48
2015 WORKERS’ COMPENSATION DRUG TRENDS REPORT

Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Embed Size (px)

DESCRIPTION

 

Citation preview

Page 1: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

2015WORKERS’ COMPENSATIONDRUG TRENDS REPORT

Page 2: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

TABLE OF CONTENTS

EXECUTIVE SUMMARY02OVERALL TRENDS03

0507091315

Generic/AWP Inflation

Generic Substitution

Specialty Drugs

Compounds

Top Therapeutic Classes

Top Utilized Drugs16THERAPEUTIC CLASS TRENDS17

Opioid Analgesics19

Skeletal Muscle Relaxants25Anticonvulsants27Antidepressants29

LEGISLATIVE AND REGULATORY HIGHLIGHTS31IN CONCLUSION43ABOUT HEALTHCARE SOLUTIONS43DEFINITIONS44

Anti-Inflammatories23

METHODOLOGY

Representing more than 2.7 million prescriptions, Healthcare Solutions’ 2015 Drug Trends Report is based on in-network paid pharmacy transactions in a comparison of 2014 to 2013. It excluded customers with less than two years of history and prescriptions with insufficient therapeutic descriptions, such as powders and bulk chemicals.

1 | Healthcare Solutions

REFERENCES45

Page 3: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Antidepressants

EXECUTIVE SUMMARY

2015 DRUG TRENDS EXECUTIVE SUMMARY

Healthcare Solutions is pleased to present our fifth annual workers’ compensation Drug Trends Report. This comprehensive analysis is based on changes in prescription drug costs and utilization patterns in 2014 as compared to 2013. We provide the Drug Trends Report in an effort to help clients understand medication trends within the workers’ compensation market. The following are highlights found in our overall book of business:

Generic/AWP Inflation

Healthcare Solutions experienced an overall 8.6% increase in the cost of prescription medications, resulting in a drug spend increase to our clients. Although an increase, Healthcare Solutions’ oversight helped to ensure our clients experienced less than the full effect of these inflationary prescription medication pressures.

Specialty Medications

New specialty medications to treat Hepatitis C were released in 2014, which impacted payers who provide workers’ compensation benefits to healthcare workers. Costs of these medications can be upward of $100,000 per treatment and will significantly impact payers’ drug spend in the future.

Compounds

Healthcare Solutions observed an upward trend in the number, complexity and cost of compounds in 2014. This trend highlights the importance of having a pharmacy benefit manager (PBM) partner that can implement appropriate tools to mitigate the rise in compound costs.

Opioids

Issues related to the use of opioid medications continue to dominate discussions in the workers’ compensation marketplace; however, Healthcare Solutions will not let familiarity with the issue lead to complacency. Healthcare Solutions’ clients who utilize our targeted opioid intervention tools continue to see improved management of opioid spend.

Legislative

Healthcare Solutions continues to support the efforts of state legislators to develop and implement formularies and guidelines for the management of workers’ compensation claims. In 2014, states that adopted guidelines saw positive results in terms of drug mix and drug spend.

In this year’s report, we present compelling insights from data in our book of business, overlaid with industry trends, to give you a market-wide view into drug costs and utilization. As always, our pharmacy clinicians are available to discuss any of the information presented in our 2015 Drug Trends Report.

2015 Drug Trends Report | 2

Page 4: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Through our subsidiary companies, Healthcare Solutions has over 50 years of

combined experience delivering services for the workers’ compensation and

auto/personal injury protection markets.

Page 5: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Healthcare Solutions’ Clinical Programs Helped Lower the Impact of AWP Inflation

OVERALL TRENDS

Healthcare Solutions aids clients in understanding trends that impact their spend and collaborates to reduce overall costs. In 2014, Healthcare Solutions’ book of business saw a 4.1% increase in the total pharmacy spend. This is attributable to an increase in the cost of prescription medications.

The Average Wholesale Price (AWP) is the industry standard for pricing prescription medications. The rate of AWP inflation in 2014 for brand name and generic medications was 12.5% and 7.9% respectively. When aggregated, the result was an overall increase of 8.6% to the price of prescription medications.

Drug mix dropped by 1.4% and prescription count decreased by 3.1% in 2014. Across Healthcare Solutions’ book of business, clients experienced less than half the inflationary pressures of the rising cost per prescription medication, largely due to clinical oversight programs. Factors contributing to the rise in AWP inflation include the changes in drug Schedules (e.g. hydrocodone/acetaminophen) and unexpected increases in price for generic drugs, which had historically remained flat year over year.

OVERALL TRENDS

2015 Drug Trends Report | 4

4.1%Increase in

Total Spend

*Drug Mix = Increased Generic Use / Decreased Brand Drug Use

8.6%Increase in

AWP Inflation

4.5% ProgramOffset

Decrease in Drug Mix*

1.4%Decrease in Prescription

Volume

3.1%[ [+

Page 6: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

GENERIC/AWP INFLATION

There were many contributors to AWP inflation rate for brand and generics. Overall, Healthcare Solutions’ book of business experienced a 12.5% increase in brand drug AWP and 7.9% increase in generic AWP. Individual clients may experience different increases in their brand and generic AWP price depending upon drug mix, state fee schedules and generic substitution rates. The brand inflationary rates were on par with 2013 trending.

Brand Price Trending

The greatest impact of brand trending for AWP in 2015 will likely surround OxyContin®. Although there have been limited releases of the generic formulation, currently the brand name product had a 20% increase in AWP as of January 2015.

GENERIC/AWP INFLATION

Generic Price Trending

As noted in the trending section of this report, there were some significant inflationary factors regarding generic product pricing. One of the main contributors to the overall increase in spend was the AWP increase in hydrocodone with acetaminophen combination products (HCPs). Figure 1 demonstrates the influence regulations had on increasing medication cost.

In the first week of October 2014, HCPs were moved from a Schedule III to a more restrictive Schedule II status. The Federal government made the decision that HCPs were more abused and more dangerous to the population than previously considered. The manufacturers are now required to follow stricter guidance, management and label changes which resulted in an increase to the AWP for the medication.

Healthcare Solutions notifies clients of medication changes through our Pharmacy eAlert Program.

C L I N I C AL

S E R V I C E Cost per pill for generics will continue to rise

as newer medications come off patent.

5 | Healthcare Solutions

Figure 1 Hydrocodone/Acetaminophen 5/325 Qty 50

Average AWP (AAWP) Price Trends 2013-2014

$26

JAN2013

$26

OCT2013

$26

APR2014

$26

JUN2014

$27

SEPT2014

$28

SEPT2014

$28

OCT2014

$29

OCT2014

$30

OCT2014

$31

NOV2014

$31

DEC2014

$27

SEPT2014

Page 7: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

GENERIC/AWP INFLATION

Utilization of generic medications has historically provided cost savings to payers, but recent trending demonstrates generics today are much more expensive per unit than those of generics previously released. In reviewing medications that have recently come off patent, this trend becomes an expensive proposition for payers (Figure 2). As an example, Lidoderm® had a list price of $11.50 per patch and its generic listed for $9.50, only a 17% difference between the brand and generic. Cymbalta® (20 mg) also had similar pricing when its generic was released; $8 for brand and $7 for generic. This represents only a 13% difference in the cost of the brand compared to the generic. Conversely, Percocet was priced at $4.20 per unit for brand and only $1.30 for its generic when it was released; a 70% difference. The AWP of new generics is averaging only 10% below the original manufacturer’s price, a vast difference from the 70% difference seen only a few years ago.

The impact of newer generic pricing will require payer’s consideration in setting reserves and settling cases through the Medicare Set-Aside (MSA) process. Healthcare Solutions’ pharmacist and physician reviews promote lower cost therapeutic alternatives, when appropriate, to drive down costs.

Step Therapy

Step therapy protocols represent a tool to offset brand and generic price trends and improve drug

mix. Step therapy protocols target claimants receiving high cost, brand name medications and convert them to more cost effective generic alternatives. The successful intervention negates some of the impact of a brand to generic release, as the claimant would already have been on a more cost effective alternative medication. Payers may realize a greater reduction in spend through the use of step therapy protocols than the reliance on a medication going generic.

There are other dynamics in the generic market adding to AWP inflation. Several key pharmaceutical companies are either being acquired (reducing competition) or pulling out of manufacturing less profitable drugs. In the generic drug market, it has been demonstrated that competition leads to reduced drug prices, as referenced in Figure 3. On average, the first generic manufacturer of a brand medication reduces the price of the medication by 6%. However, the appearance of a second generic manufacturer results in the average price per dose decreasing to half of the brand name product price. As additional generic manufacturers enter the market for a given medication, the price continues to drop, resulting in further savings. If manufacturers continue to merge or leave the market, we will continue to see price increases to generic medications.

Figure 3Generic Competition and Drug Prices1

2015 Drug Trends Report | 6

C L I N I C AL

S E R V I C E

Graph adapted from U.S. Food and Drug Administration website.

0% 20% 40% 60% 80% 100%

Num

ber o

f Gen

eric

Man

ufac

ture

rs

Average Relative Price per Dose

1

2

3

4

5

6

7

8

9

94%

52%

44%

39%

33%

26%

23%

21%

20%

Figure 2Percent Savings of Drug Cost at Time of Generic Release

Today’s generic releases produce less savings.

Previous Generic Releases

New GenericReleases

Percocet Cymbalta®Lidoderm®

0

20

40

60

80

100

70%

17% 13%

Page 8: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

GENERIC SUBSTITUTION

GENERIC SUBSTITUTION

In 2014, 83.1% of all medications dispensed were generics. The use of generic medications are associated with reduced costs. According to the U.S. Food and Drug Administration (FDA), payers realized savings of billions of dollars every week through the use of generic medications.2 Furthermore, the FDA demonstrated through numerous studies that generic drugs are just as effective as their brand name counterparts.3 However, not all eligible medications are dispensed generically.

When a medication is dispensed as a brand, despite a generic alternative option existing, an opportunity for generic medication use is missed. In 2014, 97.3% of eligible medications were dispensed as a generic. Healthcare Solutions conducted a study to evaluate barriers to 100% generic drug utilization and examined why prescribers utilize brand name medications, while generic options are available. Results of the study are discussed on the following page.

