Workers Comp Drugs: Paying too much…For the Wrong Medicines!

July 8th, 2005 by

We have long been intrigued by a number of conundrums relative to drug prescriptions in the workers comp system. Why are exotic brand name drugs prescribed so frequently, when effective generics are readily available? Why are doctors so quick to adopt “off line” uses for exotic drugs, endorsing unconventional applications for very expensive medications? What accounts for the remarkable success of pharmacy companies in getting doctors to do what they want them to do? And why do insurers simply pay the bills, without asking doctors the rationale for what appears to be a very odd and problemmatic decision-making process?
Paying Too Much…
Our esteemed colleague, Peter Rousmaniere, principal of Rousmaniere Associates, has delved long and deep in these issues. He has two intriguing articles in the current issue of Risk and Insurance (available here). In the first article he presents a study done by a Cleveland area Pharmacist, Phillip Parsons, in conjunction with the Ohio State Fund and Archestral, a data analysis firm. They analyzed a number of prescriptions written in Ohio, Michigan and Pennsylvania. The study found that of the total $179 million in payments for the two million prescriptions, about $25 million were questionable. Overall, 20 percent of prescription payments contained at least one error.
Among the problems uncovered were:
8 percent to 15 percent of drug purchases conflicted with the compensable diagnosis.
7 percent to 10 percent of prescriptions were for brand names when generic substitutes were available.
As many as 11 percent of prescriptions were incorrectly priced.
All told, about 9 percent of prescriptions, or $16 million of total paid prescriptions, had no evident relationship to the work injury. For example, payments were made for Lotrel, used to reduce high blood pressure, which would rarely be appropriate for treating a work-related injury.
A second major type of error was failure to price the drug at the lowest available price. In all, about $4 million, or about 2 percent of total payment, was due to incorrect pricing.
Perhaps the most alarming finding of the study is in the area of painkillers. Exotic brand-name drugs were routinely prescribed, rather than less expensive generic equivalents. Paying for brand names added $11 million, or 6 percent of total payments. Beyond that, the study found that the ratio of brand to generic purchases was significantly higher for the more powerful pain medications, such as Oxycontin. In one egregious example, $12,000 was paid for one year of Oxycontin, for a 1990 workers’ compensation claim of “neurotic depression.” Yikes!
For all cases with both brand and generic alternatives, 8.6 percent of generic opportunities were missed. For pain medications, 12 percent of generic opportunities were missed. For the federal Drug Enforcement Administration’s “schedule II” pain drugs