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Tim R. Covington, M.S., Pharm.D.President/CEOCovington Healthcare Associates, LLC3800 Colonnade Parkway, Suite 110Birmingham, AL 35243Phone: (205) 970-3939E-mail: trcoving@charx.com

Change is Good: Simple Ways to Lower Pharmacy Costs

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Pharmacy (Rx) Economic Trends

Rx costs account for approx. 12% of total medical cost.

85% of all Rx costs are associated with injuries that occurred > 3 years prior.

Rx costs account for approx. 25% of total medical costs after 5 years.

Rx costs are the fastest growing care cost component.

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Rx Issues in Workers’ CompExtreme polypharmacy (too many Rxs)Flawed prescribing (clinically and economically)Inadequate value derived for Rx $’s spentDrug-related safety issuesChemically impaired patients (“Rx straight

jacket”)Extreme Rx vendor pricingPhysician dispensingLack of generic mandatesState maximum Rx Fee Schedule

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Where Will You Be in 10 Years?

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20%

15%10%

8%6%

8% doubles in 9 yrs. • fiduciary responsibility to your client(s)

10% doubles in 7 yrs. • limits of affordability

15% doubles in < 5 yrs.

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How Do We Achieve Rx Savings?Two primary ways:

Management of Rx Utilization

Management of Rx Cost (other pathways are slower to achieve savings

and may require regulatory or legislative action)

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Goal of Drug Utilization Review (DUR)

Avoid unnecessary Rx costs without compromising quality of care.

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What is a DUR (also called pharmacy review)? Evidence-based medication review and

evaluation by experts in drug therapy management, drug information and relative drug cost.

Address all areas of drug therapy (clinical and economic).

Makes specific recommendations for refinements in drug therapy.

Gives adjusters and case managers intellectual “ammunition” to present to prescribers.

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Who Should Perform the DUR?Would be best if DUR is performed

by a group independent of your Rx provider (vendor) to avoid potential conflict of interest.

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Focus of an Appropriate DUR Clinical appropriateness

Right drug Alternative drug Drug duplication

Safety issues Excessive dosing Rx Risk v. Benefit (Adverse Effects) Drug interactions FDA-unapproved use (“off-label”use)

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Focus of an Appropriate DUR (cont’d)Cost savings opportunities

Noninjury related drug useGeneric alternativeTherapeutic alternativeDose consolidationStop unnecessary prescription(s)Physician dispensingCompounded prescriptionsNutritional supplements

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DUR – An “Extreme” Example41 YO Female w/ankle, back, & neck injury from fall.Reports 3 to 4 additional falls per month.

Annual Rx Cost = $103,391Projected Lifetime Rx Spend = $3.5 to $5.0 million

Rx NameRx Cost Per

MonthRx Cost Per

YearDuragesic® (fentanyl patch) 100 mcg #30 $1,850.70 $22,208.40Actiq® (fentanyl “lollipop”) 600 mcg #120 $5,244.00 $62,928.00Soma® (carisoprodol) 350 mcg #90 $523.49 $6,281.88

Lidoderm® (lidocaine 5% patch) #60 $351.76 $4,221.12

Lunesta® (eszopiclone) 3 mg #60 $378.12 $4,537.44

Nexium® (esomeprazole) 40 mg #30 $150.00 $1,800.00Lyrica® (pregabalin) 150 mg #60 $117.90 $1,414.80

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DUR Findings:Recurrent Falls - Experiencing 3 to 4 falls per

month = Significant risk for future injury & liabilityIndependent medical review could not find any

orthopedic or neuromuscular reason for falls. Recurrent falls are likely drug-inducedPatient receiving multiple (5) CNS depressants that

when combined can have their effects multiplied. This may result in sedation, drowsiness, dizziness,

impaired coordination and balance, diminished mental function, reduced quality of life, and increased risk of workplace and/or motor vehicle accidents.

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DUR Findings:Actiq® (fentanyl lozenge)

An alternative generic opioid would safely and effectively manage breakthrough pain, yet would cost as much as $62,000 less per year.

Lunesta® (eszopiclone)A conversion to generic Ambien® or Sonata®

would save about $4,000 per year.If Lunesta® is continued, the dose should be

reduced by at least half. The patient is currently receiving twice the maximum daily recommended dose.