7 | Healthcare Solutions

83.1%79.2%

76.4%71.9%

Figure 4Generic Dispense Rate Trends 2011 - 2014

Generic dispense rate has been consistently increasing by an average

of 3.7% from 2011 to 2014.

The generic dispense rate for 2015 is already trending at 84.1%; this increase is being driven by

the release of generic Celebrex®.

Page 9: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

GENERIC SUBSTITUTION

DAW: Gimme the “Good Stuff”

The generic substitution rate is the percentage for all medications dispensed as generic and measures how often a generic is dispensed when a generic version of a prescribed drug exists. The generic substitution rate; therefore, examines the effect prescriptions dispensed as brand (despite having an eligible generic alternative) have on a book of business. In electronic prescription processing, selection of a brand or generic medication is communicated through the use of Dispense-As-Written (DAW) codes. The single digit, 0-9 field captures claimant, prescriber and pharmacy factors that can impact generic substitution rate.

Claimant Factors

While pharmacy and workers’ compensation regulations on generic substitution vary by state, claimants may request the brand name version of a medication even though it has an approved generic substitute. This claimant preference is recorded during electronic prescription processing with a DAW code, specifically a code 2 (DAW2). In these situations, within Healthcare Solutions’ book of business, a claims examiner’s approval is required before the use of the brand name product. Claimant brand preference may result from a variety of factors, including lack of co-pay incentive, perceived inferiority of generics, feelings of entitlement and others. As a result, targeting claimants through claimant-centered outreach represents one means to improve generic substitution rate.

Prescriber Factors

Prescriber preference for brand name medication over a generic alternative is documented by a DAW code of 1 (DAW1) during claims processing. Surprisingly, prescribers, more so than claimants, play a large role in whether a generic alternative is dispensed to a workers’ compensation claimant. In our 2014 study, DAW1 accounted for 91% of all brand name medications eligible for generic substitution (the other 9% was claimant preference). Healthcare Solutions reached out to these DAW1 prescribers to examine why their claimants required use of brand name medications.

Almost half of the DAW1 prescribers claimed the generic was ‘ineffective’ for their claimant. Additionally, 22% of prescribers reported their claimant experienced an adverse effect with the use of the generic. This response; however, conflicts with published data from the FDA. The FDA has found generic medications are not inferior in efficacy or safety compared to their brand name counterpart.3 As a result, there is an opportunity to reduce prescribers use of brand name medication and improve the generic substitution rate.

Pharmacy Factors

There are several DAW codes which can be utilized by dispensing pharmacies that can impact the use of brand and generic medications. Our study did not find any occurrences of these codes being utilized. Nonetheless, pharmacy outreach and education may be a tool utilized to maximize the dispensing of cost effective therapy to claimants and reduce spend for payers we support.

2015 Drug Trends Report | 8

Figure 5Top Prescriber Reasons for DAW14

49%Generic

Ineffective

22%Adverse

Effect

Page 10: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

SPECIALTY DRUGS

In 2014, the FDA approved 41 new therapies, including 11 medications through its biologics division.5 Biologics, and similar therapies, are representative of a future trend in prescription drug spend--the rise of specialty medications. As the fastest growing costs in health care today, specialty drugs have the potential to change the way prescription benefits are provided in the future.6

Payers may not recognize how specialty drugs are affecting their drug spend. Specialty medications can be masked through major medical costs. Specialty drugs like Enbrel®, Humira® and Synvisc® can be processed as a major medical expense via paper bills (typically under a miscellaneous J-code) and therefore, not recognized by payers as a pharmacy expense. This leaves payers with little visibility into the costs of these medications within their book of business and a lack of tools to control these costs.

Due to the high costs of specialty medications, payers should require due diligence when claimants receive these medications. This includes:

• Proper medication handling• Medication administered appropriately• Monitoring of claimant• Medication’s desired results• Medication’s side effects on the claimant

At $1,000 per pill for some of these specialty medications, making sure a claimant can tolerate the side effects becomes vital to managing the cost of the claim. In 2014, new specialty medications were released to treat Hepatitis C. This highlights some of the potential issues specialty medications present to payers of workers’ compensation benefits.

Healthcare Solutions identifies specialty medications that are part of the paper bill process. Upon identification of a biologic (specialty medication), Healthcare Solutions provides the information to the specialty network to partner with the claims examiner, claimant and prescriber to move these medications into the network. This provides the claimant with case management oversight to ensure appropriate compliance and to help mitigate/manage adverse side effects to enable full course of treatment. Clients gain transparency into the specialty medication spend and will likely experience decreased costs through Healthcare Solutions’ contracting and clinical oversight.

SPECIALTY DRUGS

9 | Healthcare Solutions

What are Specialty Drugs?

While not clearly defined in the industry, specialty drugs are typically those medications which have one or more of the following characteristics:

• Special handling instructions• Complex administrations• Monitoring requirements (e.g. blood work)• High costs• Treat complex/chronic disease states7

Drug Cost (per month)

Enbrel® 50 mg/ml (4 syringes) $3,500

Humira® 40 mg/0.8 ml(2 pre-filled syringes) $3,800

Synvisc® 16 mg/2 ml(per knee injection) $1,500

Figure 6Specialty Medications Commonly Processed as

a Major Medical Expense

Page 11: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

SPECIALTY DRUGS

2015 Drug Trends Report | 10

Hepatitis C is defined by the Centers for Disease Control and Prevention (CDC) as, “a contagious liver disease that ranges in severity from a mild illness lasting a few weeks to a serious, lifelong illness that attacks the liver.”8 Discovered in 1989, initial Hepatitis C treatments became available in 1991 and had a success rate of 6%. Treatment duration was between 24-48 weeks with costs ranging from $1,800 to over $88,000 (Figure 7).

The Issue

Approximately 4.2% of all new Hepatitis C cases are from healthcare workers.9 Many payers of workers’ compensation coverage to healthcare workers had their first experience with specialty medications. The new Hepatitis C medications, such as Harvoni®, Olysio® and Sovaldi®, have a treatment success rate of 94-100%, or double that of previous therapies. These medications cost $90,000 to $226,000 for a 12 to 24 week course of therapy. Effectively, a client with $1 million drug spend could experience a 2% increase in overall drug spend with one claimant receiving these medications.

HEPATITIS C DRUGS - What They Could Mean for Payers

The Solution

Healthcare Solutions has a specialty medication network that provides discounted rates and

management oversight in claimants’ receiving specialty medications. Case managers work with the claimant to manage reordering, mitigation of side effects and assure claimant compliance. All this helps to ensure improved claimant outcomes and maximum cost effectiveness. Through the paper bill process, Healthcare Solutions aids payers in identifying these types of drugs and works with adjusters and physicians to move claimants toward the specialty network.

Specialty drugs represent the future of the pharmaceutical industry and the new Hepatitis C treatments demonstrate the effectiveness. Once more terminal than HIV, Hepatitis C can now be cured in the majority of cases.10

Figure 7Comparative Costs of Previous and Current Hepatitis C Treatments

These regimens typically require other medications to support the management of the Hepatitis C treatment plan. Total cost in the below chart reflects only the cost of the medication listed and not the total cost for other medications needed for treatment regimens. Relapse occurs in many cases as well and the claimant continues to run the risk of requiring a liver transplant unless the disease can be managed.

C L I N I C AL

S E R V I C E

Medication Treatment Duration Cost per Treatment

Boceprevir (Victrelis®) 24 weeks $48,142

Ribavirin 48 weeks $1,814 - $28,815

Peginterferon - alfa-2a (Pegasys®) 48 weeks $44,425 - $88,850

Peginterferon - alfa-2b (PegIntron®) 48 weeks $16,083 - $18,617

Harvoni® 8 - 24 weeks $94,000

Olysio® 12 - 24 weeks $79,632

Sovaldi® 12 - 24 weeks $100,800Curr

ent T

reat

men

tsPr

evio

us T

reat

men

ts

Page 12: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

SPECIALTY DRUGS

Pain Medications of the Future

While the release of new Hepatitis C medications in 2014 demonstrated the potential impact specialty medications can have on payers, most specialty medications generally treat rare diseases affecting small claimant populations. Currently, there are some specialty medications under development that target larger claimant populations.

Pfizer Inc. and Eli Lilly and Company are currently developing tanezumab, a new, non-narcotic medication to treat chronic pain. Chronic pain is common in the workers’ compensation market, with “nearly one in five adults” suffering from this condition.11 Tanezumab is a humanized monoclonal antibody that has demonstrated benefits at reducing pain in clinical trials. Tanezumab selectively targets nerve growth factor (NGF), a regulator of pain processing and sensitivity; inhibiting activation of pain-signaling neurons. NGF levels have been shown to increase as a result of injury or inflammation and in claimants in chronic pain states.11 In this way, tanezumab can provide non-addictive pain relief. Specialty medications, such as tanezumab, may change how we treat pain management in the future.

11 | Healthcare Solutions

It is estimated that nearly “one in five adults suffer from chronic pain.”11 This condition is

common in the workers’ compensation market.

In the last stages of development, tanezumab has the potential to offer an innovative treatment to help millions suffering from painful conditions, according to its drug manufacturers.11 However, this medication may add a significant cost to payers who cover chronic pain claimants. Healthcare Solutions will monitor the effects of this new specialty drug in 2015. As these complex therapies continue to emerge in the market, many payers are hoping biosimilars will provide less-expensive alternatives to current brand-name specialty medications.

Page 13: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

SPECIALTY DRUGS

2015 Drug Trends Report | 12

Biosimilars are manufactured duplicates of current specialty biologic medications. Compared to the traditional release of a generic for a brand name medication, biosimilars take longer and can cost more to duplicate the branded biologic product. As a result, this higher up-front investment on the part of the manufacturer is likely to lead to reduced cost-savings.12 Furthermore, whereas brand and generic medications may be interchanged following completion of the well-established FDA approval process, biosimilars are struggling. Many questions remain concerning the biosimilar standard for interchangeability which currently limits the benefit these medications may have. This demonstrates the need for specialty medication network development and case management oversight to effectively manage specialty medications.

