References

Medical Foods; page 3

1 US Food and Drug Administration. Guidance for Industry: Frequently Asked Questions About Medical Foods. Availableathttp://www.fda.gov/Food/FoodSafetyProduct-SpecificInformation/MedicalFoods/default.htm.AccessedOctober20,2010.2 PhysiciansTherapeuticsLLC.Availableathttp://www.ptlcentral.com.AccessedOctober20,2010.

Abuse-deterrent Opioids; page 5

1 Manachikanti,Laxmaiah,andSingh,Angelie,“TherapeuticOpioids:ATen-YearPerspectiveoftheComplexitiesandComplicationsofEscalatingUse,Abuse,and NonmedicalUseofOpioids.”PainPhysician,March2008

Florida Physician Dispensing; page 9

1 MichaelWhiteley,“SchoolDistrictSayingNotoRepackagedDrugPrices,”Workcompcentral,10/05/2010.2 DanReynolds,“Workers’CompIn-DepthSeries(Part1):TheTallahasseeShuffle.”Risk&Insurance,EmergingStrategiesforRisk.October15,2010issue. Availableathttp://www.riskandinsurance.com/story.jsp?storyId=533323010&topic=Main.AccessedNovember3,2010.

Medical Treatment Guidelines; page 101 WashingtonStateDepartmentofLaborandIndustries’OfficeoftheMedicalDirector,“MedicalTreatmentGuidelinesinWashingtonWorkers’Compensation,”June 2010.Availableathttp://www.lni.wa.gov/ClaimsIns/Files/OMD/MedTreat/Guidelinehistoryprocess.pdf.AccessedSeptember15,2010.

©2010Healthesystems.Updated11/03/10.

5100WestLemonStreetSuite311Tampa,FL33609800.921.1880 l TollFree800.758.5779 l CustomerServiceCenter800.964.1681 l DrugInformationLinewww.healthesystems.com

AboutHealthesystems

Healthesystems is a specialtyproviderof innovativemedical costmanagement solutions for theworkers’compensation industry. Our comprehensive products include a leading Pharmacy Benefit ManagementProgram, expert Clinical Review Services and a revolutionary Ancillary Benefit Management solution forprospectively managing ancillary medical services.

OurVerticēClaimsInformationPortaldeliversreal-timepharmacyandancillarybenefitmanagementprograminformation,reportsandtools.Thisintuitivewebportalallowsclaimsprofessionalstoaccesstoolsforquicklyandefficientlyprocessingprovidertransactions,runningreports,retrievingrelevantclinicalinformationandmany other functions.

Byleveragingpowerfultechnology,clinicalexpertiseandenhancedworkflowautomationtools,weprovideclientswithflexibleprogramsthatreducethetotalcostofmedicalcareandmanagedrugutilizationincludingthe overuse of narcotics and other problematic drugs, all while increasing the quality of care for injuredworkers.

AboutOurData

Data referenced in this document was produced using Healthesystems’ proprietary pharmacy databaseinformation.

Thecontentsofthisdocumentareforinformationalpurposesonly.Itisnotasubstituteforamedicalexam,nordoesitreplacetheneedforservicesprovidedbyamedicalprofessional.Theinformationprovidedinthisdocumentisnotintendedtodiagnose,treat,orcure.Everyefforthasbeenmadetoprovideaccurate,up-to-dateandcompleteinformation,butnowarrantyorguaranteeismadetothateffect.Healthesystemsisnotliableforanydirect,indirect,consequential,special,exemplary,orotherdamagesarisingfrom the use or misuse of any material or information provided in this document.

l 11

inside:Repackaged Medications

Medical Foods

New Medications

ComplianceUpdates

AForward-lookingPharmacyProgramDeliversValueManagingthechallengesrelatedtoprescriptiondrugsintheworkers’compensationindustryisaconstantlyevolvingarea.Thelistofcomplextopicscoversawiderangeofpharmacybusinessfunctionsincludingclinical,technicalandlegaldisciplinesinadditiontonavigatingmarketforces,allofwhichrequireconstant planning and targeted focus.

Inallofthesecases,informationiskey.CurrentandtimelyinformationcanhelpaPBMandpayersstrategizeanddevelopforward-lookingsolutionsforissuesonthehorizonwhilequicklyaddressingimmediatechallenges.Theinformationpresented in this document is a compilation of timely topics impacting payers and the pharmacy management industry today or others which may have a likelihood to do so in the near future.

Ahighlysuccessfulworkers’compPBMprogramusesavarietyoftoolstomitigateexpensiveandcostlyissues.Inmanycases,themosteffectivesolutionslikelyarenotone-timefixesbecauseinworkers’compthechallengesareconstantlyevolving.Thispastyearalonehasseenanumberofemergingtrends,such as new and reformulated medications coming to market; repackaged and compoundeddrugs;shiftingprescribingpatternsandsignificantregulatorychanges.Thekeystomanagingthesecomplexissues,whileimprovingprogramefficiencyandreducingcost,involveproactiveengagement,innovativeapproaches and sophisticated technology capabilities.

Flexibilityandaclient-tailored,totalprogramapproacharekeyelementstoasuccessfulPBMprogramandarecrucialinmanysituations,whetherit’sdealingwithlegislativechangesorclientspecificneeds.Inmanycasesthesechangesandsolutionsaretechnologydrivenandcanentailimprovingexistingpharmacyprogramprocessesbymakingthemmoreefficientordevelopingnew,innovativesolutions to address the evolving market.

