Allstate Insurance has filed suit in Federal Court against Prescription Partners, the billing entity owned with Automated Healthcare Solutions.

The suit was filed in the Eastern Michigan Federal District Court; here are a couple of the more salient assertions in the suit:

Sources indicate there are several other large auto insurers tracking this case closely; other legal action may be in the offing.

The case is focused on Prescription Partners’ alleged activity related to Allstate’s auto insurance business in Michigan. Unlike every other state, Michigan has unlimited medical benefits for those injured in auto accidents.  This make it a very attractive target for physicians dispensing drugs, as there are no limits on the insurers’ liability.  Interestingly, there is somewhat less interest among physicians in dispensing to auto claimants in other states, where maximum medical benefits may be as low as $5000 or $10,000.

$1.7 billion in workers’ comp drug costs are for drugs dispensed by physicians.  

Why don’t the big retail pharmacies care about physician dispensing in workers’ comp?

Why isn’t Walgreens, and CVS, and Rite-Aid, and Medicine Shoppe up in arms about this?

After all, claimants who get their drugs from their docs don’t visit a drug store, don’t pick up those other essentials, don’t establish a relationship with a pharmacist and possibly a store.

I’ve been stumped by this for years.  Here’s why.  About 65 percent of a chain drug store’s sales are for drugs; for independents its 93 percent.  The margin on most of those medications is pretty thin, and almost non-existent for Medicaid drugs in some states.  Chain drug stores sell drugs to get people to come in and buy toothpaste and magazines and convenience foods and cosmetics, where they do make a decent profit. And independents live and die on drug sales; and these days, most are dying. 

Yet anyone who’s tracked anti-physician dispensing efforts in Florida, Maryland, Hawai’i, Michigan, Illinois – anywhere, has not seen hide nor hair of anyone remotely associated with a drug store.

Is this a case of silos, where the department/person responsible for workers’ comp drug sales has no power or influence or is measured on percentage margin and not total sales or profits (because WC drugs are VERY profitable for pharmacies; the margins are many times those of drugs dispensed for group health plans).

Or is it ignorance, where the powers-that-be don’t care about WC drugs because they only represent a couple percentage points of scripts?  Of course, the total would be a lot higher if physicians weren’t dispensing, and this ignores the much higher profits on those drugs, but hey, ignorance is bliss, right?

Whatever the reason, it is abundantly clear that insurers, employers, PBMs, and others (me, for instance) have been fighting chain and independent pharmacies’ battles for them.

If independents don’t sell drugs, they’re dead.  And more are dying every day, as overall drug sales level off, and they are increasingly unable to compete with the chains and huge food-and-drugs.  Yet I’ve never seen anyone from an independent pharmacy, or their national trade group, engaged in the issue.

Folks on workers’ comp are either employed or getting a check to cover lost wages; they need toiletries and food and other medications and batteries, stuff they’ll likely get from the Big Box store if they don’t come in to the corner drug store to get their workers’ comp meds.  Yet NACDS and the other “advocacy” groups are nowhere on this issue.

It isn’t like I – and others – haven’t tried, multiple times, to get drug stores engaged.  For whatever reason, there’s been no response.

Meanwhile, the investment and provider communities have figured out that workers’ comp is a great business – profitable, with relatively low regulatory risk.  Comp is an “insulator”, a payer type that is removed from PPACA, Medicaid, Medicare, and all the changes coming down from Washington; a service line not affected by budget cuts or Obamacare.

At some point, perhaps when the last independent drug store is about to close up shop, someone may say “gosh, those dispensing docs sure killed our comp business; we could have used those dollars to stay open and profitable.”

Or a chain store exec may wonder “gee, why is my average profit per script lower than ever?’

Or, more likely, Not.

 

I attended and was privileged to speak at the Hawai’i Rx Drug Summit, held yesterday in Honolulu. Focused on opioids and drug controls but with a heavy emphasis on physician dispensing of drugs, the Summit also featured a random guy videotaping me, a guy who claimed he’s working on a documentary about the dearth of doctors on the Islands.

That line made no sense, as I wasn’t speaking about anything remotely related to that issue, yet he had three (!!) separate cameras recording both of my talks – and one followed me around recording me as I chatted with other attendees…

The guy, one Michael Cooper, claimed he was doing this on his own, was not affiliated with any other entity, and was funding this documentary all on his own.  I informed Cooper, in front of the 300+ people, which included law enforcement, that he could only use the video or any recording of me for the documentary and no other purposes whatsoever. Cooper agreed – again in front of the entire audience.

