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NCCI’s 2016 Annual Issues Symposium
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Workers Compensation and Prescription Drugs: 2016 UpdateSean Cooper, FCAS, MAAADirector and Senior ActuaryMay 5, 2016
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Why Are Prescription Drugs anImportant Topic in WC?
The projected prescription drug (Rx) share of total workers compensation (WC) medical costs for Accident Year 2014 is 17% Rx averages approximately 45% to 50% of
annual medical costs for active claims older than 10 years
Rx payments reported through NCCI’s Medical Data Call were over $1 billion in 2014 Rx is among the most active subjects of
legislative activity in WC In 2014, Rx price inflation was higher than
overall medical price inflation
2
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Recent WC Rx Findings
Rx prices increased 11% in 2014. This is substantially higher than the 10-year average increase of 4%. Rx utilization declined by 4%. This kept the
growth in Rx costs per active claim to 6% in 2014. Controlled substances prices increased 16% in
2014 while utilization was down 7%. Both physician-dispensed Rx prices and utilization
increased 4% in 2014. The share of generic Rx costs increased in 2014
due to increases in prices and utilization.
3
NCCI’s 2016 Annual Issues Symposium
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
The Big Picture
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Recent Activity Regarding Rx in WC
Drug Formularies
Limitations on Physician
Dispensing and Repackaged Drugs
Opioid Treatment Plan/Agreement
and Drug Adherence
Choice of Pharmacy
Medical Conditions Resulting From WC Prescription Drugs Are Compensable
Pharmacy vs. PBM (Pharmacy Benefit
Manager)
5
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
The Incremental Rx Share of Total Medical Costs Increases Rapidly as Claims Age
5%7%
13%
22%
28%
32%36%
39%42%
45%47%
49% 51% 52% 51% 50% 49% 48%50%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Rx
Sh
are
of T
otal
Med
ical
Cos
ts
Claim Maturity in Years
Projected 2014 Accident Year Share
6
NCCI analysis based on Medical Data Call, for prescriptions provided in Service Years 2011 to 2014.Rx shares shown are the projected shares for Accident Year 2014. For example, we project that Rx will be 22% of medical costs paid in 2017 for injuries that occurred in 2014. Data used with permission.
The projected Rx share of total medical costs for Accident Year 2014 is 17%
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Cost = Price x Utilization
Cost—the total dollars paid per claim Price—what is paid for individual services Utilization—the intensity of services provided
per claim The number of units (tablets, capsules, etc.) of
Rx provided per claim The mix of Rxs provided on a claim, e.g.,
OxyContin versus Ibuprofen
7
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Rx Costs per Active Claim Continue to Grow
$343 $379
$406 $429
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
2011 2012 2013 2014
Rx
Cos
ts p
er A
ctiv
e C
laim
Service Year
+6%+7%
+10%
2011 to 2014 Cumulative Change is 25%
8
NCCI analysis based on Medical Data Call, for prescription drugs with a National Drug Code (NDC) provided in Service Years 2011 to 2014. Active Claim is a claim with at least one medical service during the service year. Data used with permission.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Rx Prices Increased 11% in 2014
6%6%
11%
5%
1%
-4%
10%
7%
6%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
2011–2012 2012–2013 2013–2014
% C
han
ge
Service Year
Price Change Utilization Change Rx Cost Change per Active Claim
9
NCCI analysis based on Medical Data Call, for prescription drugs with an NDC provided in Service Years 2011 to 2014. Price changes are based on a Fisher index. Data used with permission.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Rx Utilization Components
-2%
1% 1%
5%
0%
-1%
1%0%
-4%-6%
-4%
-2%
0%
2%
4%
6%
2011–2012 2012–2013 2013–2014
% C
han
ge
Service Year
Mix of Drugs PrescribedShare of Active Claims Receiving a PrescriptionPrescriptions per Active Claim With at Least One Prescription
10
NCCI analysis based on Medical Data Call, for prescription drugs with an NDC provided in Service Years 2011 to 2014. Data used with permission.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
2014 Rx Costs per Active Claim
11
NCCI analysis based on Medical Data Call, for prescription drugs with an NDC provided in Service Year 2014.High > $582 and Low < $202. Ranges are based on the arithmetic mean ± one standard deviation. Data used with permission.
