:

100 MEQ is equivalent to approximately 7 tablets of 10mg OxyContin®
370 MEQ is equivalent to approximately 25 tablets of 10mg OxyContin®
825 MEQ is equivalent to approximately 55 tabletss of 10mg OxyContin®

In its findings NCCI first noted that early narcotic use was indicative of long term use with the average MEQ per claim receiving narcotics increasing with claim maturity. Second, NCCI found that the MEQ ranking was maintained in subsequent quarters; for example, those claims defined the by highest MEQ in initial use maintained its higher-than-other-claimant status throughout the life of the claim.

Conclusions and Commentary

Pain management is a necessary part of the worker’s compensation rehabilitation process, but the abuse of opioids can cause hazardous, life-threatening side effects for which payers may ultimately be held responsible. Payers who track and identify use patterns can better uncover any potential abuses before they become a litigious issue.

PBM reports that identify triggers such as chronic opioid narcotic use, high dollar narcotic spend, multiple physicians, multiple pharmacies are widely available across all providers. With this level of information regarding claimants at risk readily available, why then does the opioid narcotic issue appear to be getting worse? It is my belief that there is a disconnect between the information and the action.

How do we get the appropriate information into the hands of those who can, and will,
act on it? What is the appropriate action to take for each claimant? Are there jurisdictional requirements that must be met when intervention is warranted? When and by whom should contact be made to the treating physician? How do we get the agreement from the treating physicians to modify treatment? Who follows through to verify that treatment is modified?

The items listed above are a subset of the many questions we ask at Tower MSA
Partners with every referral. We work with clients to ‘stage’ claims prior to settlement and the MSA, and to address medical, pharmacy and legal issues as early in the claims process as possible. We contact the treating physician when changes are needed and obtain written agreement. We then follow through to make certain the changes are made and outcomes are achieved.

When physicians refuse to modify treatment, we also work with clients to identify specific, jurisdictionally approved strategies to obtain positive outcomes. Depending on state of jurisdiction, we assist clients to challenge treatment, pursue a change in treatment provider, close formularies, initiate dispute resolution, send the claim through utilization review, etc.

Potential strategies to address the rising problem with opioid narcotics involve 4
critical steps:

First, establish the internal triggers you wish to track;
Be proactive in identifying cases that meet your triggers;
Act on the information;
Follow through.

NCCI’s full report on opioid narcotics in workers’ compensation can be found at NCCI: Narcotics in Workers Compensation