Biosimilars vs. Traditional Generic Medications

Manufacturing Process

Up-front investment by manufacturers most likely will lead to reduced cost

savings for biosimilar medications.

Traditional generic medications cost less

to produce, resulting in higher cost savings.

Zarxio

Zarxio, the first biosimilar product approved in the U.S., does not currently have pricing; however, when Zarzio® (the equivalent to Zarxio) was released in Europe, it had a price discount of 26%.13

Neupogen, a brand name biologic product, has a cost between $350-$400 per dose. Neupogen

Page 14: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

$0

$300

$600

$900

$1,200

$1,500

Average POS SpendAverage PB Spend Average Spend

2011 2012 2013 2014

COMPOUNDS

Compounding is the practice in which a licensed healthcare professional combines, mixes or alters ingredients of a drug to create a medication tailored to the needs of an individual patient.13 Compound drugs are not FDA-approved, meaning the FDA has not evaluated these medications for safety or efficacy, nor has the FDA ensured they were manufactured in facilities that meet federal standards. Because of this, compounds have primarily been reserved for instances when commercially available medications are not appropriate for a patient. For example, medications may be compounded when a patient cannot swallow and require liquid medication that is only available in tablet form. However, the rise in complexity of compound medications suggests this is no longer the case.

COMPOUNDS

13 | Healthcare Solutions

In the past 4 years the average cost of compounds has escalated 225%. Paper bills played a large role in this increase as they increased 317% for the same time period. Figure 7 illustrates the increase in average cost of compounds as well as the average cost of paper bill and point of sale for 2011 through 2014.

In California, paper bills for compounds have resulted in that state leading the nation in compound utilization at 13.2% of total medication utilization. So how can payers mitigate the escalating costs? The tools Healthcare Solutions has helped clients implement to mitigate the rising costs of compounded medications are discussed on the following page.

Figure 8

Compound Drug Trends

Paper Bill Compounds

Cost of Compounds

Point of Sale Compounds

In the past 4 years, the average cost of compounds has escalated 225%,

with paper bill and point of sale costs increasing 317% and 214%

respectively.

2011 20132012 2014

Page 15: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Although California may be the nation’s leader in compound bills, multiple tools exist for payers in this state to leverage to reduce their spend on compound medications. These tools include the use of a pharmacy benefit network (PBN), utilization review (UR) and a collaborative care model. While each solution presented below may not fit the philosophies of all clients, each provides a lower cost alternative. When one gate fails, the next gate is recommended.

Gate 1: Establish a PBN in California: Similar to medical management, a pharmacy benefit network (PBN) functions like a medical provider network (MPN). California law allows employers to utilize a directed-care network of pharmacies, identified as the PBN. By notifying all stakeholders, clients utilizing a PBN are able to direct a claimant’s use of pharmacies to only those that are in the PBN.

In California, payers are able to require claimants to utilize their PBN.14 If a prescription, including a compound, comes from an out-of-network pharmacy, a payer may defensibly deny the medication. Healthcare Solutions has a PBN in California; as 80% of compound bills are out-of-network, this mitigates much of the cost.

Gate 2: Utilization Review: Utilization review (UR) is a review by a medical professional to determine medical appropriateness. In California and other jurisdictions, these determinations are defensible and allow payers to deny bills if the review finds the medication non-certified. In the instances of compound medications, more than 90% of compounded medications are non-certified and payers do not have to reimburse compound medications.

Gate 3: Compound Medication Review: A comprehensive, collaborative approach where a pharmacist reviews and summarizes medical literature for evidence

concerning the active compound ingredients and a nurse identifies alternatives based on the review of evidence, past therapies, claimant medication history and current formulary. Following this review, the nurse contacts the provider to collaborate on appropriate alternatives for the claimant.

COMPOUNDS

Gate 4: Peer Review: The peer review examines the claimant’s medication history and medical records over the last year using a peer physician. The peer review physician contacts the prescribing physician to discuss the appropriateness of the compound medication and makes recommendations for alternative management.

Gate 5: Independent Medical Examination: An Independent Medical Examination (IME) occurs when a peer review physician reviews the historical records in the claimant’s charts and performs a physical examination of the claimant. There is no prescriber-claimant relationship and no contact between the reviewing physician and the treating physician. After review and examination, a report is prepared containing recommendations regarding the future management of the claimant.

As costs and utilization continue to escalate for compounds, state and federal agencies are starting to explore regulatory or legislative controls to alleviate the burden these medications are placing on the health care system. Some of these legislative actions are discussed in greater detail in the Legislative and Regulatory Updates section in this report.

C L I N I C AL

S E R V I C E Reducing the Cost of Compounds

2015 Drug Trends Report | 14

Tools for Reducing Compound Medication Costs

Gate 1: Establish a PBN in California

Gate 2: Utilization Review

Gate 3: Clinical Compound Review

Gate 4: Peer Review

Gate 5: Independent Medical Examination

Page 16: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

TOP THERAPEUTIC CLASSES

TOP THERAPEUTIC CLASSES

The therapeutic class trends remained similar in 2014 as compared to 2013, in terms of utilization and spend. Utilization was captured in terms of number of prescriptions for drugs within a therapeutic class. The average number of scripts per claimant decreased from 9.6 in 2013 to 9.2 in 2014; resulting in a reduction of 5.1%.

Generic dispense rate (GDR) increased to 83.1% in 2014. This is an increase of 3.9% from 2013. Research indicates that for every 1% increase in GDR, a client saves 1.3%.15

The top five therapeutic classes are reviewed in further detail in this report.

Top Therapeutic Classes by SpendClass Spend ChangeAnalgesics - Opioid 33.4 % 1.4 %Anticonvulsants 12.8 % 0.5 %Analgesics - Anti-Inflammatory 9.7 % 1.0 %Antidepressants 6.9 % -1.4 %Dermatologicals 6.5 % -0.9 %Skeletal Muscle Relaxants 6.5 % 0.4 %Ulcer Drugs 2.9 % -0.2 %Hypnotics 2.7 % -0.3 %Antipsychotics/Antimanic 2.3 % 0.1 %Antiasthmatic/Bronchodilator 1.8 % 0.2 %

Top Therapeutic Classes by Prescription CountClass Prescription ChangeAnalgesics - Opioid 34.7 % -0.4 %Analgesics - Anti-Inflammatory 12.8 % 0.5 %Skeletal Muscle Relaxants 10.8 % 0.2 %Anticonvulsants 9.2 % 0.4 %Antidepressants 7.0 % 0.1 %Dermatologicals 3.6 % 0.1 %Hypnotics 2.5 % -0.2 %Ulcer Drugs 2.4 % 0.1 %Antianxiety Agents 2.4 % -0.2 %Corticosteroids 1.3 % 0.1 %

15 | Healthcare Solutions

$

fueled primarily by generic launches for Lidoderm®

Generic dispense rate (GDR) increased 3.9 percentage points for a total of

83.1%and Cymbalta® late in 2013 and the Celebrex® generic launch late in 2014.

Page 17: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

TOP UTILIZED DRUGS - By Spend and Prescription Count

Healthcare Solutions saw movement in the top ten drugs by spend in 2014. The generic release of Lidoderm® (lidocaine) and Cymbalta® (duloxetine) were the driving factors behind this shift. These drugs were ranked two and three, respectively, in 2013 and their generic counterparts were seven and eight in 2014.

As previously stated in the Generic/AWP Inflation section of this report, generic medications are resulting in less savings to clients than in previous years. For example, in 2011, brand name medication Levaquin® went generic. At the time, the generic medication was 20% less expensive then the brand name. However, at the end of 2014 when Celebrex® came off patent, the generic resulted in only a 10% decrease in cost. This example demonstrates that the change in drug cost following a generic release is lower than historic trends. This difference is partially responsible for the increase in spend for generic medications.

OxyContin®, Lyrica® and Celebrex® were the only brand name products in the 2014 top ten drug list by spend. We expect another realignment in 2015 with the release of generic Celebrex®.

There was a decrease in prescription count for HCPs, which was anticipated as the medication moved from a Schedule III to a Schedule II. The slight increase in utilization for tramadol (Ultram®) was likely due to this reclassification. The medication took the number two spot, replacing gabapentin (Neurontin®).

Lyrica® and Celebrex® were the only two brand name medications in the top ten drug list by prescription count. Celebrex® became generically available in December 2014, while Lyrica® is anticipated to become generically available in 2018.

TOP UTILIZED DRUGS

Top Utilized Drugs by SpendClass Spend ChangeOxyContin® 7.1 % -0.5 %Lyrica® 6.3 % 0.5 %Celebrex® 4.2 % 0 %Oxycodone/Acetaminophen 4.1 % 1.9 %Hydrocodone/Acetaminophen 4.0 % 0.1 %Gabapentin 3.9 % 0 %Duloxetine HCL 3.3 % 3.2 %Lidocaine 3.0 % 2.1 %Oxycodone HCL 2.0 % 0.8 %Morphine Sulfate 1.8 % 0.3 %

Top Utilized Drugs by Prescription CountClass Prescription ChangeHydrocodone/Acetaminophen 14.8 % -0.9 %Tramadol HCL 4.9 % 0.2 %Gabapentin 4.6 % 0.4 %Cyclobenzaprine HCL 4.2 % 0.2 %Oxycodone/Acetaminophen 4.1 % 0.2 %Ibuprofen 3.5 % 0.2 %Lyrica® 2.8 % -0.1 %Oxycodone HCL 2.3 % 0.3 %Naproxen 2.2 % 0.2 %Celebrex® 2.1 % -0.2 %

2015 Drug Trends Report | 16

$

Hydrocodone/acetaminophen combination products (HCPs) moved from

a Schedule III to a Schedule II medication.

IIIIIIIV

V

Page 18: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Healthcare Solutions continues to adapt to ongoing industry transformation and advancing medical technologies to bring outcome-based clinical solutions to our clients. Our clinical solutions are the most targeted way to streamline prescription costs while maintaining the safety of the claimant.