We shall see what develops; given my “popularity” with the physician dispensing crowd, I thought it might just be that somehow they’d want to record me saying something they could twist or slant or use to further their cause….

Here are a few of the highlights.

Tim Dayton of auto insurer GEICO spoke, noting 60% of auto loss costs are for auto repair, but losses are trending lower due to better, more efficient repairs and competition.  However, the trend in other coverages – especially PIP (medical coverage) is getting much worse.  In fact, GEICO needed a rate increase of 75% – 89% increase for PIP for some of their insurance lines, and ended up with a 25% rate increase for PIP.

A big driver is – surprise – physician dispensing.

Dayton is, to his dismay, quite knowledgeable about drug costs, drug pricing, and physician dispensing.  He opined that some very smart peole had figured out how to exploit a rule that had been written with the best of intentions – he was referring to a HI rule re reimbursement for drugs for medical treatment.   Dayton cited SpeedGel (you remember that, right?) and the “evolution” in pricing for that “medication”, it was $24.95 originally, then $59.95, then $258.96, now $416.01 at 140% of AWP, the reimbursement required by state regulations.  And all with barely a change in the wonder drug!

Dayton was followed by Paul Au, the risk manager for the City and County of Honolulu, where drug costs went up from $400k to 1.8 million over ten years; and a  half-million over two (1.25 to 1.78 from 2011 – 2012).  This was driven almost exclusively by physician dispensed drugs, which happened after a large dispensing entity entered the islands. (this could be mere coincidence…)

For the City/County, physician-dispensed drugs now account for 19% of scripts, 50% of costs; the cost is up 650% over 8 years.

This at a time when claim counts have declined by 300 claims, or 20% or so while drug costs are up 570% on a cost per claim basis.

I spoke twice – first on opioids (yes, again…) and then on physician dispensing, citing CWCI’s ground-breaking research, and debunking the five myths of physician dispensing (improves access (not), improves outcomes (actually worsens them), requires higher reimbursement due to higher cost for repackaged drugs (absolutely false), MD-dispensing is necessary to get life-saving drugs started immediately (completely untrue), reduces disability duration (actually increases it).

The Summit was put together by Kristy Kobayashi of CorVel, and sponsored by CompToday, Genex, ESI, PacBlue, and Allied Managed Care.  Kudos to those folks for sponsoring…

more to come.

Express Scripts’ 2012 Drug Trends Report provides an interesting picture of the trends experienced by their clients.  ESI has a pretty strong presence among the State Funds, with California and New York two of the larger ones served by the St Louis-based PBM.

As noted last week, you can’t compare statistics from one PBM to the next without ensuring you understand and factor in the definitions, formulae, claimant population and methodology/time frames used by the PBMs in question.

ESI’s stake in the ground is in avoiding “waste”, defined as “any additional spend on pharmacy costs that provides no incremental benefit in treatment outcomes.” Prescribing branded drugs when generics are available, maximizing home delivery, avoiding potentially abused drugs – all contribute to waste and thus higher costs and poorer outcomes.

A couple of interesting data points; ESI’s researchers determined that using non-morphine pain medications (typically synthetic opioids e.g. OxyContin) instead of morphine-containing meds “could have cost $1,172 in additional spend per injured worker for each year during which narcotic medications were used.” The point was specific to claimants receiving long-acting opioids relatively early in the treatment process, with ESI contending other, less expensive drugs are likely more appropriate.

Lead clinician TIm Pokorney RPh and his colleagues also looked at compounds and copacks; potency was “much higher than intended in MIssouri and Texas”, a particularly frightening finding given the well-publicized problems with compounds’ safety.

ESI’s average client saw trend increase 2.9% in 2012, driven by a 3.2% increase in the cost per script.  Oxycontin remained the top drug in terms of cost, at 9.7 percent of spend, however overall usage of narcotics was down 2.7% – a welcome change and one mirrored by other PBMs’ results.

Drugs that saw significant more utilization year-over-year include generic morphine, Cymbalta(R) gabapentin and oxycodone – all used for treating pain. On the positive side, utilization of Opana(R) ER and Oxycontin both declined dramatically. Clearly ESI’s efforts to move claimants from branded drugs to generics are paying off.

Progress.