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Rx Rundown

Employers face numerous challenges in managing pharmacy care in workers’ compensation. The opioid epidemic, emerging drug classes and dispensing channels, and numerous regulatory changes all require new levels of data analysis. To better understand the trends behind this data we've provided some insightful perspectives.

Topical Treatments - Their Impact on Drug Spend and Utilization

By Nikki Wilson, Director, Pharmacy Product Development
May 14, 2018

Topicals place fourth in overall cost among the 10 most expensive drug classes in workers’ comp. These include prescription nonsteroidal anti-inflammatory drugs (NSAIDs) and other formulations, such as creams and patches designed to treat pain. We’ve outlined this class and its impact on drug spend and utilization in part one of our drug trends. To learn more about Topicals watch this short video.

Watch the video

AWP Trends — Understanding the Forces That Drive Drug Prices

By Dannielle Foroozandeh, Director, Pharmacy Product Development
May 7, 2018

A drug’s Average Wholesale Price (AWP) is a simple benchmark for distinguishing the cost of one medication from that of another. Policymakers and insurers use this important figure in determining fee schedules and reimbursement rates. The effect of AWP on a client depends on the mix of drugs prescribed and the utilization controls that are in place. Regardless, by examining the forces that conspire to push AWP higher or lower, we can gain a deeper understanding of the pharmacy landscape.

The AWP trends revealed in our 2017 Drug Trends report offer a helpful look at what’s driving drug costs. Last year, First Script's overall AWP increased 4.4%. This was less than the previous year’s AWP growth of 5.9%. An increase of 10.9% in the cost of brand drugs accounted for nearly all of the increase in overall AWP. The AWP increase for generic drugs was negligible and therefore helped mitigate the overall AWP impact on the prescription cost per claim.

Among brand drugs, OxyContin® and Lyrica® stood out for their role in propelling AWP. OxyContin® was the most expensive and most utilized sustained-release opioid brand medication in our book of business. OxyContin® experienced a 10.5% increase in AWP. Lyrica®, an anticonvulsant used to treat neuropathic pain, was the most costly and utilized brand medication overall in our book of business. It saw an AWP increase of 15.2% in 2017.

There were also noteworthy AWP increases for the short-acting opioid, topical, and nonsteroidal anti-inflammatory drug (NSAID) classes. Short-acting opioids increased 9.9% overall. Increases in Percocet® (8.8%) and Nucynta® (14.0%) drove the higher costs. Topicals, meanwhile, increased 12.8%. The overall increase followed jumps in the price of Flector® (13.1%) and Pennsaid® (22.7%). NSAIDs increased 20.2%. Sizable increases in Duexis® (24.5%) and Vimovo® (26.8%) pushed overall prices higher.

So what causes these changes in AWP each year? Unfortunately, there isn’t a single driver. Many factors can have an impact. The following are some of the most common elements that typically drive changes in AWP:

Price hikes ahead of a patent expiration

  • When a brand drug nears the end of its patent protection we typically see the price of that drug increase as the manufacturer attempts to recoup the research and development costs it put into developing the drug.

Consolidation among drug manufacturers

  • Over the last decade, drug makers began to consolidate to achieve the scale needed to maintain profitability. Typically, when a branded drug loses patent protection, multiple generic manufacturers produce the drug and compete on price. However, following a wave of industry consolidation, fewer manufacturers are applying to the U.S. Food and Drug Administration (FDA) for permission to produce drugs that have come off patent. With substantially fewer manufacturers churning out a particular generic drug—in some cases only two or three producers—generic prices have crept up with time.

Stricter regulations

  • The FDA has tightened quality control, which has forced manufacturers to invest more in their quality systems.

Drug shortages due to manufacturing issues

  • When one or more manufacturers producing a drug runs short of inventory, demand overtakes supply and prices rise. According to the FDA, quality issues and manufacturing challenges are major causes of drug shortages.

A focus on new and more profitable drugs

  • A manufacturer might cease production of a drug simply to reallocate resources to another product or to invest in more profitable initiatives (e.g., biosimilars).

The continued growth in AWP emphasizes the importance of working with a Pharmacy Benefit Manager (PBM) to manage both cost and utilization. First Script offers many tools and strategies to help mitigate the impact of AWP inflation. These include:

  • Increasing network penetration — for the greatest control over both cost and utilization, the script must be captured in-network
  • Generic enforcement — requiring the substitution of a brand medication for a generic equivalent when available
  • Evidenced-based clinical programs — various provider-outreach programs, therapeutic-alternative education, and advanced analytics

In addition, open communication and collaboration among pharmacies, payers, injured workers and treating physicians remain critical to confirming a medication is appropriate in terms of how it is used and its cost. The result of such a synchronized effort is a decrease in overall medication costs while maintaining high standards of care. That’s a win for everyone.

Drops in MED Indicate We’re Making Important Progress

By Nikki Wilson, Director, Pharmacy Product Development
April 30, 2018

Part One of Coventry’s Drug Trends Series reported the largest drop in Morphine Equivalent Dose (MED) in the last three years. As an indicator of increased chances for adverse outcomes, including death from overdose, these and other inroads are essential in the effort to curtail opioid misuse. To learn more about MED and its impact watch our short video.