Page 19: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Pharmacogenomics (PGx) is the study of the role of genetics in drug response. Identifying claimant genes that affect drug therapy allows for personalizing the medication mix to decrease drug side effects and increase drug effectiveness, leading to cost savings. However, such personalized medicine is an admirable goal whose time has not yet come, particularly in the context of pain which is complex, subjective and multifaceted.16

You can have a gene for a specific disease type; however, this does not mean it has been triggered to be active. X does not always equal Y in these tests. In addition to genetic factors, claimant responses to drugs can vary for many reasons, including:

• Drug interactions with food or other drugs• Claimant age and gender• Claimant diseases• Medication adherence

Although a pharmacogenetic test may identify how an enzyme behaves in the claimant’s body, drug receptors are complicated and likely to involve more than one gene as well as being influenced by the environment.17 Any drug dosage changes that are recommended based on pharmacogenomic test results have not yet been validated by prospective clinical studies. In addition, improved clinical outcomes have not been demonstrated when the drug therapy or dose selected is based on genetic testing versus routine clinical care.

So why all the hype around PGx? Today, it is recognized that CYP2D6 enzymes metabolize about 25% of drugs used clinically, including antidepressants and opioids.18 As a result, CYP2D6 genotyping is offered by most PGx testing laboratories and results are reported as an inferred metabolic phenotype. The complexity and variation does not stop at how the enzymes impact drug metabolism. There is a lack of consistency in lab test interpretation surrounding the enzyme which may confuse clinicians and claimants, and affect the clinical utility of the reported results.19

Providers and claimants need to be educated on the availability, interpretation, potential benefit, current limitations and non-standardized results of PGx testing. Clinical studies need to be adequately powered, reproducible and demonstrate therapeutic value and cost effectiveness of PGx testing. In addition, guidelines need to be developed that help identify when and whether genetic testing is indicated before results of pharmacogenetic testing can be applied to routine medical care. The future of personalized medicine is exciting, and while we are heading in that direction, we are not there yet.

Genetic Information Nondiscrimination Act (GINA)

Title II of Genetic Information Nondiscrimination Act (GINA) prohibits the use of genetic information in making employment decisions, restricts employers from requesting, requiring or purchasing genetic information, and strictly limits the disclosure of genetic information. There is, however, an exception under GINA for workers’ compensation. GINA’s final rule states that when an employer makes a request for medical information related to a workers’ compensation injury, the employer should warn the employee or the health care provider from whom the information was requested that the employee or health provider should not provide genetic information to the employer. The warning may be in writing or provided verbally (if the employer typically does not make such requests in writing). The U.S. Equal Employment Opportunity Commission (EEOC) has indicated that, to take advantage of this exception, the employer must do what is reasonably necessary to ensure the warning is understood by employees or doctors submitting health-related information.

Although generally not mandatory, it is advisable to obtain written consent of the claimant regardless of any regulatory requirements. Claimant consent could be obtained in conjunction with the warning required by GINA.

Pharmacogenomics

• Test does not identify environmental influences such as drug or food interactions

• Labs are not standardized across the industry

• Having a gene does not mean it is ‘turned on’

PHARMACOGENOMICS

THERAPEUTIC CLASS TRENDS

2015 Drug Trends Report | 18

Page 20: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

OPIOID ANALGESIC TRENDS 2014 Compared to 2013

OPIOID ANALGESICS

Opioid medications remain the most common drug class in Healthcare Solutions’ book of business in terms of spend and number of prescriptions. This is consistent with the trend we observed in 2013. As noted previously in this report, HCPs have significantly increased in their AWP, while the spend trend has decreased. The increase in AWP may be due to two market dynamics: (1) the reclassification of HCPs from Schedule III to Schedule II and/or (2) the reformulations of many HCPs due to FDA requirements to limit the amount of acetaminophen permitted in HCPs.

Since HCP was rescheduled in October of 2014, the impact of rescheduling is only observed in the last quarter. From October through end of 2014, HCP utilization dropped on average 20% across the book of business. Physicians appear to be moving claimants towards acetaminophen with codeine as an alternative to HCPs. Acetaminophen with codeine products utilization increased by 4% over the previous year. There were no significant changes identified in the utilization of other Schedule II opioid medications within this time frame. This suggests the HCP utilization decrease did not result in a potential increase of any other Schedule II opioid medications. However, the decrease in HCP use in the fourth quarter of 2014 may have led to increases in other drug classes such as non-steroidal anti-inflammatory drugs (NSAIDs).

OPIOID ANALGESICS

19 | Healthcare Solutions

20% reduction of hydrocodone/acetaminophen combination products (HCPs) due to the rescheduling of the medication.

$Spend

-1.4% -0.4%

ClaimantUtilization

PrescriptionCount

Rx

1.4%

Page 21: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Top Opioid Analgesics by Prescription CountDrug Name 2014 ChangeHydrocodone/Acetaminophen 42.7 % -2.1 %Tramadol HCL 14.0 % 0.6 %Oxycodone/Acetaminophen 11.7 % 0.6 %Oxycodone HCL 6.6 % 0.9 %OxyContin® 5.2 % 0.1 %Morphine Sulfate 3.8 % 0.2 %Fentanyl 2.5 % 0.1 %Tramadol/Acetaminophen 1.6 % -0.1 %Acetaminophen/Codeine 1.7 % 0.1 %Hydromorphone HCL 1.4 % 0.2 %

Top Opioid Analgesics by SpendDrug Name 2014 ChangeOxyContin® 21.3 % -2.5 %Oxycodone/Acetaminophen 12.3 % 5.3 %Hydrocodone/Acetaminophen 11.9 % -0.3 %Oxycodone HCL 5.8 % 2.2 %Morphine Sulfate 5.5 % 0.6 %Tramadol HCL 5.4 % -0.7 %Fentanyl 5.3 % -0.7 %Percocet 3.6 % 0.5 %Opana ER® (crush resistant) 3.4 % -1.3 %Duragesic® 2.5 % -0.1 %$

OPIOID ANALGESICS

2015 Drug Trends Report | 20

$ 160% by the end of 2014.

Oxycodone/Acetaminophen’s AWP increased by

Another significant trend observed within the opioid drug class was the increase in the AWP of oxycodone with acetaminophen. Since the start of 2013, there has been a 160% increase in the AWP of this medication. As expected, spend on oxycodone with acetaminophen increased in 2014; however, the increase was not as high as anticipated. This was attributed to a decrease in the number of claimants using this product. Healthcare Solutions has targeted clinical solutions that intervene early in the life cycle of a claim to produce positive results.

OxyContin® spend decreased by 2.5%.

Acetaminophen with codeine increased in utilization as a result of scheduling

reclassification of HCPs.

Page 22: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Pain conditions dominate the workers’ compensation market. Chronic opioid use can be associated with prolonged disability and a reduction in return to work. Chronic claims are associated with a higher spend not just in opioids, but in overall medication costs. The average drug spend per claim at Healthcare Solutions is approximately $1,000 per claimant per year. However, after five years, the average drug spend per claim is over $4,000 per year. A correlation can be made from the TROUP study that early claim intervention can decrease drug spend.

Healthcare Solutions has developed innovative programs that promote early intervention and prevent the costly consequences of long-term opioid use. Opioid Defense Manager® (ODM®)

identifies claimants after 30 days of opioid use within 60 days. Upon identification, Healthcare Solutions starts the process with claimant education on the safe use and risks of opioids. Following enrollment into ODM®, a team of nurses and pharmacists conduct interventions every 60 days with the treating physician to monitor the claimant while they are on opioids. This collaborative care model focuses on claimant safety through the use of pain contracts and urine drug monitoring.

Sixty-five percent of patients who receive 90 days of continuous opioids will still be on opioids five years later, according to the TROUP study published in the Journal of General Internal Medicine.21 Factors contributing to the continuation of opioids were:

1. Opioid doses greater than 120 mg morphine equivalent dose (MED) per day

2. Previous opioid use3. Opioid misuse

One of the guiding principals for pain management released by the New England Journal of Medicine and the Institute of Medicine Committee states, “Chronic pain has such severe effects on all aspects of a person’s life that every effort should be made to achieve both primary prevention and secondary prevention through intervention.”22 The committee has recognized the appropriateness and safety of using opioids in certain pain situations such as acute, post-operative, procedural and end of life pain.

EARLY INTERVENTION REDUCES RISK OF CHRONIC OPIOID USE

OPIOID ANALGESICS

C L I N I C AL

S E R V I C E

20-30% of opioids prescribed for chronic pain are being misused20

21 | Healthcare Solutions

POWERFUL CLINICAL OUTCOMES

Early Intervention Results - claim with date of injury of less than three years

Overall Program Results - for all claims

Decrease in MED after 90 days in the ODM® program

Lower overall pharmacy costs

Lower opioid costs

Fewer opioid prescriptions

70% 48% 65% 73%

Decrease in MED after 90 days in the ODM® program

Lower overall pharmacy costs

Lower opioid costs

Fewer opioid prescriptions

47% 33% 25% 57%

Page 23: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

OPIOID ANALGESICS

“ODM’s claimant-centered approach and collaboration with prescribers is remarkable. We started using ODM® almost one year ago, and we’ve already seen the number of injured workers receiving

opioids decrease more than 30%. The web-based processes for tracking and managing our claims are easy to use and seamless for our claims adjusters. ODM® balances appropriate opioid therapy in

claimant care and treatment.”

- Jennifer HertzfeldAssistant Vice President, Workers’ Compensation Claims

The Motorists Insurance Group

2015 Drug Trends Report | 22

Early Intervention Results - claim with date of injury of less than three years

Overall Program Results - for all claims

Fewer opioid prescriptions

73%

Fewer opioid prescriptions

57%

Figure 9ODM® Intervenes Early in the Claim Process

CLAIMANT IDENTIFICATION 30 days opioids in last 60 days

CLAIMANTEDUCATION

FOLLOW-UP 60 day follow-up

NURSE INTERVENTIONOpioid Progress Report (OPR) Pain Agreements Medication History/Formulary

INJURY

Page 24: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

ANTI-INFLAMMATORIES

ANTI-INFLAMMATORIES

Non-steroidal anti-inflammatory drugs (NSAIDs) are commonly utilized to treat acute and chronic pain. As a result, these medications are common in the treatment of work-related injuries.23 In 2014, there was an increase in the number of NSAID prescriptions utilized within Healthcare Solutions’ book of business. Our data suggests this increase may have resulted from interventions targeted at chronic opioid users as well as the rescheduling of HCPs in October 2014. In both instances, prescribers likely needed alternative treatment options for pain, which resulted in the increased NSAID use.