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DUR Findings:Soma® (carisoprodol)

Has never been shown to be safe or effective with chronic therapy. It is metabolized to meprobamate, a highly addictive substance.

Discontinuation and/or conversion to generic tizanidine or baclofen was recommended. This would save nearly $6,000/year.

Duragesic® (fentanyl patches)A conversion to the generic version would

reduce cost by approximately $10,000/year.

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DUR Findings:Nexium® (esomeprazole)

Heartburn symptoms are more than likely related to dietary/lifestyle factors, not the original injury.

For the most part, PPIs are interchangeable.A switch to generic Prilosec® would save

$1,400/year.Lidoderm® (lidocaine 5% patch)

Published review articles have suggested that lidocaine topical products can be used instead of Lidoderm®.

Conversion to lidocaine 5% ointment would save $3,800/year.

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DUR Findings:Lyrica® (pregabalin)

Generally considered a first-line treatment in neuropathic pain; however, numerous generic first-line treatments are available.

A conversion to generic gabapentin would save $1,100/year.

Brand v. Generic IssuesBy simply converting Actiq®, Soma® and

Duragesic® to their FDA-approved generics, $47,000 in savings per year could be realized.

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DUR Potential Savings Annual Rx Cost = $103,391Potential Savings = $88,300/year (100%

acceptance)If only Nexium® switch is accepted,

savings would be $1,400/year or $14,000 over 10 years.

If only Lidoderm® switch is accepted, savings would be $3,800/year or $38,000 over 10 years.

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Savings in Work Comp Patients A Worker’s Compensation third party

administrator (TPA) enrolled 35 patients into our DUR program. They realized an average annual savings of $3,708/patient/ year (see below).

Return on Investment (ROI) = 200% to 300% in 1st year alone; compounding will occur in

subsequent years

SavingsAverage Savings Per Patient Per Year $3,708Realized Savings at 2 Years for 35 Patients

$259,561

Potential Savings After 5 Years for 35 Patients

$648,902

Potential Savings After 10 Years for 35 Patients

$1,297,805

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Savings in MSA Patients Consider the cost savings achieved in actual

settlements involving 18 representative cases:

Return on Investment (ROI) = >10,000% per case

due to the realization of lifetime savings on Rxs

Examples

Lifetime Rx Cost Before

the DUR

Lifetime Rx Cost After DUR

Difference in Rx Cost

18 Cases $3,934,769.42 $2,195,133.53 $1,739,635.89 Total Savings

= $1,739,635.8

9 Savings/Case = $96,646.44

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Who can benefit from a DUR?In the general work comp population (non-

MSA), target your highest cost patients. Top 10% of Rx spending patient

population typically accounts for 20% to 30% of all Rx costs.

Target any case you are trying to settle that involves significant Rx cost.

Look for “Red Flags” in any case…

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What is a “Red Flag” for a DUR?1. Drug Cost – DURs are most beneficial in

patients who spend more than $500 to $750/month on prescription drugs. The higher the drug costs, the more likely a DUR will be beneficial.

2. Brand Name Drugs – A DUR may be beneficial in anyone using one or more of the following brand-name medications…Aciphex, Actiq, Ambien CR, Amitiza, Avinza, Celebrex, Cymbalta, Duragesic, Fentanyl lozenge, Fentora, Gabitril, Kadian, Lamictal, Lidoderm, Lunesta, Lyrica, Nexium, Opana, OxyContin, Prevacid, Provigil, Seroquel, Skelaxin, Topamax, etc.

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What is a “Red Flag” for a DUR?3. Physician Dispensing – Approximately 10% of

physicians dispense drugs. Although this can be very convenient for patients, physicians can charge significantly more than pharmacies for the same medications.

4. Number of Medications – Patients receiving 6 or more medications are likely to be taking one or more drugs that are non-injury related, unnecessary, have lower cost but equally effective alternatives, interact adversely with other medications and/or have a safer alternative.

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DURs – A Plan of ActionUse DURs as a utilization management tool to

control drivers of Rx cost.Use DURs as early as possible after patient

meets one or more “red flag” criteria. Longer the delay the greater the cost.

DURs can help you settle cases involving moderate to high cost pharmacy charges.

DURs can reduce Rx-related MSA costs.DURs can help you decrease your cost

exposure on high-cost cases with open medicals.

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Where Will You Be in 10 Years?

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Questions?/Discussion