Workers Compensation and Prescription Drugs: 2016 Update...Projected 2014 Accident Year Share 6 NCCI analysis based on Medical Data Call, for prescriptions provided in Service Years

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


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


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



The Big Picture


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


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%


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


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.


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.


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.


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


Rx Cost Containment

Pharmacy Benefit Managers

Pharmacy Networks

Utilization Reviews

Drug Fee Schedules

Prescription Drug Monitoring Programs (PDMPs)

Drug Formularies and Treatment Guidelines

12


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.


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.



Controlled Substances and Physician Dispensing


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.


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%)


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


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.


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


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.


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


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.


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.


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


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


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.


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)



Top Drugs in Workers Compensation


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.


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.


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


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.


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


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.


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.


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.


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



Appendix


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


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

Documents

Workers Compensation and Prescription Drugs: 2016 Update...Projected 2014 Accident Year Share 6 NCCI analysis based on Medical Data Call, for prescriptions provided in Service Years