Workers' Comp Pharmacy Spending Rose 5.4% In '08

NU Online News Service, April 20, 10:09 a.m. EDT

The workers' compensation industry experienced a 5.4 percent growth in total pharmacy spend per injured worker in 2008, according to a study by Tampa, Fla.-based comp insurance services firm PMSI.

A significant portion of the increase was attributed to a copyright action by Purdue Pharma, the manufacturer of OxyContin, which removed generic equivalents of that popular pain killer from the marketplace.

PMSI in its "2009 Annual Drug Trends Report for Workers' Compensation" said the spending increase it charted took into consideration both price and utilization changes.

The firm said that, as expected, the cost of narcotic analgesics continued to be the main driver of total medication spend in workers' compensation.

Painkillers had a price per prescription increase of 3.4 percent, most of which, it said, could be directly attributed to the dwindling supply of generic OxyContin drugs.

The impact of medication prices was 4.2 percent and represented the majority of the increase in pharmacy spend, while utilization of drugs made a much smaller contribution, the report said.

Beginning in early 2008, PMSI said there was an increase in the total price per prescription of long-acting OxyCodone products directly attributed to an increase in the use of the brand-name product.

Because OxyContin and its generic formulations accounted for 9.3 percent of total drug costs, the net result was a 0.9 percent increase in the average price for a prescription, said PMSI.

Price per prescription, said the report, will continue to rise as utilization of lower-cost generic formulations are replaced with the higher-cost brand formulations. As of December 2008, the use of generic formulations of OxyContin was down to 17.1 percent versus 64.2 percent in early 2007.

In addition, it noted that three new strengths of OxyContin were launched in 2008: 15 mg, 30 mg and 60 mg sustained-release tablets. This also contributed to the price impact associated with this medication, since these strengths were only available as brand formulations, said PMSI.

In 2008, the average price of a workers' compensation prescription increased by 4.2 percent. This was driven by both noncontrollable and controllable factors.

The noncontrollable factors, the report said, included:

o AWP (average wholesale price) increases, which were predominantly annual inflationary factors.

o New product introductions, such as new brand medications, which increased the average price of a prescription.

o New generic medication launches, which helped to reduce prescription price.

o Loss of generic products, such as OxyContin, which increased price.

Historically, PMSI said average wholesale price has remained relatively constant for generic medications, while brand medications have typically demonstrated a 7 percent to 9 percent annual increase.

It found results for 2008 were consistent with this average wholesale price trend, with an AWP increase of 9.3 percent for brand medications and a negligible increase in generic AWP.

Since brand-name medications account for 64.4 percent of total spend, the combination of brand and generic AWP changes resulted in an overall increase in price per prescription of 6.1 percent for 2008, PMSI said.

Among top brand medication spending the number one drug OxyContin AWP increased 6 percent and total spend 6.8 percent.

Overall, the new generic products released in 2008 decreased the average price of a prescription by slightly less than 0.1 percent. None of the new generics represented products in the top 50 medications by total spend, indicating low utilization in workers' compensation, the report said.

On average, new generic products have a 10 percent lower AWP than their brand counterparts, making their use "integral to cost containment," said PMSI.

For long-term injuries, the report charted an increase in the number of prescriptions taken per year, as well as an increase in price per prescription as the injury ages.

At first year price per prescription is under $60 and prescriptions per claimant is about five. For a 10-year injury the average price per prescription exceeds $160 and the average number of prescriptions exceeds 20.

Injured workers taking medications, the report said, need to be monitored on an ongoing basis for medication-related problems. Some of these are: multiple prescribers; multiple pharmacies; duplicate therapy; over- or underutilization of medications; drug-to-drug interactions; suspicion of inappropriate medication-use behaviors.

The report said pharmacy benefit managers can influence utilization increases through effective formulary management and clinical review programs and recommended that pain management programs focusing on utilization management should be part of all workers' compensation cost-containment initiatives.