The most significant change to this class was the release of generic Celebrex® in December 2014. Initial data demonstrates nearly a 90% conversion rate from brand to generic in just the first few weeks of its release. In 2013 and in 2014, Celebrex® was the number one medication in terms of drug spend in this drug class. The generic release of Celebrex® is expected to result in decreased spend for clients in the coming year.

With Celebrex® going generic, new trends are being observed in this drug class. One trend is an increased prevalence of combination products containing an NSAID and a gastroprotective. Specifically, Duexis®, a combination product of famotidine (Pepcid®) and ibuprofen (Motrin®), and Vimovo®, a combination product of naproxen (Aleve®) and esomeprazole (Nexium®), are increasing in spend and utilization. These combination products add costs to the system without providing significant gains in claimant care. The ingredients in these combination products, namely Pepcid®, Motrin®, Aleve® and Nexium®, can all be purchased over-the-counter at a fraction of the cost. Despite Duexis® or Vimovo® representing less than 1% of transactions, both medications appear in the top 10 drugs by spend in this drug class.

The other trend observed is the resurgence of older NSAIDs re-entering the market as branded products with new technology that delivers the same medication, at significantly lower doses. Such products include the

23 | Healthcare Solutions

re-formulated diclofenac products, Zipsor® and Zovolex. With new technology comes new costs. The newer products range from $5 to $6 (AWP) per dose compared to the older diclofenac formulations that are less than $1 (AWP) per dose (strength dependent). All diclofenac products are designated as ‘N’ drugs by the Official Disability Guidelines due to diclofenac’s increased risk profile compared to other NSAIDs.23

Healthcare Solutions’ P&T Committee currently recommends non-formulary status be given to Duexis®, Vimovo®, Zipsor® and Zorvolex®.

ANTI-INFLAMMATORY TRENDS 2014 Compared to 2013

Anti-Inflammatory medication spend and utilization increased was likely caused by the reclassification of hydrocodone with

acetaminophen combination products (HCPs).

ClaimantUtilization

1.0%

$Spend

1.0%

PrescriptionCount

Rx

0.5%

Page 25: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

ANTI-INFLAMMATORIES

Opioids and NSAIDs represent the most common drug classes in the treatment of

work-related injuries and within Healthcare Solutions’ book of business. There is a considerable amount of medical literature concerning the appropriate use of these drug classes. Healthcare Solutions offers medication review services to handle complex cases involving the opioid and NSAIDs therapeutic drug classes.

Our last drug trends report went into detail surrounding peer reviews. Two trends noticeable in the peer review arena include:

1. Clients are starting to use this tool earlier in the claim life. This is due to enhanced data analytics intelligence and clinical liaisons working closely with case managers and claims examiners.

2. Average MEDs were reduced another 2% for a total average of 42% reduction. This is due to clients requesting nurse case managers quarterbacking of post review outcomes to help ensure the agreed upon treatment plan is being followed.

One of Healthcare Solutions’ main focus points in 2014 was to aid clients in managing urine drug screens. Legislatively, many jurisdictions are requiring drug screens as part of an overall opioid management strategy. Medical literature supports the use of urine drug screenings to help ensure appropriate opioid use; however, what the industry is experiencing is an increase in the number and costs of urine drug screens without a corresponding decrease in opioid use.24

Healthcare Solutions’ approach is to work with urine drug screen vendors to create a flat panel rate both prospectively and retrospectively. This enables physicians to complete needed tests without the escalation of costs that have been reported in the market. The program supports the use of a very valuable tool for physicians to leverage. Healthcare Solutions’ staff monitors drug screen reports and works with claims examiners to make recommendations for unanticipated, non-compliant findings. This collaborative approach is just one tool to drive therapeutic outcomes, claimant safety and support cost containment.

Medication ReviewsC L I N I C AL

S E R V I C E Top Anti-Inflammatories by SpendDrug Name 2014 ChangeCelebrex® 43.3 % -4.7 %Meloxicam 15.5 % -2.2 %Ibuprofen 7.0 % 2.8 %Duexis® 6.9 % 3.1 %Naproxen 6.1 % -0.8 %Vimovo® 3.7 % 3.2 %Diclofenac Sodium 2.5 % -0.4 %Naprelan® 2.3 % -0.5 %Nabumetone 1.8 % -0.4 %Zipsor® 1.5 % 0 %

Top Anti-Inflammatories by Prescription CountDrug Name 2014 ChangeIbuprofen 27.6 % 0.4 %Celebrex® 16.7 % -2.4 %Naproxen 17.3 % 0.7 %Meloxicam 17.2 % 0.9 %Diclofenac Sodium 4.7 % 0 %Nabumetone 3.4 % 0 %Etodolac 2.9 % -0.4 %Naproxen Sodium 2.6 % 0.2 %Duexis® 1.0 % 0.2 %All Others 6.8 % 0.5 %

2015 Drug Trends Report | 24

$

Healthcare Solutions’ step therapy programs and the generic introduction were

key to driving down Celebrex’s utilization.

Vimovo® and Duexis® are associated with significant costs; however, Healthcare Solutions’ targeted interventions are

keeping utilization low.

Page 26: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

In comparison to 2013, spend and prescription count were relatively consistent for skeletal muscle relaxants. This drug class is common in the treatment of work-related injuries; however, product labeling and guidelines do not recommend the chronic use of most skeletal muscle relaxants. Available evidence has not yet shown benefit with long-term use of these medications, with the exception of baclofen and tizanidine. As a result, Healthcare Solutions targets the utilization of muscle relaxants and uses multiple interventions to promote appropriate use of these medications. For example, metaxalone (generic for Skelaxin®) is one of the most expensive medications in this drug class. In 2014 alone, the AWP for this medication increased 7%. Despite these pressures, Healthcare Solutions observed a decease of 1.9% in spend for metaxalone in 2014.

Physician Intervention Letters

Metaxalone’s decrease in spend, despite its rising cost, is attributed to Healthcare

Solutions’ clinical programs and strong client support. In the case of skeletal muscle relaxants, physician intervention letters are sent to the prescriber to alert them when their claimants have utilized a muscle relaxant beyond the recommended time frame and suggests alternative management strategies going forward on the claim. Additional tools include the use of step therapy protocols to guide use of skeletal muscle relaxants to the most cost effective formulation possible.

SKELETAL MUSCLE RELAXANTS

SKELETAL MUSCLE RELAXANTS

C L I N I C AL

S E R V I C E

CASE STUDY: Physician Intervention Letter

CLAIMANT: 46 year old male

INJURY: Low back and neck pain

PROBLEM: Extended use of carisoprodol (Soma) from two prescribers

SOLUTION: Physician intervention letter sent

RESULT: Both prescribers ceased prescribing carisoprodol; resulting in a savings of 5% on the claim

25 | Healthcare Solutions

SKELETAL MUSCLE RELAXANT TRENDS 2014 Compared to 2013

Product labeling and guidelines do not recommend the chronic use of most skeletal muscle relaxants.

ClaimantUtilization

0.2%

$Spend

0.4% -0.2%

PrescriptionCount

Rx

Page 27: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

SKELETAL MUSCLE RELAXANTS

2015 Drug Trends Report | 26

Top Skeletal Muscle Relaxants by Spend

Drug Name 2014 ChangeTizanidine HCL 20.5 % -1.6 %Metaxalone 17.9 % -1.4 %Cyclobenzaprine HCL 16.6 % -1.9 %Baclofen 12.8 % 7.7 %Amrix® 10.7 % 1.1 %$

Top Skeletal Muscle Relaxants by Prescription Count

Drug Name 2014 ChangeCyclobenzaprine HCL 38.3 % 0.9 %Tizanidine HCL 17.5 % 0.6 %Carisoprodol 12.3 % -3.2 %Methocarbamol 10.5 % 0.6 %Baclofen 9.1 % 0.7 %

As a mitigation strategy for the high cost cyclobenzaprine formulation, Amrix®, Healthcare Solutions offers a step therapy program suggesting the use of lower cost generic

cyclobenzaprine formulations.

Figure 10Comparative Prices of Available Products Containing Cyclobenzaprine as the Active Ingredient

Cyclobenzaprine Product Average Cost per Month(based upon AWP & standard doses)

Cyclobenzaprine 5mg(generic Flexeril®) $142

Cyclobenzaprine 10mg(generic Flexeril®) $96

Cyclobenzaprine ER 15mg(generic Amrix®) $635

Cyclobenzaprine ER 30mg(generic Amrix®) $635

Flexeril® 5mg $277

Flexeril® 10mg $292

Amrix® 15mg $904

Amrix® 30mg $904

Preferred Products

Utilizing generic cyclobenzaprine could

potentially result in annual savings of over

$8,000.

Page 28: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

ANTICONVULSANTS

In comparison to 2013, spend and prescription count were relatively consistent. Anticonvulsant medications work to treat pain by ‘calming’ nerves that cause pain. Anticonvulsants do not work on all pain types, such as lower back pain. These drugs tend to work more effectively on the extremities.25

Gabapentin and Lyrica® continue to represent the most common drugs in this drug class. Over the last year, there has been a 20% increase in the AWP of Lyrica®. Although Lyrica® only makes up 30% of transactions for anticonvulsants, it contributes to 49.4% of the spend for this drug class. On the other hand, gabapentin makes up greater than 50% of transactions for this drug class, but contributes to only 30% of the spend.

Lyrica® will not be generically available until 2018; therefore, this trend may continue. As a result, Healthcare Solutions recommends the use of step

therapy protocols when coverage is provided for the anticonvulsant drug class. Our protocol requires claimants to try gabapentin first before authorizing Lyrica®; resulting in client savings.

ANTICONVULSANTS

Successful step therapy and outreach programs decreased Lyrica® utilization by 2%.