Intheend,PBMsmustkeepcustomersonestepahead,lookingforwaystominimizethefinancialimpactandcomplexitiesofindustrychanges.Inadditionthey must be focused on providing greater value to customers because as industryresultshaveclearlydemonstrated,drugdiscountpricingalonewillnot equate to better overall results. It has been proven time and again that thepriceofthepillisnotnecessarilydrivingthecost;it’smorelikelytobetheamountandfrequency.Mostimportantly,aPBMshouldbetheretomanagetheentireworkers’compensationprescriptiondrugcontinuum.Asaresult,payerswillrealizegreatercostsavingswhilemaintainingsolidstrategiestocontinuesucceeding in the long run.

In the workers’ comp and drug therapy arenas, the challenges are constantly evolving.

Repackaged MedicationsWhenHealthesystemsfirststartedreportingonthischallengingtrendafewyears ago,someindustryinsidersignoredtheissuebecauseitwas(andtoacertainextentstillremains)arelativelysmallpercentageofoverallprescriptionvolume.Sincethatoriginalreport,theuseoftheseformulationshasrisentoanalarminglevelandconsideringtheoverbilledamountsinthemostegregiouscases,thedollarslostarehardlyinsignificant.Moreimportantly,thegrowthfromthisdispensingsourcehasbeenexponentialoverthesepastfiveyears,andisn’tshowing any sign of slowing down. Repackaged medications represent the latest trendinaseriesofexploitedlegislativeloopholes.Repackagerstakeabulkmedicationandre-labelitinasmallerpackagewithanewNDC(NationalDrugCode)andassignanewAverageWholesalePrice(AWP),frequentlyataninflatedratecomparedtotheoriginalproduct.Becauseofaloopholeinmanystatelaws,therepackagingcompaniesareconsidered“labelers,”whichiswhytheyareabletosettheirownAWPfortheseproducts,andeasilycontrovertstatefeeschedulesandothercost-containmentmeasures.Theresultisthesamedrugshaveanaveragecostperprescriptionfarexceedingthosedispensedatatraditional point of service.

Typically,repackagedmedicationsareassociatedwithphysiciandispensing.Advocates for this practice often tout patient convenience and improved compliancewiththerapyaschiefbenefits.Somestates(e.g.,Texas)haverestrictionsaroundthephysiciandispensingpractice,allowingitonlyinselectcircumstances(ruralareas,etc.).Repackagers,however,haveimplementednewmethodstocircumventthespiritofthisstatute—forexampleopeningpharmacy operations frequently located closely to medical arts and pain clinic areas.However,itisimportanttonotethatnotallrepackagersarecost-abusive(infact,onlyasmallfractionaccountdisproportionatelyforthemajorityofcosts).

Currently,themajorityofrepackagingfirmsoperateinahandfulofstates—CA,TX,AZ,FLandMA.However,duetothetimeusuallyinvolvedwithclosinglegislativeloopholes,theirinfluenceislikelytospreaduntilpreemptiveactionistakentoeliminatethereimbursementdifferentialsthatsoheavilyfavorthesefirms.

SeveralyearsagothestateofCalifornia,wherethemajorityofthisactivitystarted,enactedlegislationwhichincludedrestrictivereimbursementguidelinesforrepackageddrugswhichquicklyhadapositiveeffect.Recently,Arizonaalsointroducedsimilarguidelinestoaddressthefastgrowingpractice,however,thereare signs certain companies in the repackaging industry have started modifying theirbusinesspracticesinanattemptbypasstherulesinthesestates.Thisincludes not using the repackaged drug number sequence usually included in the assignedNDCandthusavoidingdetectionduringtheprescriptionadjudicationprocess.Addressingthistypeofchallengerequiressignificantdataminingandanalyticsexpertisesinceitmaynotbeeasilyidentifiableonthesurfaceoftheprescriptiontransactionlevel.Inaddition,manyPBM’smaynotnecessarilyhave the adjudication methodology in place to be able to apply the allowable jurisdictionalrulesinstateslikeCAandAZwherebyrepackageddrugscanbeadjudicatedtothelowestcosttherapeuticequivalent.However,baseduponthecontinuedgrowthinvolume,thechallengeswilllikelycontinuetogrowanditiscrucialforthePBMtohaveboththetechnologicalandclinicaltoolsinplacetoimplement and maintain a successful long term strategy.

234

567

9

Repackaged Medications

Medical Foods

Verticē,APowerfulWeb-basedClientPortal

Abuse-deterrentOpioids

New Medications

TXtoAdoptClosedFormularyBasedonODG

ComplianceUpdates FinancialImpactExampleHere’sanexampleofthepotentialfinancialimpactresultingfromarepackaged drug:

A repackaged prescription for a tabletofHydrocodone/APAPisbilledatanAWPrateof$1.74perpill,whilethe lowest cost therapeutic equivalent of the same drug dispensed in a non-repackagedformis$0.39perpill(over 4timestheamount).

l01 02l

TopWorkers’CompRepackaged DrugsThefollowingaresomeofthemostfrequently repackaged drugs based uponHealthesystems’analysis:

Hydrocodone/APAP

Carisoprodol

Naproxen

Tramadol

Cyclobenzaprine

Ibuprofen

AForward-lookingPharmacyProgramDeliversValueManagingthechallengesrelatedtoprescriptiondrugsintheworkers’compensationindustryisaconstantlyevolvingarea.Thelistofcomplextopicscoversawiderangeofpharmacybusinessfunctionsincludingclinical,technicalandlegaldisciplinesinadditiontonavigatingmarketforces,allofwhichrequireconstant planning and targeted focus.

Inallofthesecases,informationiskey.CurrentandtimelyinformationcanhelpaPBMandpayersstrategizeanddevelopforward-lookingsolutionsforissuesonthehorizonwhilequicklyaddressingimmediatechallenges.Theinformationpresented in this document is a compilation of timely topics impacting payers and the pharmacy management industry today or others which may have a likelihood to do so in the near future.