$429
Countrywide
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Rx Cost Containment
Pharmacy Benefit Managers
Pharmacy Networks
Utilization Reviews
Drug Fee Schedules
Prescription Drug Monitoring Programs (PDMPs)
Drug Formularies and Treatment Guidelines
12
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
A closed formulary is a list of drugs with an associated reimbursement status
For example, for ODG (adopted by TX, OK, and in 2016 TN):
On average, 24% of drug costs and 17% of prescriptions in a service year are for N drugs
The intent of formularies is to use evidence-based guidelines in order to: Reduce over prescribing (opioids in particular) Maximize healing and improve return-to-work outcomes Contain drug costs
Status Description
Y Preauthorized for use
N Not allowed, or needs authorization
* Both Y and N are possible depending on intended purpose
13
Closed Drug Formulary
The Official Disability Guidelines (ODG) Drug Formulary is a product of the Work Loss Data Institute.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Potential Rx Costs Savings From ODG Formulary
14
NCCI analysis based on Medical Data Call, for prescription drugs with an NDC provided in Service Year 2014.The Official Disability Guidelines (ODG) Drug Formulary is a product of the Work Loss Data Institute. Data used with permission.
NCCI’s 2016 Annual Issues Symposium
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Controlled Substances and Physician Dispensing
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Rx Costs per Active Claim Continue to Grow
$201 $232 $255 $265
$101$107
$110 $119$40 $40
$41 $44
$343 $379
$406 $429
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
2011 2012 2013 2014
Rx
Cos
ts p
er A
ctiv
e C
laim
Service Year
All Other Rx Controlled Substances Physician Dispensing
+8%
+8%
+4%
+1%
+3%
+10%
+0%
+5%
+15%
16
NCCI analysis based on Medical Data Call, for prescription drugs with an NDC provided in Service Years 2011 to 2014.Controlled substances are Rxs classified as Schedule 2 and 3 by the Drug Enforcement Administration, not dispensed by a physician. Physician dispensing includes controlled substances. Data used with permission.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
2014 Change in Rx Costs per Active Claim
17
NCCI analysis based on Medical Data Call, for prescription drugs with an NDC provided in Service Years 2013 to 2014. Data used with permission.
+6%
Countrywide
(Less than 0%)
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
States With a Decrease in 2014 Rx Costs per Active Claim
$122 $108
$189 $178
$255 $251 $78
$67
$65 $67
$71 $68
$3$3
$14 $8
$134 $118
$203 $177
$268 $253
$460 $437
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
OR-2013 OR-2014 AR-2013 AR-2014 FL-2013 FL-2014
Rx
Cos
t p
er A
ctiv
e C
laim
All Other Rx Controlled Substances Physician Dispensing
18
NCCI analysis based on Medical Data Call, for prescription drugs with an NDC provided in Service Years 2013 and 2014.Controlled substances are Rxs classified as Schedule 2 and 3 by the Drug Enforcement Administration, not dispensed by a physician. Physician dispensing includes controlled substances. Data used with permission.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
States With an Increase in 2014 Rx Costs per Active Claim
$127 $145 $165 $200
$304 $331 $84$100 $57
$57
$134
$177
$6$5
$74
$126
$37
$44
$217 $250
$296
$383
$474
$551
$0
$100
$200
$300
$400
$500
$600
MA-2013 MA-2014 IL-2013 IL-2014 AZ-2013 AZ-2014
Rx
Cos
ts p
er A
ctiv
e C
laim
All Other Rx Controlled Substances Physician Dispensing
19
NCCI analysis based on Medical Data Call, for prescription drugs with an NDC provided in Service Years 2013 and 2014.Controlled substances are Rxs classified as Schedule 2 and 3 by the Drug Enforcement Administration, not dispensed by a physician. Physician dispensing includes controlled substances. Data used with permission.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Controlled Substances Prices Increased 16%
4%5%
16%
2%
-2%
-7%
5%3%
8%
-10%
-5%
0%
5%
10%
15%
20%
2011–2012 2012–2013 2013–2014
% C
han
ge
Service Year
Price Change Utilization Change Rx Cost Change per Active Claim
20
NCCI analysis based on Medical Data Call, for controlled substances with an NDC provided in Service Years 2011 to 2014.Controlled substances are Rxs classified as Schedule 2 and 3 by the Drug Enforcement Administration, not dispensed by a physician. Price changes are based on a Fisher index. Data used with permission.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Controlled Substances Utilization Components
-2%
2%2%
1%
-3%
-5%
2%
-1%
-4%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
2011-2012 2012-2013 2013-2014
% C
han
ge
Service Year
Mix of Drugs PrescribedShare of Active Claims Receiving a PrescriptionPrescriptions per Active Claim Receiving at Least One Prescription
21
NCCI analysis based on Medical Data Call, for controlled substances with an NDC provided in Service Years 2011 to 2014.Controlled substances are Rxs classified as Schedule 2 and 3 by the Drug Enforcement Administration, not dispensed by a physician. Data used with permission.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
2014 Controlled Substances Share of Rx Costs
22
NCCI analysis based on Medical Data Call, for controlled substances with an NDC provided in Service Year 2014.Controlled substances are Rxs classified as Schedule 2 and 3 by the Drug Enforcement Administration. High > 35.0% and Low < 22.5%. Ranges are based on the arithmetic mean ± one standard deviation. Data used with permission.