50%Gabapentin now makes up over

of all anticonvulsant prescriptions, yet only 30% of the costs due to the ever increas-

ing cost of Lyrica®.C L I N I C AL

S E R V I C E

27 | Healthcare Solutions

$200

$300

$400

$500

$600

Sept2009

July2012

Jan2013

July2013

Jan2014

June2014

Jan2015

Jan2010

July2010

Jan2011

Jan2012

Figure 11AWP Inflation of Lyrica® 150 mg Qty 90

In 2014, the price of Lyrica® increased by

20%. Since 2009, the price of Lyrica®

has increased by 124%.$231 $243

$255$278

$303

$361

$396

$433

$474

$519

$330

Page 29: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

ANTICONVULSANTS

2015 Drug Trends Report | 28

Top Anticonvulsants by SpendDrug Name 2014 ChangeLyrica® 49.4 % 2.3 %Gabapentin 30.4 % -1.4 %Topiramate 6.1 % -0.4 %Neurontin® 2.0 % 0 %Lamotrigine 1.9 % 0.1 %

Top Anticonvulsants by Prescription CountDrug Name 2014 ChangeGabapentin 50.2 % 2.8 %Lyrica® 30.1 % -2.0 %Clonazepam 6.3 % -0.9 %Topiramate 4.9 % 0.2 %Levetiracetam 1.4 % 0 %

$

$Spend Prescription

Count

Rx

ANTICONVULSANT TRENDS2014 Compared to 2013

Figure 12Percentage of Claimants Utilizing Lyrica® 2010 - 2014 Trends

0%

1%

2%

3%

4%

5%

6%

7%

6.3% 5.9% 5.7% 5.4% 4.9%

2010 2011 2012 2013 2014

0.5% 0.4%-0.1%

ClaimantUtilization

Page 30: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

ANTIDEPRESSANTS

ANTIDEPRESSANTS

Despite what the name might suggest, antidepressants are not solely used to treat depression. Antidepressants are used to treat a variety of other conditions, including neuropathic pain or anxiety.

The highlight in this class of drugs was the introduction of generic Cymbalta® at the end of 2013. The effect of this generic launch was fully realized in 2014. Cymbalta® and its generic, duloxetine, represent the most common drug within this class. Because of the generic release, spend per prescription decreased by 18% for this medication in 2014 compared to 2013.

Also note that since Cymbalta® is now generic, all of the top utilized antidepressants are generic medications.

Because antidepressants are historically a difficult drug class to manage, Healthcare Solutions offers clients the use of a clinical liaison. The clinical liaison works as part of

a client’s team to produce positive outcomes. Clinical pharmacists leverage both predictive and demonstrated modeling through Healthcare Solutions’ Advanced Trigger Report to identify at-risk claims. Working with clients, Healthcare Solutions routes information either to the claims examiner or to assigned case management, depending on each unique model. Larger clients typically are staffed with clinical resources in which Healthcare Solutions adapts to their best practices by supplying information on the front-end to the clinicians; working through intervention modeling; creating unique point-of-sale edits for the claimant; and reporting on outcomes. This closed-loop model drives toward enhancing claimant safety and resulting in overall claim savings.

C L I N I C AL

S E R V I C E

$Spend per prescription for

Cymbalta® decreased by

18%

29 | Healthcare Solutions

Figure 13FDA Approval History for Cymbalta®26

Jun 16, 2008 FDA approves Cymbalta® for the management of fibromyalgia

Nov 5, 2010 FDA clears Cymbalta® to treat chronic musculoskeletal pain

Nov 30, 2009 FDA approves Cymbalta® for maintenance treatment of generalized anxiety disorder

Nov 30, 2007 FDA approves Cymbalta® for maintenance treatment of depressive disorder

Feb 26, 2007 FDA approves Cymbalta® for treatment of generalized anxiety disorder

Sept 7, 2004 FDA approves Cymbalta® for neuropathic pain associated with diabetes

Aug 4, 2004 FDA approves Cymbalta® for the treatment of depression

While Cymbalta® (duloxetine) can be expensive, it provides an alternative to chronic opioid therapy as an effective way to treat

musculoskeletal pain and some types of neuropathic pain.

Page 31: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

ANTIDEPRESSANTS

Top Antidepressants by SpendDrug Name 2014 ChangeDuloxetine HCL 47.8 % 46.4 %Cymbalta® 8.8 % -52.7 %Venlafaxine 5.6 % 0.6 %Bupropion HCL 5.3 % 0.2 %Escitalopram Oxalate 5.0 % 0.3 %Sertraline HCL 3.4 % 0 %Pristiq® 3.2 % 0.8 %Fluoxetine HCL 2.9 % 0.2 %Amitriptyline HCL 2.0 % 0.6 %Wellbutrin XL® 1.8 % 1.0 %

Top Antidepressants by Prescription CountDrug Name 2014 ChangeDuloxetine HCL 28.9 % 27.9 %Amitriptyline HCL 13.8 % -0.4 %Trazodone HCL 9.7 % 0.5 %Bupropion HCL 6.3 % -0.3 %Escitalopram Oxalate 5.5 % -0.2 %Sertraline HCL 5.3 % -0.1 %Venlafaxine HCL 5.0 % 0.1 %Nortriptyline HCL 4.5 % 0.2 %Fluoxetine HCL 3.4 % -0.1 %Citalopram Hydrobromide 3.3 % 0.1 %

2015 Drug Trends Report | 30

$Prescription

Count

Rx

ANTIDEPRESSANT TRENDS2014 Compared to 2013

-1.4% -0.6% 0.1%

ClaimantUtilization

$Spend

Page 32: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Healthcare Solutions participated in public hearings, teleconferences and meetings to help address concerns with proposed legislation/regulation to help ensure the best possible solutions were adopted for clients and injured workers.

Page 33: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

LEGISLATIVE AND REGULATORY HIGHLIGHTS

2014 LEGISLATIVE AND REGULATORY HIGHLIGHTS

Healthcare Solutions’ governmental affairs program was very active in 2014. The workers’ compensation legislative and regulatory sessions were active from the beginning to the end of the year. The current pace in early 2015 is matching or exceeding that of the 2014 session.

Healthcare Solutions participated in public hearings, teleconferences and meetings to help address concerns with proposed legislation/regulations and to ensure the best possible solutions were adopted for clients and injured workers. Our governmental affairs department monitors daily activity, and conducts outreach to legislative, regulatory and other stakeholders. Healthcare Solutions’ program is recognized nationwide by many regulators who are proactively seeking input and advice from our experienced governmental affairs team.

Some of the same efforts that were made in 2013, spilled over and picked up steam in 2014.

Cont

rolle

d Su

bsta

nces

Dire

ctio

n of

Car

e

Dru

g Fo

rmul

ary

Fee

Sche

dule

Med

ical

Mar

ijuan

a

PBM

Reg

ulat

ions

Pres

crip

tion

Dru

g M

onito

ring

Prog

ram

Phys

icia

n D

ispe

nsin

g

Trea

tmen

t Gui

delin

es

39

82

9

26

36

147

4

Figure 14

Number of Bills Proposed/Passed in 2014 - 2015 by Category

2015 Drug Trends Report | 32

Healthcare Solutions is committed to keeping clients informed on proposed and enacted regulations that may impact their business. We

notify clients of important regulatory updates when they occur through our Regulatory eAlerts as well as publish a quarterly regulatory and compliance newsletter, The Examiner.

Page 34: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Pennsylvania HB 1846: Limits physician dispensed drug reimbursement to 110% of AWP based on the original manufacturer NDC. Disallows use of repackaged NDCs; if the original manufacturer NDC is not included on the bill, reimbursement shall be based on the AWP of the least expensive clinically equivalent drug. No outpatient provider, other than a licensed pharmacy, may seek reimbursement for drugs listed as Schedule II in excess of an initial 7 day supply, commencing upon the employee’s initial treatment. An additional 15 day supply can be dispensed commencing on the date of the medical procedure. No outpatient provider, other than a licensed pharmacy, may seek reimbursement for drugs listed as Schedule III and containing hydrocodone in excess of an initial 7 day supply, commencing upon the employee’s initial treatment. An additional 15 day supply can be dispensed commencing on the date of the medical procedure. No outpatient provider, other than a licensed pharmacy, may seek reimbursement for any other drugs in excess of an initial 30 day supply, commencing upon the employee’s initial treatment; if one healthcare provider has dispensed drugs under any of these provisions, no other healthcare provider may submit for reimbursement for drugs dispensed to an injured worker under the same claim. No outpatient provider, other than a licensed pharmacy, may seek reimbursement for an over-the-counter drug. Requires the workers’ compensation advisory council to conduct an annual study of the impact of this legislation, including calculations of savings.

North Carolina SB 744: Creates a pharmacy fee schedule at 95% of AWP. Repackaged drugs go back to original NDC. If repackaged drug and original NDC are not on the bill, reimbursement is 100% of AWP of the least expensive clinically equivalent drug. No provider, outside of a licensed pharmacy, can receive reimbursement for Schedule II or Schedule III in excess of a 5 day supply commencing upon the employee’s initial treatment following injury.

Delaware HB 373: This Act makes substantial changes to Titles 18 and 19 of the Delaware Code designed to control the level of workers’ compensation premiums in Delaware. The most significant changes are:

• A 33% reduction in medical costs to the workers’ compensation system, phased in over a period of three years;

• Absolute caps, expressed as a percentage of Medicare per procedure reimbursements, on all workers’ compensation medical procedures beginning on January 31, 2017; and

• Increased independence for the ratepayer advocate who represents ratepayers during the workers’ compensation rate approval process and for the committee that oversees the cost control practices of individual workers’ compensation insurance carriers.

LEGISLATIVE AND REGULATORY HIGHLIGHTS

2014 YEAR-IN-REVIEW

Legislation:

33 | Healthcare Solutions

Page 35: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Oklahoma: Medical Services - Emergency Adoption The Workers’ Compensation Commission (WCC) adopted emergency rules to implement the closed formulary required under SB 1062. For all dates of injury on or after 02/01/2014, the closed formulary applies with no legacy claimants or transition period. Claimants with a date of injury prior to 02/01/2014 will not be subject to the closed formulary. The closed formulary includes FDA approved drugs, EXCLUDING the following:

• ‘N’ drugs per the ODG Appendix A;

• All compounds;

• Investigational or experimental drugs for which there is early developing scientific or clinical evidence demonstrating potential efficacy, but which is not yet broadly accepted as prevailing standard of care; and

• Drugs not in ODG (drugs that are not preferred, exceed or are not addressed by the ODG in effect on the date of treatment).