Ahighlysuccessfulworkers’compPBMprogramusesavarietyoftoolstomitigateexpensiveandcostlyissues.Inmanycases,themosteffectivesolutionslikelyarenotone-timefixesbecauseinworkers’compthechallengesareconstantlyevolving.Thispastyearalonehasseenanumberofemergingtrends,such as new and reformulated medications coming to market; repackaged and compoundeddrugs;shiftingprescribingpatternsandsignificantregulatorychanges.Thekeystomanagingthesecomplexissues,whileimprovingprogramefficiencyandreducingcost,involveproactiveengagement,innovativeapproaches and sophisticated technology capabilities.

Flexibilityandaclient-tailored,totalprogramapproacharekeyelementstoasuccessfulPBMprogramandarecrucialinmanysituations,whetherit’sdealingwithlegislativechangesorclientspecificneeds.Inmanycasesthesechangesandsolutionsaretechnologydrivenandcanentailimprovingexistingpharmacyprogramprocessesbymakingthemmoreefficientordevelopingnew,innovativesolutions to address the evolving market.

Intheend,PBMsmustkeepcustomersonestepahead,lookingforwaystominimizethefinancialimpactandcomplexitiesofindustrychanges.Inadditionthey must be focused on providing greater value to customers because as industryresultshaveclearlydemonstrated,drugdiscountpricingalonewillnot equate to better overall results. It has been proven time and again that thepriceofthepillisnotnecessarilydrivingthecost;it’smorelikelytobetheamountandfrequency.Mostimportantly,aPBMshouldbetheretomanagetheentireworkers’compensationprescriptiondrugcontinuum.Asaresult,payerswillrealizegreatercostsavingswhilemaintainingsolidstrategiestocontinuesucceeding in the long run.

In the workers’ comp and drug therapy arenas, the challenges are constantly evolving.

Repackaged MedicationsWhenHealthesystemsfirststartedreportingonthischallengingtrendafewyears ago,someindustryinsidersignoredtheissuebecauseitwas(andtoacertainextentstillremains)arelativelysmallpercentageofoverallprescriptionvolume.Sincethatoriginalreport,theuseoftheseformulationshasrisentoanalarminglevelandconsideringtheoverbilledamountsinthemostegregiouscases,thedollarslostarehardlyinsignificant.Moreimportantly,thegrowthfromthisdispensingsourcehasbeenexponentialoverthesepastfiveyears,andisn’tshowing any sign of slowing down. Repackaged medications represent the latest trendinaseriesofexploitedlegislativeloopholes.Repackagerstakeabulkmedicationandre-labelitinasmallerpackagewithanewNDC(NationalDrugCode)andassignanewAverageWholesalePrice(AWP),frequentlyataninflatedratecomparedtotheoriginalproduct.Becauseofaloopholeinmanystatelaws,therepackagingcompaniesareconsidered“labelers,”whichiswhytheyareabletosettheirownAWPfortheseproducts,andeasilycontrovertstatefeeschedulesandothercost-containmentmeasures.Theresultisthesamedrugshaveanaveragecostperprescriptionfarexceedingthosedispensedatatraditional point of service.

Typically,repackagedmedicationsareassociatedwithphysiciandispensing.Advocates for this practice often tout patient convenience and improved compliancewiththerapyaschiefbenefits.Somestates(e.g.,Texas)haverestrictionsaroundthephysiciandispensingpractice,allowingitonlyinselectcircumstances(ruralareas,etc.).Repackagers,however,haveimplementednewmethodstocircumventthespiritofthisstatute—forexampleopeningpharmacy operations frequently located closely to medical arts and pain clinic areas.However,itisimportanttonotethatnotallrepackagersarecost-abusive(infact,onlyasmallfractionaccountdisproportionatelyforthemajorityofcosts).

Currently,themajorityofrepackagingfirmsoperateinahandfulofstates—CA,TX,AZ,FLandMA.However,duetothetimeusuallyinvolvedwithclosinglegislativeloopholes,theirinfluenceislikelytospreaduntilpreemptiveactionistakentoeliminatethereimbursementdifferentialsthatsoheavilyfavorthesefirms.

SeveralyearsagothestateofCalifornia,wherethemajorityofthisactivitystarted,enactedlegislationwhichincludedrestrictivereimbursementguidelinesforrepackageddrugswhichquicklyhadapositiveeffect.Recently,Arizonaalsointroducedsimilarguidelinestoaddressthefastgrowingpractice,however,thereare signs certain companies in the repackaging industry have started modifying theirbusinesspracticesinanattemptbypasstherulesinthesestates.Thisincludes not using the repackaged drug number sequence usually included in the assignedNDCandthusavoidingdetectionduringtheprescriptionadjudicationprocess.Addressingthistypeofchallengerequiressignificantdataminingandanalyticsexpertisesinceitmaynotbeeasilyidentifiableonthesurfaceoftheprescriptiontransactionlevel.Inaddition,manyPBM’smaynotnecessarilyhave the adjudication methodology in place to be able to apply the allowable jurisdictionalrulesinstateslikeCAandAZwherebyrepackageddrugscanbeadjudicatedtothelowestcosttherapeuticequivalent.However,baseduponthecontinuedgrowthinvolume,thechallengeswilllikelycontinuetogrowanditiscrucialforthePBMtohaveboththetechnologicalandclinicaltoolsinplacetoimplement and maintain a successful long term strategy.