29%
Countrywide
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Physician-Dispensed Rx Utilization Increased 4% in 2014
4%
1%
4%
-4%
0%
4%
0%1%
8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
2011–2012 2012–2013 2013–2014
% C
han
ge
Service Year
Price Change Utilization Change Rx Cost Change per Active Claim
23
NCCI analysis based on Medical Data Call, for physician-dispensed prescriptions with an NDC provided in Service Years 2011 to 2014. Price changes are based on a Fisher index. Data used with permission.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Mix of Rxs Is a Major Contributor to Utilization for Physician Dispensing
Utilization Components
-5%
4%
10%
7%
0%
-4%
-7%
-4%-3%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
2011–2012 2012–2013 2013–2014
% C
han
ge
Service Year
Mix of Drugs PrescribedShare of Active Claims Receiving a PrescriptionPrescriptions per Active Claim Receiving at Least One Prescription
24
NCCI analysis based on Medical Data Call, for physician-dispensed prescriptions with an NDC provided in Service Years 2011 to 2014. Data used with permission.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved. 25
2014 Physician-Dispensed Share of Rx Costs
NCCI analysis based on Medical Data Call, for physician-dispensed prescriptions with an NDC provided in Service Year 2014.High > 16.2% and Low < 1.7%. Ranges are based on the arithmetic mean ± one standard deviation. Data used with permission.
10%
Countrywide
(Medium)
NCCI’s 2016 Annual Issues Symposium
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Top Drugs in Workers Compensation
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Top Drugs by Cost
27
Drug Name
BrandName/Generic
TherapeuticClass
2013 Cost Ranking
2014 Cost Ranking
2014 Share of Total Rx Costs
OXYCONTIN Brand Name Analgesics 1 1 6.2%LYRICA Brand Name CNS Drugs 2 2 5.5%GABAPENTIN Generic CNS Drugs 4 3 4.7%OXYCODONE-ACETAMINOPHEN Generic
Analgesics 9 4 3.8%CELEBREX Brand Name Antiarthritics 6 5 3.4%DULOXETINE HCL Generic Psychotherapeutic 132 6 2.9%LIDOCAINE Generic Anesthetics 24 7 2.9%MELOXICAM Generic Antiarthritics 8 8 2.8%HYDROCODONE-ACETAMINOPHEN Generic
Analgesics 7 9 2.7%OXYCODONE HCL Generic Analgesics 14 10 2.0%
NCCI analysis based on Medical Data Call, for prescription drugs with an NDC provided in Service Years 2013 and 2014.Data used with permission.
• DULOXETINE HCL is the generic formulation of Cymbalta. Cymbalta’s patent expired on 12/11/2013. Cymbalta’s rank changed from 3rd to 47th between 2013 and 2014.
