Transcript Slide 1

Managing Drug Costs
in Workers’ Compensation
Artemis Emslie
President, myMatrixx
Agenda
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Industry overview
PBM Background
Pricing Benchmarks
Cost Drivers
WC PBM Programs to Manage Costs
Monitoring Plan Performance
Hot Topics
Legislative Update
Summary
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© 2012 myMatrixx. All rights reserved.
Pharmacy Landscape
• 2011 Total Rx spend approx. $319
billion.
– Growth in Dollars = 3.7%
– Growth in Transactions = less
than 1%
• Moderate growth in dollars due
to generics.
— Brand name losing patents
and more generics in market.
• Other growth factors include:
– Lack of introduction of new
drugs.
– OTC conversions.
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2011 Market Share
8%
3%
growth
.6%
Growth
92%
Retail/Mail
Non Retail
Source IMS
© 2012 myMatrixx. All rights reserved.
Pharmacy Landscape, cont.
Market Update
• Deals
– ESI – Medco
– SXC – HealthTrans and Catalyst (Walgreens)
– Private Equity – PMSI and Progressive
– ESI – MSC
• Healthplans are spinning off in-house PBM's
• Impact to Stakeholders
– Network
– System integration
© 2012 myMatrixx. Do Not Distribute.
© 2012 myMatrixx. All rights reserved.
PBM Background
Physician Dispensing Model
Manufacturer
Revenue Streams
- Difference btw Payer contract &
Pharmacy contract
- Rebates paid to PBM for market
share
- Clinical programs
Claimant/
Patient
Data Warehouse
(Sets AWP)
Doctor
PBM
- MediSpan
- First Databank
National Drug Code – NDC
Manufacturer, drug name and
quality
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Managed
Care
Wholesaler
Optimal Data Exchange
Pharmacy
Network/
Mail Order
- Patient utilization – Payer
- Physician Report - PPO
© 2012 myMatrixx. All rights reserved.
Payer
Pricing Benchmarks
• Provide a guideline for multiple data points and stakeholders
– AWP – Average Wholesale Price
– AAC – Average Acquisition Cost
– NADAC – National Average Drug Acquisition Cost
– RSP – Retail Survey Price
– WAC – Wholesale Acquisition Cost
– ASP – Average Sale Price
• Challenges
— Time needed to adjust processes
— Maintenance and data
— Contracts
— Legislation
— Business planning - transitions
© 2012 myMatrixx. All rights reserved.
Cost Drivers
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Increased numbers of prescriptions per claim.
Narcotic usage.
Increasing wholesale medication costs.
Newer, more expensive drugs.
Off label use.
Continued growth of senior demographic
as a percentage of the workforce.
Increasing severity of workplace injuries.
Long tail of drug coverage in workers’
compensation.
Direct-to-consumer advertising.
Physician Dispensing.
Drug Testing.
© 2012 myMatrixx. Do Not Distribute.
© 2012 myMatrixx. All rights reserved.
WC PBM Programs to Manage Costs
• Network compliance/Network penetration
– Third Party Billers/Paper Bills
– Claimant Communication
– Card Usage
• Utilization Management (prospective, concurrent and
retrospective)
• Prior Auth Programs
• Mail Order
• Data Management Tools
• Clinical Programs
– Step Therapy, Physician Outreach Pharmacy Review
– Formulary Management
– Generic conversion
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© 2012 myMatrixx. All rights reserved.
Monitoring Plan Performance
Plan Information
Audit contract term
Complex plan coverage documentation
Actual Rx Claims Data
Utilize both paid claim data and copies of invoices.
Financial Review Module
Review claims for outliers:
•AWP Discounts
•Ingredient cost calculations
•Administration fees
•Dispensing fees
•AWP Neutrality Adjustment
•Applicable state sales taxes
•State Fee Schedule
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Plan Benefit Review Module
Review claims for errors from incorrect application of
plan rules:
•Injured worker eligibility
•Drug coverage – first fill & injury-specific formularies
•Pharmacy/injured workers’ billings
•High use of controlled substances
•Review of utilization management
•Review prior auth process
•Review for duplicate claims
•Other customized edits
•DAW codes
•Generic efficiency
© 2012 myMatrixx. All rights reserved.
Hot Topics
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Physician Dispensing
– Several states are addressing and considering legislation.
National Trends in Opioids*
– Studies have shown narcotic prescriptions are increasing, which may lead to
more abuse in workers’ comp.
– Doctors may be over treating injured workers with more, and stronger,
narcotics than necessary.
Compounding**
– In the next five years, a growing number of doctors and patients will likely
turn to compounding pharmacies to prepare medications.
– Due to growing number of senior citizens who require alternate doses and
strengths.
– Also due to increasing number of mass manufactured drugs in short supply.
Bath Salts
– Synthetic Stimulant
– Also sold as plant food
– Banned in several states including FL, AL, GA, TN
*May, 2012 National Safety Council’s magazine, “Safety + Health”, article “Injured and addicted?”
**Compounding Pharmacies in the US: Market Research Report, May 2012, IBISWorld.
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© 2012 myMatrixx. All rights reserved.
Legislation Update
• Physician Dispensing
– In Florida regulators declined, for a third year, to place into law
rules and regulations banning the ability to charge the
increased price of a repackaged medication.
– California, South Carolina and Oklahoma have made
considerable changes to close the gap.
– States to soon review this are Illinois and Hawaii.
• AWP migration
– California continues to review options for change to AAC or
WAC.
– Most likely to be held up for months if not years due to the
large endeavor involved.
– No standard is being considered nationally.
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© 2012 myMatrixx. All rights reserved.
Legislative Update, cont.
• Risk Evaluation and Mitigation Strategy (REMS)
– The Food and Drug Administration Amendments Act of
2007 gave FDA the authority to require a REMS from
manufacturers to ensure that the benefits of a drug or
biological product outweigh its risks.
– FDA experts indicate extended-release and long-acting
opioids are extensively misprescribed, misused and
abused, leading to overdoses, addiction and even death
in the US.
– Blueprint for Prescriber Continuing Education Program for
extended-release (ER) and long-acting (LA) opioids
introduced.
© 2012 myMatrixx. Do Not Distribute.
© 2012 myMatrixx. All rights reserved.
Summary
• Numerous challenges exist to setting Pricing Benchmarks.
• PBM’s challenged with Network Penetration and Clinical
Oversight.
• Success of a PBM = Managing Costs Proactively
– Key factors to success include
• Network Pricing
• Network Compliance
• Legislation
• Physician Dispensing
• Opioids
• Analyze ongoing performance of PBM to create process and
improvements to program
— Review Plan Information – contract terms
— Utilize Actual Rx Claims Data
© 2012 myMatrixx. Do Not Distribute.
© 2012 myMatrixx. All rights reserved.
Questions?
Artemis Emslie
[email protected]
www.mymatrixx.com
© 2012 myMatrixx. Do Not Distribute.
© 2012 myMatrixx. All rights reserved.