234

567

9

Repackaged Medications

Medical Foods

Verticē,APowerfulWeb-basedClientPortal

Abuse-deterrentOpioids

New Medications

TXtoAdoptClosedFormularyBasedonODG

ComplianceUpdates FinancialImpactExampleHere’sanexampleofthepotentialfinancialimpactresultingfromarepackaged drug:

A repackaged prescription for a tabletofHydrocodone/APAPisbilledatanAWPrateof$1.74perpill,whilethe lowest cost therapeutic equivalent of the same drug dispensed in a non-repackagedformis$0.39perpill(over 4timestheamount).

l01 02l

TopWorkers’CompRepackaged DrugsThefollowingaresomeofthemostfrequently repackaged drugs based uponHealthesystems’analysis:

Hydrocodone/APAP

Carisoprodol

Naproxen

Tramadol

Cyclobenzaprine

Ibuprofen

Issues of patient safety must be considered when these products are used. The problem is complex but solvable.

statementrequiredofallprescriptionmedications:“CAUTION:FEDERALLAWPROHIBITSDISPENSINGWITHOUTAPRESCRIPTION.”However,thepresenceofthesemarkingsalonedoesnotconferlegitimacyontheseproducts,nordoesitimply FDA approval.

Tofurtherlegitimizetheseproducts,medicalfoodslikeTheramineandHypertensaareoftencombinedwithFDA-approvedmedications(e.g.,musclerelaxants,bloodpressuremedications,NSAIDs,etc.)inpatient-ready“conveniencepacks.”Noevidenced-baseddataexiststoprovethesafetyorefficacyoftheingredientsinthesemedicalfoods–whichrangefromcocoaandgingko(SentraPM®),grapeseedandcinnamon(Theramine®),totheesotericaminoacidshistidineandarginine(Hypertensa®).Nevertheless,whencombinedwithgenericallyavailablemedicationssuchasnaproxen(Theraproxen®)andlisinopril(Lytensapril®),these“new”formulationsarepricedwithasubstantialmarkup.

Issues of patient safety must be considered when these products are used; unprovensafetyprofilesandunfoundedclaimsofefficacymakemedicalfoodspotentiallydangerousagents.Theproblemiscomplex,butsolvable.Itwilltakethecollaborativeparticipationbyhealthcareproviders,regulatoryagencies,legislators,manufacturers,andconsumerstoregulatetheuseoftheseproducts.

A Powerful Web-based ClientPortal

Sinceintroducingtheweb-basedVerticēclaimsinformationportaltoHealthesystemsclients,almost90%ofpriorauthorizationactivity occurs using this robust online tool. Theresult?Anadjusterneverhastopickupthephoneunlessit’sabsolutelynecessary.And because the transactional environment occursinreal-time,theHealthesystemscustomer service staff is able to respond immediately(removingwhatusedtotakemultiplephonecalls).TheHealthesystemsproactive approach also provides injured workerswithamorereliable,“high-touch”serviceexperience.

Approximately16percentofthetimewhena pharmacy transaction requires a prior authorization,theinjuredworkerisstandingat the pharmacy counter. A real-time informationportal,suchasVerticē,removesthedelay,andallowsissuestoberesolvedimmediately.

Medical FoodsAnewpotentialissuetokeepinsightforworkers’compensationpayersistheprescribingof“medicalfoods”insomeisolatedworkers’comppopulations.Anumberofconcernsexistregardingtherelianceon“medicalfoods”totreatthispatientpopulationincludingsafety,efficacyandcost.

AccordingtotheFDA,amedicalfoodisdistinguishedbybeing“speciallyformulated … to meet the distinctive nutritional requirements of a disease or condition … for the patient who is seriously ill … who requires the product as amajor[aspectof]treatment.”1Themedicalfooddesignationistypicallyforproducts that provide nutrition when a patient is unable to obtain all of the necessarycaloriesornutrientsfromatraditionaldiet,suchascaseswhenapatientmustbetubefed.Incontrast,medicalfoodsarealsofrequentlydispensed by closed networks of subscribing physicians where they are marketed asnoveltreatmentsaddressingunderlyingnutritionaldeficienciescausedbydisease.2

Questionsshouldberaisedconcerningtherapeuticandtoxiclevelsofthesesubstances.Whatparametersareusedtodetermineapatient-specificdose?Is this a weight-based protocol? What are the typical adverse effects caused bythesesubstances,andwhataresigns/symptomsofitstoxicity?Whatisan“unsafe”doseofanagentsuchasTheramineorGABAdone?BasedoncasesHealthesystemshasobserved,itfrequentlycannotbedeterminediftheseproducts are being prescribed applying any regard to total daily doses or whetherthereisconcernfortoxicitypotentiallycausedbythesesubstances.

Forexample,onemedicalfood,Theramine,ispurportedlyusedto“stimulateproductionofserotonin,GABA,norepinephrine,nitricoxide,andacetylcholine.”Anotheragent,GABAdone,“providesaminoacidsthatareprecursorstoneurotransmitters.”ItisunclearhowtheseproductsthatpurporttoincreasethelevelsoftheseneurotransmitterssimilartoprescriptionSSRIs(e.g.,Prozac,Celexa)cansafelybeusedatanunlimitedlevel.If,importantly,thereisnotoxicdoseofTheramineorGABAdone,then,conversely,itshouldalsobequestionedwhether there is a therapeutic dose.

Itismedicallyrecognizedthatsomediseasestatesresultdirectlyinnutritionaldeficiencies(.e.g.,pancreaticorkidneyinsufficiency,pellagra,scurvy,etc.)—andsupplementingthepatient’sdietwithnutritionalsubstancesisoftennecessaryinthesecases.However,thelanguageusedinthelawhasallowedallmannerofproductstobemarketedwithoutoversight.Currently,medicalfoodsdonotundergo FDA review and have neither been proven safe nor effective by the FDA. Therearegenerallynohumanclinicalstudiestoreviewordocumenteddruginteractions,side-effects,orhepatic,renal,andgastrointestinaleffectsofthesecombinations.