Drugs not in the closed formulary require prior authorization and payment may be denied if prior authorization is not requested. Prior authorization requests must include the prescriber’s “drug regime plan of care” and anticipated dosage or range of dosages. If a request for prior authorization is not responded to within 72 hours, it is deemed approved. Explanations of Benefits (EOBs) must be sent to the pharmacy, prescribing doctor and injured worker at the time an insurance carrier denies payment for medications for any reason related to medical necessity or reasonableness of health care.

LEGISLATIVE AND REGULATORY HIGHLIGHTS

Regulations:

2015 Drug Trends Report | 34

Page 36: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Michigan: Opioids and Compounds Adopts by reference, 2014 Medicare HCPCS procedure codes, RBRVS codes, AMA physicians CPT codes and both ICD-9 and ICD-10 requirements. Adds Medi-Span as a nationally recognized compendium for AWP pricing. Requires both original and repackaged NDCs on CMS 1500 form for physician dispensed bills in the order/format recommended by NUCC. Physicians prescribing opioids past 90 days must submit a written report to the payer for reimbursement. Reimbursement for prescribing and dispensing opioid medications may be denied for failing to submit a report, but only after a period of time for the injured worker to be weaned off the opioid and alternative treatments to be offered. Providers can bill for the report under CPT 99215 and charge $25.00 under MPS01 for accessing a PDMP database. Compounds shall be billed using each individual ingredient and the original manufacturer’s NDC. Compound reimbursement is capped at: AWP - 10%, Medi-Span or Redbook and a compounding fee of $12.50 using WC 700-C. Compounds are capped at a $600 maximum; if the bill exceeds this amount, it must include the manufacturer’s invoice for review. Reimbursement should only be considered after the compound meets all of the following:

1. There is no readily available commercially manufactured equivalent product;

2. No other FDA approved alternative drug is appropriate for the claimant;

3. The active ingredients of the compound each have an NDC number and are components of drugs approved by the FDA;

4. The drug has not been withdrawn or removed from the market for safety reasons; and

5. The prescriber is able to demonstrate to the payer that the compound medication is clinically appropriate for the intended use.

LEGISLATIVE AND REGULATORY HIGHLIGHTS

Regulations:

35 | Healthcare Solutions

Page 37: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

New York: Non-Acute Pain Treatment GuidelinesNew York adopted non-acute pain treatment guidelines. Treatment not in accordance with the guidelines requires a variance as set forth in 12 NYCRR §324.3. All diagnostic imaging, testing procedures, non-surgical and surgical therapeutic procedures within the criteria of the Medical Treatment Guidelines (MTG) are considered authorized, with the exception of the following procedures:

• Lumbar fusion• Artificial disc replacements• Vertebroplasty• Kyphoplasty• Electrical bone growth and spinal stimulators• Pain pumps• Osteochondral autography• Autologous chondrocyte implantation• Total or partial knee joint replacements

Subsequent procedures also require prior authorizations. Physicians should make sure that non-opioid pain management approaches, including non-pharmacological and non-opioid measures have failed prior to considering long-term opioid use; long-term opioid management guidelines for initial, transitioning and on-going treatment are outlined. Guidelines for optimizing opioid treatment include, but are not limited to:

• Monitoring on-going treatment• Pain agreements• Random urine drug testing (UDT)• Optimizing drug doses• Weaning/tapering from opioids

UDT results cannot be shared with the employer, insurance carrier or the workers’ compensation board, and compound medications: topical, oral and/or systemic are not recommended.

LEGISLATIVE AND REGULATORY HIGHLIGHTS

Regulations:

2015 Drug Trends Report | 36

Page 38: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

LEGISLATIVE AND REGULATORY HIGHLIGHTS

Compound medications have taken a front seat for many payers due to their high cost and lack of proven efficacy. Although compounds are a small percentage of overall dispensed medications, they are becoming a higher percentage of overall medication spend due to an increase in the number of ingredients and overall costs.

Unlike controls for physician dispensing, which included limiting or banning physician dispensing and tying reimbursement for a repackaged drug back to the original National Drug Code (NDC), most state workers’ compensation programs have not come up with an effective way to manage compound drug utilization and/or costs.

Oklahoma has taken a somewhat aggressive stand in requiring all compound drugs to require prior authorization through the use of a drug formulary and treatment guidelines. Figure 16 provides examples of controls in place in a few states.

COMPOUNDS

Effective ControlsSome ControlsLimited/No Controls

Figure 15Compound Legislation Status by State

37 | Healthcare Solutions

Page 39: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

LEGISLATIVE AND REGULATORY HIGHLIGHTS

Effective Compound Controls

Alaska • Compounds are not reimbursable in workers’ compensation

Oklahoma • All compounds require prior authorization• Reimbursement is at the ingredient level and AWP x 90% + $5.00 dispensing fee

Mississippi

• Compounds itemized out by ingredient and paid at MS Fee Schedule plus a single dispensing fee = $5.00 per compound

• If the NDC for any ingredient is a repackaged drug, reimbursement for the repackaged ingredient(s) shall be as above provided

• Reimbursement for a compound cream medication is limited to maximum total reimbursement of three hundred dollars ($300) for one hundred twenty (120) grams per month

• Any additional quantity over and above this one hundred twenty (120) gram limit requires further documentation and prior authorization (pre-certification)

Some Compound Controls

Colorado

Compounds are reimbursed using proprietary codes:• Category I Z0790 Fee $75 per 30 day supply = Any anti-inflammatory medication or any local anesthetic

single agent• Category II Z0791 Fee $150 per 30 day supply = Any anti-inflammatory agent or agents in combination

with any local anesthetic agent or agents• Category III Z0792 Fee $250 per 30 day supply = Any single agent other than anti-inflammatory agent or

local anesthetic, either alone or in combination with anti-inflammatory or local anesthetic agents• Category IV Z0793 Fee $350 per 30 day supply = Two or more agents that are not anti-inflammatory or

local anesthetic agents, either alone or in combination with other anti-inflammatory or local anesthetic agents

• All ingredient materials must be listed by quantity used per prescription. Category fees include materials, shipping and handling and time. Regardless of how many ingredients or what type, compounded drugs cannot be reimbursed higher than the Category IV fee.

Georgia

• Reimbursement at AWP - 50% plus compound fee $20• Compounds itemized out at ingredient level; repack language for ingredients back to original

manufacturer• Non-sterile compounds reimbursement only considered with 1-3 FDA approved active ingredients

Limited/No Controls

Illinois • No compound medication workers’ compensation fee schedule

New Jersey • No compound medication workers’ compensation fee schedule

Figure 16Examples of states with effective compound controls versus those with some or limited to no controls.

2015 Drug Trends Report | 38

Page 40: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

LEGISLATIVE AND REGULATORY HIGHLIGHTS

PHARMACY DRUG FORMULARIES

Texas was one of the first states, after Ohio and Washington, to adopt a drug formulary and publish data of its effectiveness on costs and utilization. Oklahoma, through emergency regulations, adopted a drug formulary similar to Texas and is in the process of adopting permanent rules.

One reason these drug formularies are effective is that the states that have formularies have also adopted medical treatment guidelines. Having either one of these cost containing tools without the other essentially makes them less effective in controlling drug costs by changing prescribing patterns.

In late 2014, and now in early 2015, formularies have become a hot topic in several jurisdictions. We are aware, as of date, that Louisiana, Tennessee, Maine, Michigan, Arkansas, Montana and California have either introduced legislation, proposed regulations or are in discussions to add a drug formulary to their workers’ compensation strategies.

Figure 17As of the date of this publication, Louisiana, Tennessee, Maine, Michigan, Arkansas, Montana and California have either

introduced legislation, proposed regulations or are in discussions to add a drug formulary to their jurisdiction.

39 | Healthcare Solutions

Page 41: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Montana – D747/S292 – Authorizes a drug formulary applying to injured workers; establishes rules for payment and reimbursement of compound drugs; allows the department to establish a maximum morphine equivalent for Schedule II and III narcotics within the formulary; provides that the insurer is not liable for brand name drugs if the generic equivalent is available; creates a process for an independent medical review for prescription drugs denied by the insurer; and provides rule-making authority to the Department of Labor and Industry.

Arkansas – Treatment Guidelines and Drug Formulary (proposed legislation) - The scope and duration of medical treatment under workers’ compensation shall be provided in accordance with the current edition of Official Disability Guidelines (ODG), as published by the Work Loss Data Institute. The employer or insurance carrier shall not be responsible for charges for medical treatment that is not provided in accordance with ODG unless: (1) it was provided in a medical emergency, (2) it was preauthorized by the employer or insurance carrier, or (3) it was approved by the Workers’ Compensation Commission upon a finding based on clear and convincing evidence provided by or at the direction of the treating physician. Medications with the status of ‘N’ in the ODG Drug Formulary require prior authorization.

LEGISLATIVE AND REGULATORY HIGHLIGHTS

Examples of Drug Formulary Legislation and Regulations

2015 Drug Trends Report | 40

California – AB 1124 – This bill would require the administrative director to establish a formulary for the purposes of prescribing prescription medications.

Page 42: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Figure 18Formulary Exception Processing

LEGISLATIVE AND REGULATORY HIGHLIGHTS

Prior Authorization

Prior authorization required for drugs excluded from the closed formulary which must go through a certified Utilization Review Agent.

Closed Formulary Excludes:

• ODG Appendix A ‘N’ Drugs• Compounds that contain ‘N’ drug ingredients• Any investigational or experimental drug

Initial Pharmacy Care

• Drugs included in closed formulary and dispensed do not require prior authorization and are not subject to retrospective review.

• Drugs excluded from the closed formulary do not require prior authorization but are subject to retrospective review.

Treatment Guidelines

• Drugs included in the closed formulary and recommended by the treatment guidelines do not require prior authorization.

• Drugs included in the closed formulary that exceed or are not addressed in the treatment guidelines do not require prior authorization.

Prior Authorization

Prior authorization required for drugs excluded from the closed formulary which can be obtained from the employer or carrier. Must include the doctor’s drug regimen plan of care.

