© 2013 CorVel Corporation. All rights reserved. Pharmacy Dispensing Channels Physician Dispensing...

Pharmacy Dispensing ChannelsPhysician Dispensing and Other Channels, Plus Their Impact on Cost and Exposure

Pharmacy exposures and drivers,

including Physician Dispensing

Benefits and limits of PBMs

Solutions

Agenda

Workers’ Comp Pharmacy Costs

Impact*19% of work comp medical spend, over life of claim

Physician dispensing* 28% of total pharmacy spend nationally

Narcotics*25% of total pharmacy spend

Discounts or utilization?60% of prescriptions are managed prospectively

Pharmacy Statistics

*Source: NCCI

Known and expected

Utilization

Extreme utilization (dependence & addiction)

Extending employer exposure

Addiction and third party liability

Addiction and reputational risk

Pharmacy Exposure

Brand vs. generic

More expensive drugs

State fee schedule rates

Physician dispensing and repackaging

Price Drivers

Drug Pricing Varies by State

State Rx Fee Schedule Calculation Price

Texas AWP + 25% + $4 $66.24

Arkansas AWP + 0% + $5.13 $54.93

Florida AWP + 0% + $4.18 $53.98

Indiana AWP (no fee schedule) $49.80

New York AWP - 20% + $5 $44.84

California MediCal + $7.25 $12.65

60 pills of Tramadol (generic) 50 MG at AWP$.83 x 60 pills = $49.80

Increase in Physician Dispensing

States with no regs to eliminate repack premium:

• FL = 62% from 43%

• MD = 47% from 36%

• PA = 27% from 15%

States with regs to eliminate repack premium:

• CA = 52% from 55% (2007 reg LTE)

• GA = 48% from 32% (2011 reg original NDC)

• IL = 63% from 22% (2012 reg original NDC)

Physician DispensingDriving Costs & Growing (2010-2011 from 2007-2008)

Source: * WCRI Physician Dispensing in Workers’ Compensation July 2012

Physician Marketing

Point-of-care dispensing

Setup and supplies

Repackaging

Collections

Inventory tracking

What is the profit potential to my practice?

If your practice is using the Nations Pharmaceuticals dispensing system by promoting it to all patients and encouraging use of the program, the profit potential can be significant. As with any program, utilization is the key. For a single physician practice seeing 30 patients per day the average annual income range is between $70,000-$125,000. Workers compensation costs and profit margins vary by state and will produce much higher margins.

http://www.nationspharm.com/faqs.html

What is being marketed to your physicians (who all need to make a living)

Price Difference: Tramadol

* Percent of mark-up measured against original manufacturers’ AWP

Tramadol 50 MG Manufacturer/ Labeler

AWP Price per Pill

AWP Price - 60 Pills

Package Size Dispensed Mark-up*

00093-0058-05 Teva USA $ .83 $ 49.80 500 60 0%

65162-0627-50 Amneal $ .83 $ 49.80 500 60 0%

36329-2868-02 Bryant Ranch $1.61 $ 96.60 60 60 194%

33261-0105-60 Aidarex Pharm $1.62 $ 97.20 60 60 195%

42549-0527-60 Stat Rx USA $1.66 $ 99.60 60 60 200%

55045-2928-09 DRX $1.55 $ 93.00 60 60 187%

60760-0377-60 St. Mary’s $1.41 $ 84.60 60 60 170%

66336-0915-60 Dispensing Solutions $1.55 $ 93.00 60 60 187%

Physician Dispensed / Repackaging Docs and Third Party Vendors

Provider Scripts % Scripts Charges % ChargesRec.

Payments% Rec.

PaymentsPrescription Partners 277 1.6% $124,073 3.5% $108,483 4.3%Chartwell Pennsylvania 53 0.3% $32,078 0.9% $21,387 0.8%Stoneriver Pharmacy Solutions 65 0.4% $19,589 0.6% $19,004 0.8%Claim One, LLC 107 0.6% $17,413 0.5% $16,330 0.6%BottomLine Medical Solutions, LLC 59 0.3% $15,455 0.4% $15,419 0.6%Infectious Disease Associates, P.C. 38 0.2% $14,516 0.4% $14,418 0.6%SHERMAN-WEBER, SOFIA 38 0.2% $14,516 0.4% $14,417 0.6%MedX Sales Ltd 15 0.1% $8,932 0.3% $8,932 0.4%Physician Dispensing Solutions 48 0.3% $8,400 0.2% $6,479 0.3%Industrial Pharmacy Management 40 0.2% $7,037 0.2% $6,242 0.2%

The following is a listing of the top sources of physician dispensed prescriptions and repackaging sourcesfor calendar year 2012.

Overall health of US population

Big Pharma advertising and marketing

“Fix me” – Public demand for an instant fix

Doctor shopping leading to multiple prescribers

Easy access to black market via internet to sell

prescription meds

Utilization Drivers

Everybody wants the quick fix Easier to treat pain than address function

627% Increase

296% Increase

National Vital Statics System, multiple cause of death data set and DEA ARCOS system, 2007 opioid sales figure is preliminary

Increased prescribing of addictive narcotics

Lack of resources to manage

Lack of data integration for timely identification

Physician dispensing rising

Growth of alternative pharmacies

Third party retail billers

Over-reliance on PBMs

Dependence & Addiction Drivers

Narcotic use and abuse is a growing concern in Work Comp

Source: WCRI data from Oct. 1, 2008 – Sept. 30, 2009 claims, with fills thru March 31, 2011

OxyContin®

Moved from the #3 to #1 most prescribed

workers’ compensation drug in 2009.

Description: a controlled-release narcotic

painkiller prescribed for around-the-clock relief of

moderate to severe pain.