Prescribers and patients may mistake these products as FDA-approved for anumberofreasons.ManufacturersoftheseitemstypicallyassignfictitiousNationalDrugCode(NDC)numberstotheproducts;thisisthenumberallFDA-approvedmedicationsbear.Similarly,theirlabelstoutthecommondrug

Medical Foods Observed by Healthesystems

Sentra PM®

Sentra AM®

Limbrel®

GabadoneTM

Theramine®

Gabitidine PakTM

GaboxetinePakTM

TrepoxenPak

SentrazolpidPakPM

GabazolaminePakTM

PrazolaminePakTM

TheratramadoPak-60

TheratramadoPak-90

Hypertensa®

Lytensopril®

SenophyllineTM

StrazepamTM

TrazamineTM

Theraproxen®

BasedoncasesHealthesystemshasobserved,itfrequentlycannot be determined if medical food products are being prescribed applying any regard to total daily doses or whether there isconcernfortoxicitypotentially caused by these substances.

l03 04l

Issues of patient safety must be considered when these products are used. The problem is complex but solvable.

statementrequiredofallprescriptionmedications:“CAUTION:FEDERALLAWPROHIBITSDISPENSINGWITHOUTAPRESCRIPTION.”However,thepresenceofthesemarkingsalonedoesnotconferlegitimacyontheseproducts,nordoesitimply FDA approval.

Tofurtherlegitimizetheseproducts,medicalfoodslikeTheramineandHypertensaareoftencombinedwithFDA-approvedmedications(e.g.,musclerelaxants,bloodpressuremedications,NSAIDs,etc.)inpatient-ready“conveniencepacks.”Noevidenced-baseddataexiststoprovethesafetyorefficacyoftheingredientsinthesemedicalfoods–whichrangefromcocoaandgingko(SentraPM®),grapeseedandcinnamon(Theramine®),totheesotericaminoacidshistidineandarginine(Hypertensa®).Nevertheless,whencombinedwithgenericallyavailablemedicationssuchasnaproxen(Theraproxen®)andlisinopril(Lytensapril®),these“new”formulationsarepricedwithasubstantialmarkup.

Issues of patient safety must be considered when these products are used; unprovensafetyprofilesandunfoundedclaimsofefficacymakemedicalfoodspotentiallydangerousagents.Theproblemiscomplex,butsolvable.Itwilltakethecollaborativeparticipationbyhealthcareproviders,regulatoryagencies,legislators,manufacturers,andconsumerstoregulatetheuseoftheseproducts.

A Powerful Web-based ClientPortal

Sinceintroducingtheweb-basedVerticēclaimsinformationportaltoHealthesystemsclients,almost90%ofpriorauthorizationactivity occurs using this robust online tool. Theresult?Anadjusterneverhastopickupthephoneunlessit’sabsolutelynecessary.And because the transactional environment occursinreal-time,theHealthesystemscustomer service staff is able to respond immediately(removingwhatusedtotakemultiplephonecalls).TheHealthesystemsproactive approach also provides injured workerswithamorereliable,“high-touch”serviceexperience.

Approximately16percentofthetimewhena pharmacy transaction requires a prior authorization,theinjuredworkerisstandingat the pharmacy counter. A real-time informationportal,suchasVerticē,removesthedelay,andallowsissuestoberesolvedimmediately.

Medical FoodsAnewpotentialissuetokeepinsightforworkers’compensationpayersistheprescribingof“medicalfoods”insomeisolatedworkers’comppopulations.Anumberofconcernsexistregardingtherelianceon“medicalfoods”totreatthispatientpopulationincludingsafety,efficacyandcost.

AccordingtotheFDA,amedicalfoodisdistinguishedbybeing“speciallyformulated … to meet the distinctive nutritional requirements of a disease or condition … for the patient who is seriously ill … who requires the product as amajor[aspectof]treatment.”1Themedicalfooddesignationistypicallyforproducts that provide nutrition when a patient is unable to obtain all of the necessarycaloriesornutrientsfromatraditionaldiet,suchascaseswhenapatientmustbetubefed.Incontrast,medicalfoodsarealsofrequentlydispensed by closed networks of subscribing physicians where they are marketed asnoveltreatmentsaddressingunderlyingnutritionaldeficienciescausedbydisease.2

Questionsshouldberaisedconcerningtherapeuticandtoxiclevelsofthesesubstances.Whatparametersareusedtodetermineapatient-specificdose?Is this a weight-based protocol? What are the typical adverse effects caused bythesesubstances,andwhataresigns/symptomsofitstoxicity?Whatisan“unsafe”doseofanagentsuchasTheramineorGABAdone?BasedoncasesHealthesystemshasobserved,itfrequentlycannotbedeterminediftheseproducts are being prescribed applying any regard to total daily doses or whetherthereisconcernfortoxicitypotentiallycausedbythesesubstances.

Forexample,onemedicalfood,Theramine,ispurportedlyusedto“stimulateproductionofserotonin,GABA,norepinephrine,nitricoxide,andacetylcholine.”Anotheragent,GABAdone,“providesaminoacidsthatareprecursorstoneurotransmitters.”ItisunclearhowtheseproductsthatpurporttoincreasethelevelsoftheseneurotransmitterssimilartoprescriptionSSRIs(e.g.,Prozac,Celexa)cansafelybeusedatanunlimitedlevel.If,importantly,thereisnotoxicdoseofTheramineorGABAdone,then,conversely,itshouldalsobequestionedwhether there is a therapeutic dose.

Itismedicallyrecognizedthatsomediseasestatesresultdirectlyinnutritionaldeficiencies(.e.g.,pancreaticorkidneyinsufficiency,pellagra,scurvy,etc.)—andsupplementingthepatient’sdietwithnutritionalsubstancesisoftennecessaryinthesecases.However,thelanguageusedinthelawhasallowedallmannerofproductstobemarketedwithoutoversight.Currently,medicalfoodsdonotundergo FDA review and have neither been proven safe nor effective by the FDA. Therearegenerallynohumanclinicalstudiestoreviewordocumenteddruginteractions,side-effects,orhepatic,renal,andgastrointestinaleffectsofthesecombinations.