Closed Formulary Excludes:

• ODG Appendix A ‘N’ Drugs• All compounds• Any investigational or experimental drug• Drugs not preferred, exceed or are not

addressed by ODG

Initial Pharmacy Care

No provisions

Treatment Guidelines

• Drugs included in the closed formulary do not require prior authorization.

• Drugs that exceed, not addressed or not preferred DO require prior authorization.

TEXASOKLAHOMA

Formulary Management: A Review of Oklahoma and Texas

41 | Healthcare Solutions

Page 43: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

LEGISLATIVE AND REGULATORY HIGHLIGHTS

So are the outcomes similar between Oklahoma and Texas when it comes to the ODG formulary? That is open to interpretation. Those following the issue are familiar with the success Texas had with management of non-formulary drugs – those defined as a ‘N’ status by the Official Disability Guidelines.

Oklahoma has not yet experienced the overall success that Texas has when comparing legacy and new transaction activities; however, Oklahoma did experience positive results:

• Decrease in the number of ‘N’ drug prescriptions• Lower ‘N’ drug spend• Decrease in opioid prescription count• No change in opioid spend

Point of interest in the comparison between Texas and Oklahoma is that a formulary is only a vehicle to manage drug utilization. How that formulary is supported through regulation drives how successful it may be. Oklahoma demonstrates that even with looser rules around management, there are still positive impacts supporting reduced spend and enhanced claimant safety. Expect more states to implement formulary controls in 2015.

2015 Drug Trends Report | 42

LEGEND:Pre-Implementation Claims - claims within the year prior to regulation enactment

Post-Implementation Claims - claims within the year after regulation enactment

Figure 192014 Results by Category for Texas and Oklahoma

* MED - Morphine Equivalent Dose

0%

5%

10%

15%

20%

25%

‘N’ Drug Prescriptions vs. Spend

3%

12%

6%7%

6%

21%

7%

17%

‘N’ Drug Prescriptions

TEXAS OKLAHOMA

‘N’ Drug Spend

TEXAS OKLAHOMA

Opioid Prescriptions vs. Spend

40%39%

47%51%

22%23%27% 27%

Opioid Prescriptions

TEXAS OKLAHOMA

Opioid Spend

TEXAS OKLAHOMA

Average MED* - Texas

45 43VS

Average MED* - Oklahoma

54 49VS

0%

10%

20%

30%

40%

50%

60%

Data is based on Healthcare Solutions’ clients in these states.

Page 44: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

IN CONCLUSION

43 | Healthcare Solutions

Trends of higher inflationary rates for generic medications will persist. Compound medication utilization and cost will also continue to rise. In 2014, hydrocodone with acetaminophen combination products (HCPs) decreased by 20% due to the scheduling change. We continue to see an overall decrease in opioid utilization. In relation to cost management, HCP price increases were offset by the gains in decreased utilization. The introduction of higher cost specialty medications will need to be monitored closely, as with the Hepatitis C medications coming into the arena in 2014.

While all of those trends sound like they come with a hefty price tag for the payers, Healthcare Solutions promises to continue to develop innovative clinical programs to help lower clients’ medical spend. In 2014, those programs helped to offset inflationary factors by more than 50% overall. We are committed to enhancing clinical programs, providing new network management tools and solutions to the growing compounded medication problem. Your PBM is a partner in your business and we take that very seriously at Healthcare Solutions. Your problems become our problems. Our solutions become your solutions.

IN CONCLUSION

Healthcare Solutions and its subsidiaries, Cypress Care, Procura Management, ScripNet and Modern Medical, are now part of the Catamaran family of companies. We deliver integrated medical cost management solutions to over 750 customers in workers’ compensation and auto/personal injury protection markets. The company’s clinical- and technology-based services include pharmacy benefit management, ancillary services, PPO networks, medical bill review, case management and Medicare Set-Aside services.

ABOUT HEALTHCARE SOLUTIONS

Page 45: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

Average Average Wholesale Price (AAWP): Aggregate pricing of AWPs either within a class or type of medication.

Average Wholesale Price (AWP):Medication reference price suggested by drug manufacturers and wholesalers. Published by First DataBank, Medi-Span, Red Book and Elsevier Gold Standard.

Compound Drugs:

Drugs produced in licensed pharmacies by the mixing of drugs pursuant to a physician’s order. NDC numbers and published pricing may be associated with the active ingredients, but not typically with the final compounded product.

Days Supply: The number of days a prescription is expected to provide therapy based on the quantity prescribed and dosing schedule.

Drug Mix: The observed mix in utilization of brand and generic medications both within and across therapeutic classes.

Generic Dispensing Rate (GDR): The percentage of prescriptions dispensed with a generic.

Generic Substitution Rate (GSR):The percentage for all medications dispensed as generic; measures how often a generic is dispensed when a generic version of a prescribed drug exists.

Price: The amount billed per days supply or per prescription.

Repackaged Drugs:

Drugs which are repackaged from larger package sizes into smaller units for sales and distribution. Once repackaged, they are assigned new NDC numbers and are often used for physician dispensing.

Spend: The amount billed per injured worker.

Utilization: The days supply dispensed per injured worker or the number of prescriptions per injured worker.

DEFINITIONS

2015 Drug Trends Report | 44

Page 46: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

REFERENCES

45 | Healthcare Solutions

1. U.S. Food and Drug Administration. (2010). About FDA: Generic competition and drug prices. Retrieved from http://www.fda.gov/AboutF-DA/CentersOffices/OfficeofMedicalProductsandTobacco/CDER/ucm129385.htm

2. U.S. Food and Drug Administration. (2012). Facts about generic drugs. Retrieved from http://www.fda.gov/Drugs/ResourcesForYou/Consum-ers/BuyingUsingMedicineSafely/UnderstandingGenericDrugs/ucm167991.htm

3. U.S. Food and Drug Administration. (2015). Medwatch: The FDA safety information and adverse event reporting program. Retrieved from http://www.fda.gov/Safety/MedWatch/

4. Healthcare Solutions. (2014). DAW study. Data on file.

5. Mullard, A. (2014). FDA drug approvals. Nature Reviews Drug Discovery. 14:77-81.

6. Gavlin, R., & Longman, R. (2014). We need more transparency on the cost of specialty drugs. Harvard Business Review. Retrieved from https://hbr.org/2014/11/we-need-more-transparency-on-the-cost-of-specialty-drugs

7. Midwest Business Group on Health. (n.d.). No single definition for specialty drugs. Retrieved from http://www.specialtyrxtoolkit.com/spe-cialty-pharmacy-101/no-single-definition-specialty-drugs

8. Centers for Disease Control and Prevention. (2015). Hepatitis c FAQ for the public. Retrieved from http://www.cdc.gov/hepatitis/C/cFAQ.htm

9. Jagger, J., Puro, V., & Carli, G. (2002). Occupational transmission of hepatitis c virus. The Journal of the American Medical Association. 288(12):1469-1471. Available by subscription at http://jama.jamanetwork.com/article.aspx?articleid=1032056

10. Ward, J. (2014). Hepatitis c: 25 years from discovery to cure. Retrieved from http://www.medscape.com/features/slideshow/hepatitis-c. Registration and login required.

11. Pfizer Inc. (2015). Pfizer and Lilly preparing to resume phase 3 chronic pain program for tanezumab. [Press Release]. Retrieved from http://www.pfizer.com/news/press-release/press-release-detail/pfizer_and_lilly_preparing_to_resume_phase_3_chronic_pain_program_for_tan-ezumab

12. OptumRX. (2015). Biologics bigger more complex. Retrieved from https://www.optum.com/content/dam/optum/resources/articles/orx8219_150120_biologicdrugsinfographic2.pdf

13. U.S. Food and Drug Administration. (2014). Compounding and the FDA: Questions and answers. Retrieved from http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCompounding/ucm339764.htm

14. CA Labor Code 4600.2

15. Liberman, J.N., & Roebuck, C. (2010). Prescription drug costs and the generic dispensing ratio. J Manag Care Pharm. 16(7):502-06.

16. Vuilleumier, P., Stamer, U., & Landau, R. (2012). Pharmacogenomic considerations in opioid analgesic. Pharmacogenomic Pers Med. 5:73-87.

17. Tantisira, K., & Weiss, S. T. (2014). Overview of pharmacogenomics. Available by subscription at http://www.uptodate.com/contents/over-view-of-pharmacogenomics

18. Gaedigk, A. (2013). Complexities of CYP2D6 gene analysis and interpretation. Int Rev Psychiatry. 25(5):534-553.

19. PharmGKB. (n.d.). CPIC: Clinical pharmacogenetics implementation consortium. Retrieved from http://www.pharmgkb.org/page/cpic

20. Arlotta, C. (2015). Opioid misuse in chronic pain patients is around 25%, new study shows. Retrieved from http://www.forbes.com/sites/cjar-lotta/2015/04/01/opioid-misuse-in-chronic-pain-patients-is-around-25-new-study-shows/

21. Martin, B., Fan, M., Edlund, M., DeVries, A., Brennan Braden, J., & Sullivan, M. (2011). Long-term chronic opioid therapy discontinuation rates from the TROUP study. Journal of General Internal Medicine. 26(12):1450-1457.

22. Pizzo, P. A., & Clark, N. M. (2012). Alleviating suffering 101 - pain relief in the United States. The New England Journal of Medicine. 197-199. Available by subscription at http://www.nejm.org/doi/full/10.1056/NEJMp1109084

23. Work Loss Data Institute. (2015). Official disability treatment guidelines (ODG) (web version). Retrieved from http://www.odg-twc.com/odgtwclist.htm

24. WCRI-CA

25. WebMD. (2014). Anticonvulsants for chronic pain. Retrieved from http://www.webmd.com/sleep-disorders/anticonvulsants-for-chronic-pain

26. Drugs.com. (n.d.). Cymbalta approval history. Retrieved from www.drugs.com/history/cymbalta.html

Page 47: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report
Page 48: Healthcare Solutions' 2015 Workers' Compensation Drug Trends Report

2736 Meadow Church Road, Suite 300Duluth, GA 30097(866) 810-4332healthcaresolutions.com