• LIDOCAINE is the generic formulation of Lidoderm. Lidoderm’s patent expired on 9/15/2013. Lidoderm’s rank changed from 5th to 34th between 2013 and 2014.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
10 Drugs Explain More Than Half of the 2014 Change in Prices
28
Drug Name
BrandName/Generic
DEA Schedule
2013 Price Paid per
Unit*
2014 Price Paid per
Unit
2014 Change in Price Paid per Unit
OXYCODONE-ACETAMINOPHEN Generic 2 $1.19 $1.61 35%
LYRICA Brand Name 5 $3.74 $4.54 21%
OXYCODONE HCL Generic 2 $0.63 $1.01 60%
CELEBREX Brand Name None $5.63 $6.92 23%
OXYCONTIN Brand Name 2 $6.73 $7.27 8%
DUEXIS Brand Name None $6.05 $10.40 72%
BACLOFEN Generic None $0.65 $1.22 86%
PERCOCET Brand Name 2 $7.15 $9.18 28%
MORPHINE SULFATE ER Generic 2 $2.35 $2.94 25%
IBUPROFEN Generic None $0.30 $0.43 44%
NCCI analysis based on Medical Data Call, for prescription drugs with an NDC provided in Service Years 2013 and 2014.*2013 price paid per unit based on 2014 NDC distribution. Data used with permission.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Generic Rx Utilization Increased 13% in 2014
0%
-1%
7%
12%
8%
13%12%
7%
21%
-5%
0%
5%
10%
15%
20%
25%
2011–2012 2012–2013 2013–2014
% C
han
ge
Service Year
Price Change Utilization Change Rx Cost Change per Active Claim
29
NCCI analysis based on Medical Data Call, for prescription drugs with an NDC provided in Service Years 2011 to 2014.Price changes are based on a Fisher index. Data used with permission.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Brand Name Rx UtilizationDecreased 18% in 2014
10%12%
14%
-1%
-4%
-18%
9%7%
-7%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
2011–2012 2012–2013 2013–2014
% C
han
ge
Service Year
Price Change Utilization Change Rx Cost Change per Active Claim
30
NCCI analysis based on Medical Data Call, for prescription drugs with an NDC provided in Service Years 2011 to 2014.Price changes are based on a Fisher index. Data used with permission.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Generic Shares of Rx Costs and Prescriptions Both Increased in 2014
44% 45% 45%51%
76% 77% 78%82%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014
Gen
eric
Sh
are
of R
x
Service Year
Rx Costs Prescriptions
31
NCCI analysis based on Medical Data Call, for prescription drugs with an NDC provided in Service Years 2011 to 2014.Data used with permission.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
3 Drugs Explain Most of the 2014 Change in the Generic Share of Rx Costs
32
Drug Name
2013 Price Paid per Unit
2014 Price Paid per Unit
2014 Changein Price Paid per Unit Contribution Recent Events
DULOXETINE HCL $5.47 $5.70 4% 38%
The brand name equivalent formulation’s (Cymbalta) patent expired on 12/11/2013
LIDOCAINE $6.08 $6.89 13% 27%
The brand name equivalent formulation’s (Lidoderm) patent expired on 9/15/2013
OXYCODONE-ACETAMINOPHEN $0.92 $1.61 74% 20% Price increased
NCCI analysis based on Medical Data Call, for prescription drugs with an NDC provided in Service Years 2013 and 2014.Data used with permission.
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Concluding Remarks
33
Rx continue to be a significant share of WC costs, largely due to increasing prices Legislative reform and stakeholders’ concerted
efforts to contain costs have contributed to dampened utilization of Rxs in WC Will formularies, physician-dispensing laws, and
other reform efforts have the intended impact on WC experience? Choice of pharmacy and the role of PBMs and
PDMPs are some of the emerging themes in the dynamic world of Rxs and WC
NCCI’s 2016 Annual Issues Symposium
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Appendix
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
NCCI Medical Data Call
The NCCI Medical Data Call (MDC) captures transaction-level detail on medical bills processed on or after July 1, 2010, including dates of service, charges, payments, procedure codes, and diagnosis codes
Carriers are not required to report transactions for services provided more than 30 years after the date of the injury
NCCI collects the MDC for 43 jurisdictions*
*The 43 jurisdictions are AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, MD, ME, MI, MN, MO, MS, MT, NC, NE, NH, NJ, NM, NV, NY, OK, OR, RI, SC, SD, TN, UT, VA, VT, WI, and WV.
35
© Copyright 2016 NCCI Holdings, Inc. All Rights Reserved.
Data Source
For this study, the Medical Data Call experience evaluated as of March 2015 was restricted to:
Services provided between January 1, 2011 and December 31, 2014
States included are: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, MD, ME, MN, MO, MS, MT, NC, NE, NH, NJ, NM, NV, NY, OK, OR, RI, SC, SD, TN, UT, VA, VT, and WI
State-specific results are based on state of jurisdiction
36