Prescribers and patients may mistake these products as FDA-approved for anumberofreasons.ManufacturersoftheseitemstypicallyassignfictitiousNationalDrugCode(NDC)numberstotheproducts;thisisthenumberallFDA-approvedmedicationsbear.Similarly,theirlabelstoutthecommondrug

Medical Foods Observed by Healthesystems

Sentra PM®

Sentra AM®

Limbrel®

GabadoneTM

Theramine®

Gabitidine PakTM

GaboxetinePakTM

TrepoxenPak

SentrazolpidPakPM

GabazolaminePakTM

PrazolaminePakTM

TheratramadoPak-60

TheratramadoPak-90

Hypertensa®

Lytensopril®

SenophyllineTM

StrazepamTM

TrazamineTM

Theraproxen®

BasedoncasesHealthesystemshasobserved,itfrequentlycannot be determined if medical food products are being prescribed applying any regard to total daily doses or whether there isconcernfortoxicitypotentially caused by these substances.

l03 04l

New MedicationsWhile it can occasionally be challenging to control physician prescribing patterns and the costs associated with some of the top dispensed medications in the workers’comppopulation(e.g.,Oxycontin,Lyrica,Cymbalta,Celebrex,Lidoderm),proactiveidentificationofmedicationsemerginginthemarketplaceofferstheopportunitytocreateprogramsaimedatmanagingutilizationandtargetinginappropriate use of medications. Many medications recently brought to the markethavethepotentialtopassonexcessiveandpossiblyunwarrantedcoststo payers.

Forexample,insteadofprescribingcertainnewbrandproducts,anorallyavailable,immediate-releasegenericformulationoftheactiveingredientmaybeconsideredabetteragentforapatient’sinitialprescription.SomeolderproductsthatstillfallintothiscategoryareAmrix(cyclobenzaprineextended-releasecapsules)andAmbienCR(zolpidemextended-release).Regardingthenew“abuse-deterrent”opioidproducts(e.g.,Embeda,Exalgo),sufficientpatienthistoryshouldbenecessarytowarranttheuseofthistypeofformulation,asopposedtoamoretraditionalagentlikemorphineERorOxycodoneER.

Healthesystemsclinicalservicesmonitorsandmanagesaccesstocertaindrugs,while providing an educational resource for prescribers and case managers as a meanstopromoteproperuseofnewmedicationsinworkers’compensation.

Some new medications/indications include:

Abuse-deterrentOpioidsTheprescriptionofopioidsintheUnitedStateshasrisendramaticallyoverthepast15years.Methadoneprescribingrosenearlyathousandpercentbetween1997and20051,andisthoughttobeinlargepartduetoashiftinprescribingresultingfromthebadpressOxycontinreceivedinthelate90s.Inaddition,accordingtotheNationalCenterforHealthStatistics,thenumberofdeathsfromopioidoverdosesoverthesameperiodrosenearly400%,coincidingwiththe increased rate of prescribing while the United States continues to be the greatestconsumerofprescriptionopioidsandaccountsfor99%ofworldwidehydrocodoneuse(hydrocodonehascontinuedtoberankedasoneofthetopdrugsdispensedintheworkers’compensationpopulationformorethanadecade,andisalsoconsideredtobewidelyabused).Similartothestatisticsonoverdoses,clinicalstudieshavebeendocumentinganattendantriseintherateof opioid abuse and addiction.

Overthepasttwoyearsseveralnew“abuse-deterrent”formulationsofopioidshave been released to the market in an attempt to curb the misuse of these powerfuldrugs.Thenewformulationsincludeeitheraphysicalorchemicalbarrier that prevents or provides an impediment to the ways the drugs are typicallyabused–crushing,chewing,injecting.Giventheaddictionpotentialtheopioidclasspossesses,theplaceintherapyforthesenewagentsonthesurfaceseemsintuitive,however,thequestionstillneedstobeasked,whenshouldthesenew formulations be used in treating chronic pain?

OneofthemorenotableopioiddrugentrantsincludestherecentlyreleasedreformulatedOxycontin.Asoneofthemostprescribedandfrequentlyproblematicdrugsfortreatinginjuredworkers,thisnewbrandformulationwill continue to require close oversight from payers regardless of the new formulationproperties.Inaddition,thebranddesignationmaylikelyimpactoverall prescription costs.

AnotherofthenewlyreleasedopioidsEmbeda,iscomprisedofnaltrexonecombined with morphine and has also been formulated as an abuse deterrent drug.AnadditionaldrugExalgo,whichislikelythemostpotentofthethreedrugs,isnotanabusedeterrentformulationandisanextendedreleasedrug.Asisthecasewiththeintroductionofanynewpowerfulpaintreatmentdrugs,understanding the clinical implications at a patient level is most crucial to ensure positive outcomes.

Intermsofthepatientsthatmaybenefitfromthenewer,abuse-deterrentformulations–whoarethey?Thosewithahistoryofdrugabuse(prescriptionorillicit),orthosethatmightbeinanenvironmentwherediversionislikelymaybenefitfromprescriptionoftheseformulations.Butitisimportanttorememberthat these formulations are not a silver bullet against abuse. Appropriate use of abuse-deterrent opioids needs to be part of a comprehensive monitoring programonthepartoftheprovider,onewithwhichthepatientwillinglyandactivelyparticipates.Importantly,whileabuse-deterrentopioidscandiscourageabusebytypicalmeans,theydonotdecreasepotentialforoverdose.