Watch the video

A Look at the Foundation of Work Comp Pharmacy Trends

By Dannielle Foroozandeh, Director, Pharmacy Product Development
April 23, 2018

Hello and welcome to Rx Rundown! We are excited to kick off this effort by discussing the workers’ compensation trends we have identified in our annual Drug Trends Series and to dig into some of the key drivers behind these trends. The first drug trends installment reviews key trends and highlights from the traditional retail and mail-order pharmacy view.

Over the years, PBMs have exclusively focused on this subset of prescriptions for reporting their impact on the client experience through discounts in pricing per script as well as point-of-sale edits for utilization management prior to the prescription being dispensed. That’s critical information to have but it doesn’t reveal the complete picture. We’ve seen a shift in medication-dispensing patterns over the last few years in workers’ comp, and it has become clear that solely analyzing and reporting on medications dispensed through traditional means is no longer sufficient. A comprehensive view remains the most effective way to understand the full pharmacy landscape.

Taking a more comprehensive approach doesn’t diminish the importance of including key trends from the traditional view. We still need the traditional view to compare 2017 results to those in prior years, and to provide a valid market benchmark for the pharmacy experience where the most mature clinical- and cost-management tools are applied.

2017 Traditional View—Key Trends & Highlights

In 2017, First Script’s “traditional view” accounted for 69.6% of all pharmacy transactions and 71.2% of all pharmacy spend. Accordingly, the remaining prescriptions that were not accounted for in the traditional view represented 30.4% of all pharmacy transactions and 28.8% of all pharmacy spend. We will be discussing the trends associated with these non-traditional prescriptions in part two of our Drug Trends Series.

Within the traditional view there are three key metrics that the industry commonly reports:

• Cost per script
• Prescriptions per claim
• Total prescription cost per claim

Last year, we experienced a decrease of 0.2% in the overall cost per prescription, which was driven mostly by the drop in average wholesale price (AWP) for brand drugs, and an increased focus on drug-mix management by our clinical team. Double-digit declines in utilization of key drug classes such as opioids and compounds contributed to a 6.7% drop in overall utilization, or the number of scripts per claim. The decreases in cost per script and utilization resulted in a 6.8% decrease in overall prescription cost per claim for the traditional view.

A 1.6% points decline in opioid prescriptions with Morphine Equivalent Dose (MED) over 100, in addition to a 6.6% decline in overall MED per prescription, represented the largest drop in the last three years; this is great news for clients and patients alike. This significant decline in opioid utilization relates to a variety of factors. Most important are the strong partnerships being formed between First Script and our clients. First Script has worked diligently to build robust clinical programs to continuously reduce MED over the last seven years through:

• Early-intervention and outreach programs for prescribers and patients
• Education initiatives for physicians, injured workers, and adjusters
• Targeted focus groups to analyze and design strategies that reduce narcotic utilization
• State-based closed formularies, medical guidelines and other recently adopted regulatory measures
•  National emphasis on increasing physician use of Prescription Drug Monitoring Programs (PDMPs)

Compounds were another key drug class that experienced compelling trend changes in the traditional view. We saw a 60% plunge in cost per claim and a 52.7% drop in utilization. In the last few years, the number of compound medications prescribed for injured workers had overshadowed the growth of nearly every drug class with the exception of opioids. There was no single catalyst that touched off this welcome change. Instead, many factors helped restrict the use of compound medications to instances in which injured workers would likely realize medical improvement. These factors included:

•  Evaluation of compounds for clinical necessity at the drug-ingredient level
• Network oversight, scrutiny of compound providers and, in some cases, removal of providers from the network where necessary
• Advocacy for continued state-reform measures that require a compound’s medical necessity be demonstrated prior to dispensing
• Education efforts that empower claim evaluators to better make critical decisions around the approval of compound medications

The reversal of cost and utilization trends within the traditional space, are only possible through continued understanding of what occurs in both the managed and unmanaged space and with persistent advocacy by all stakeholders to drive change. That same determination also drives the welcome decreases we’ve seen in the opioid data. In all cases, the health and safety of injured workers should always come before profitability for prescribers and dispensers. We’re eager to report more successes in the coming years.

We hope you’ve enjoyed our inaugural Rx Rundown and we look forward to hearing your thoughts.

Meet some of our authors

Dannielle Foroozandeh, Director Pharmacy Product Development
Dannielle received her MBA from Pepperdine University, Graziadio School of Business and Management, and has been focused on developing innovative solutions in the managed care industry for the last eight years. She plays a key role in identifying unique opportunities and developing our products and solutions for managing complex workers’ compensation claims.
Nikki Wilson, Pharm.D., Director of Pharmacy Product Development
Wilson is a Pharm.D. who graduated with her Doctor of Pharmacy and MBA from Creighton University. Prior to joining First Script Nikki served as the Clinical Department Manager for Applied Underwriters for 5 years where she oversaw their Pharmacy Benefit Management (PBM) and home delivery programs and managed all clinical pharmacy operations.
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