#1 Workers’ Compensation Prescription

Source: 2011 NCCI Prescription Drug Study

The longer the use, the more the risk Use trends vary widely by state

Source: WCRI data from Oct. 1, 2008 – Sept. 30, 2009 claims, with fills thru March 31, 2011

Figure A Percentage of Nonsurgical Claims with Narcotics That Were Identified as Longer-Term Users of Narcotics,a 2009/2011

Delayed return to work

Fatal overdoses = death benefit

Non-fatal overdoes = long term care

How many of my claimants are addicts?

Expected Outcomes of Addicted Claimants

How many could be your claimants? What is your exposure?

627% Increase

296% Increase

National Vital Statics System, multiple cause of death data set and DEA ARCOS system, 2007 opioid sales figure is preliminary

National Vital Statics System, multiple cause of death data set and DEA ARCOS system,

Drug Overdose Death Rate

December 2011, PA appellate court upheld death benefit

The Heffernan Decision

The DecisionIn December 2011, PA appellate court upheld death benefit.

U/R ruling. No more Dr. Rodriguez!

Mr. Heffernan suffered chronic pain from a compensable 2002 lower back injury.At some point between 2002 – 2007, he became addicted to his pain meds.

June 2007

10 amDr. R appt.

Need new script for pain meds

June 2007

10 amDr. R appt.

Call Dr. R at his home #.

OMG – meds denied!

June 2007

10 amDr. R appt.

8:30 amAppt. w/ Dr. R’s sister, Daisy

OMG – meds denied! I need my meds!

June 2007

10 amDr. R appt.

WHERE ARE THEY!

June 2007

10 amDr. R appt.

WHERE ARE THEY!

Fed Ex here Thank God!

June 2007

It does not matter if fatal dose would have been denied by U/R

Employer has a duty/responsibility to take care of the addicted claimant

Extension of employer liability

http://www.leagle.com/xmlResult.aspx?xmldoc=In%20PACO%2020111202462.xml&docbase=CSLWAR3-2007-CURR

The Appellate Court’s rationale

Courts do not hesitate to extend employer liability

Will courts extend employer liability beyond comp

for torts committed by their addicted employees

under the influence of prescription meds?

Plaintiff attorneys are on constant look-out for the

next wave of opportunity

Potential impact of decision and underlying rationale

You might have to defend your company

Drug addicts causing mayhem is big news

Potential exposure:

No statutory limits to third party liability

Damage to company’s reputation/brand

One claim can do a lot of damage

What does this mean for my company?

Prospective Management of Drug Dispensing

What Your PBM Can Do

Drive transactions to prospective management

First fill and dynamic eligibility

Pharmacy ID cards

Manage the transactions (formulary and DUR)

Back-end management

Convert paper bills, if available

Broaden PBM definition to include retro 3rd party bills

The Role of the PBM

Total Exposure Management

But what about the transactions the

PBM does not see?

PBMs are losing traction every year

Dispensing Channels

100% Visibility to all Rx Transactions

Dispensing Channels – PBM Visibility

Limited Visibility

Penetration Math

Why is data aggregation important?

Total Exposure Management

Solutions

1) Drive PBM penetration

2) Manage physician and non-traditional dispensing

3) Manage narcotic/opioids with risk profiling and clinical resources

Data Visibility and Resources

Solution 1: Drive PBM Penetration

Required Elements Results

Timely, actionable and 100% visibility to the Rx data Accurately measure and drive penetration

Dedicated resources More prospective transactions through PBM

Leverage over third party billers Aggressive but fair handling of third party bills

Defensible process

Solution 1: Drive PBM Penetration

Timely, actionable and 100% visibility to the Rx data Accurately measure and drive penetration

Dedicated resources More prospective transactions through PBM

Leverage over third party billers Aggressive but fair handling of third party bills

Defensible process

Solution 2: Manage Physicians

Timely, actionable and 100% visibility to the Rx data Identify and categorize dispensing MDs

Dedicated resources Reduce dispensing MDs, reduce costs

Education and leverage over providers Protect employee health and welfare

Reasonable process to maintain provider relationships Preserve provider relationships

Solution 2: Manage Physicians

Timely, actionable and 100% visibility to the Rx data Identify and categorize dispensing MDs

Dedicated resources Reduce dispensing MDs, reduce costs

Education and leverage over providers Protect employee health and welfare

Reasonable process to maintain provider relationships Preserve provider relationships

Solution 3: Manage Narcotics

Timely, actionable and 100% visibility to the Rx data Appropriate drug therapy plan

Clinical profiling technology Healthier and safer employees

Education and leverage over providers Reduce pharmacy and total claims costs

Dedicated resources (peer to peer) Manage exposure and risk

Reasonable process to maintain provider relationships

Solution 3: Manage Narcotics

Timely, actionable and 100% visibility to the Rx data Appropriate drug therapy plan

Clinical profiling technology Healthier and safer employees

Education and leverage over providers Reduce pharmacy and total claims costs

Dedicated resources (peer to peer) Manage exposure and risk

Reasonable process to maintain provider relationships

Pharmacy exposure continues to increase, and. . . your exposure goes far beyond cost

PBMs are critical for managing your exposure, but. . . they have limits

Better integration yields better results

Summary

1) Dedicate resources

2) Aggregate your Rx data

3) Risk-score all of your claimants

4) Educate and apply strategic leverage to manage physician prescribers

To do’s:

Today’s Presenter

Matt EngelsVice President, Network Solutions

CorVel Corporation

(630) 874-7343 office

(773) 255-9479 cell

matt_engels@corvel.com

© 2013 CorVel Corporation. All rights reserved. Pharmacy Dispensing Channels Physician Dispensing...

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