The prescription of opioids in the United States has risen dramatically in the past 15 years. Methadone prescribing rose nearly a thousand percent between 1997 and 2005, and is thought to be in large part due to a shift in prescribing resulting from the bad press Oxycontin received in the late 90s. As the dramatic increases this table demonstrates, abuse-deterrent formulations of opioids will likely maintain a role in therapy.

1997 2005 % Change

Methadone 518,737 5,362,815 933%

Oxycodone 4,449,562 30,628,973 588%

Fentanyl base 74,086 387,928 423%

Hydromorphone 241,078 781,287 244%

Hydrocodone 8,669,311 25,803,544 198%

Morphine 5,922,872 15,054,846 154%

Meperidine 5,765,954 4,272,520 -26%

Codeine 25,071,410 18,960,038 -24%

New Product

SprixTM

VimovoTM (naproxen and esomeprazole)

Rybix®

ExalgoTM

ButransTM (buprenorphine) transdermal patch

Vivitrol® (NEW INDICATION)

Suboxone® sublingual film

Neudexta

Latuda®

Manufacturer

Roxro Pharma, Inc.

Pozen, Inc., and AstraZeneca, Plc

Victory Pharma, Inc.

Mallinckrodt Inc.

Purdue Pharma, L.P.

Alkermes, Inc.

Reckitt Benckiser Pharmaceuticals, Inc.

Avanir Pharmaceuticals, Inc.

Sunovion Pharmaceuticals Inc.

Approved by FDA

May 14, 2010

April 30, 2010

June 1, 2010

March 3, 2010

June 30, 2010

October 12, 2010

August 30, 2010

October 29, 2010

October 28, 2010

Therapeutic Class

NSAID

NSAID/Proton Pump Inhibitor Combo

Short-acting opioid analgesic

Opioid Analgesic

Opioid Analgesic

Opioid Antagonist

Addiction therapy

Antitussive/Antiarrhythmic

Atypical Antipsychotic

FDA-Approved Indications

Short term (up to 5 days) management of moderate to moderately severe pain

Relief of signs and symptoms of osteoarthritis, rheumatoid arthritis and ankylosing spondylitis and to decrease risk of developing gastric ulcers. This product is not recommended for initial treatment of acute pain. Studies do not extend past 6 months

Management of moderate to moderately-severe pain in adults (16 years of age or older)

Management of moderate to severe pain in opioid tolerant patients requiring continuous, around-the-clock opioid analgesia for an extended period of time

For the management of moderate to severe chronic pain in patients requiring a continuous, around-the-clock analgesic for an extended period of time

Prevention of relapse to opioid dependence, following opioid detoxification

Maintenance treatment of opioid dependence

For the treatment of pseudobulbar affect (PBA)

For the treatment of schizophrenia

Market Availability

Unknown

Available Now

Available Now

Available Now

Anticipated first quarter 2011

Available Now

Anticipated October 2010

Anticipated first quarter 2011

Anticipated first quarter 2011

Appropriate use of abuse-deterrent opioids needs to be part of a comprehensive monitoring program on thepartoftheprovider,one with which the patient willing and actively participates.

l05 06l

New MedicationsWhile it can occasionally be challenging to control physician prescribing patterns and the costs associated with some of the top dispensed medications in the workers’comppopulation(e.g.,Oxycontin,Lyrica,Cymbalta,Celebrex,Lidoderm),proactiveidentificationofmedicationsemerginginthemarketplaceofferstheopportunitytocreateprogramsaimedatmanagingutilizationandtargetinginappropriate use of medications. Many medications recently brought to the markethavethepotentialtopassonexcessiveandpossiblyunwarrantedcoststo payers.

Forexample,insteadofprescribingcertainnewbrandproducts,anorallyavailable,immediate-releasegenericformulationoftheactiveingredientmaybeconsideredabetteragentforapatient’sinitialprescription.SomeolderproductsthatstillfallintothiscategoryareAmrix(cyclobenzaprineextended-releasecapsules)andAmbienCR(zolpidemextended-release).Regardingthenew“abuse-deterrent”opioidproducts(e.g.,Embeda,Exalgo),sufficientpatienthistoryshouldbenecessarytowarranttheuseofthistypeofformulation,asopposedtoamoretraditionalagentlikemorphineERorOxycodoneER.

Healthesystemsclinicalservicesmonitorsandmanagesaccesstocertaindrugs,while providing an educational resource for prescribers and case managers as a meanstopromoteproperuseofnewmedicationsinworkers’compensation.

Some new medications/indications include:

Abuse-deterrentOpioidsTheprescriptionofopioidsintheUnitedStateshasrisendramaticallyoverthepast15years.Methadoneprescribingrosenearlyathousandpercentbetween1997and20051,andisthoughttobeinlargepartduetoashiftinprescribingresultingfromthebadpressOxycontinreceivedinthelate90s.Inaddition,accordingtotheNationalCenterforHealthStatistics,thenumberofdeathsfromopioidoverdosesoverthesameperiodrosenearly400%,coincidingwiththe increased rate of prescribing while the United States continues to be the greatestconsumerofprescriptionopioidsandaccountsfor99%ofworldwidehydrocodoneuse(hydrocodonehascontinuedtoberankedasoneofthetopdrugsdispensedintheworkers’compensationpopulationformorethanadecade,andisalsoconsideredtobewidelyabused).Similartothestatisticsonoverdoses,clinicalstudieshavebeendocumentinganattendantriseintherateof opioid abuse and addiction.

Overthepasttwoyearsseveralnew“abuse-deterrent”formulationsofopioidshave been released to the market in an attempt to curb the misuse of these powerfuldrugs.Thenewformulationsincludeeitheraphysicalorchemicalbarrier that prevents or provides an impediment to the ways the drugs are typicallyabused–crushing,chewing,injecting.Giventheaddictionpotentialtheopioidclasspossesses,theplaceintherapyforthesenewagentsonthesurfaceseemsintuitive,however,thequestionstillneedstobeasked,whenshouldthesenew formulations be used in treating chronic pain?

OneofthemorenotableopioiddrugentrantsincludestherecentlyreleasedreformulatedOxycontin.Asoneofthemostprescribedandfrequentlyproblematicdrugsfortreatinginjuredworkers,thisnewbrandformulationwill continue to require close oversight from payers regardless of the new formulationproperties.Inaddition,thebranddesignationmaylikelyimpactoverall prescription costs.

AnotherofthenewlyreleasedopioidsEmbeda,iscomprisedofnaltrexonecombined with morphine and has also been formulated as an abuse deterrent drug.AnadditionaldrugExalgo,whichislikelythemostpotentofthethreedrugs,isnotanabusedeterrentformulationandisanextendedreleasedrug.Asisthecasewiththeintroductionofanynewpowerfulpaintreatmentdrugs,understanding the clinical implications at a patient level is most crucial to ensure positive outcomes.

Intermsofthepatientsthatmaybenefitfromthenewer,abuse-deterrentformulations–whoarethey?Thosewithahistoryofdrugabuse(prescriptionorillicit),orthosethatmightbeinanenvironmentwherediversionislikelymaybenefitfromprescriptionoftheseformulations.Butitisimportanttorememberthat these formulations are not a silver bullet against abuse. Appropriate use of abuse-deterrent opioids needs to be part of a comprehensive monitoring programonthepartoftheprovider,onewithwhichthepatientwillinglyandactivelyparticipates.Importantly,whileabuse-deterrentopioidscandiscourageabusebytypicalmeans,theydonotdecreasepotentialforoverdose.

The prescription of opioids in the United States has risen dramatically in the past 15 years. Methadone prescribing rose nearly a thousand percent between 1997 and 2005, and is thought to be in large part due to a shift in prescribing resulting from the bad press Oxycontin received in the late 90s. As the dramatic increases this table demonstrates, abuse-deterrent formulations of opioids will likely maintain a role in therapy.

1997 2005 % Change

Methadone 518,737 5,362,815 933%

Oxycodone 4,449,562 30,628,973 588%

Fentanyl base 74,086 387,928 423%

Hydromorphone 241,078 781,287 244%

Hydrocodone 8,669,311 25,803,544 198%

Morphine 5,922,872 15,054,846 154%

Meperidine 5,765,954 4,272,520 -26%

Codeine 25,071,410 18,960,038 -24%

New Product

SprixTM

VimovoTM (naproxen and esomeprazole)

Rybix®

ExalgoTM

ButransTM (buprenorphine) transdermal patch

Vivitrol® (NEW INDICATION)

Suboxone® sublingual film

Neudexta

Latuda®

Manufacturer

Roxro Pharma, Inc.

Pozen, Inc., and AstraZeneca, Plc

Victory Pharma, Inc.

Mallinckrodt Inc.

Purdue Pharma, L.P.

Alkermes, Inc.

Reckitt Benckiser Pharmaceuticals, Inc.

Avanir Pharmaceuticals, Inc.

Sunovion Pharmaceuticals Inc.

Approved by FDA

May 14, 2010

April 30, 2010

June 1, 2010

March 3, 2010

June 30, 2010

October 12, 2010

August 30, 2010

October 29, 2010

October 28, 2010

Therapeutic Class

NSAID

NSAID/Proton Pump Inhibitor Combo

Short-acting opioid analgesic

Opioid Analgesic

Opioid Analgesic

Opioid Antagonist

Addiction therapy

Antitussive/Antiarrhythmic

Atypical Antipsychotic

FDA-Approved Indications

Short term (up to 5 days) management of moderate to moderately severe pain

Relief of signs and symptoms of osteoarthritis, rheumatoid arthritis and ankylosing spondylitis and to decrease risk of developing gastric ulcers. This product is not recommended for initial treatment of acute pain. Studies do not extend past 6 months

Management of moderate to moderately-severe pain in adults (16 years of age or older)

Management of moderate to severe pain in opioid tolerant patients requiring continuous, around-the-clock opioid analgesia for an extended period of time

For the management of moderate to severe chronic pain in patients requiring a continuous, around-the-clock analgesic for an extended period of time

Prevention of relapse to opioid dependence, following opioid detoxification

Maintenance treatment of opioid dependence

For the treatment of pseudobulbar affect (PBA)

For the treatment of schizophrenia

Market Availability

Unknown

Available Now

Available Now

Available Now

Anticipated first quarter 2011

Available Now

Anticipated October 2010

Anticipated first quarter 2011

Anticipated first quarter 2011

Appropriate use of abuse-deterrent opioids needs to be part of a comprehensive monitoring program on thepartoftheprovider,one with which the patient willing and actively participates.

l05 06l

TXtoAdoptClosedFormularyBasedonODGTheTexasDivisionofInsurance(TDI)hasbeenengagedintheprocessofadoptingaclosedformularybasedontheWorkLossDataInstitute’sOfficialDisabilityGuidelines(ODG).Whileimplementingaformularybasedonevidence-basedtherapeuticguidelinessuchastheODGhasmanybenefits,theproposedprocessalsoleavesseveralimportantquestionsunanswered.Itisexpectedthattheseissues,aswellasissuesnotyetidentified,mayhaveunintendedconsequences and impact the success of the program in yet unknown ways.

Theopportunitiesthatcanberealizedthroughtheuseofaclosedformularyarelargelyintuitive.Evidence-basedtreatmentguidelinesliketheODGcanminimizereimbursementuncertaintyamongproviders,andstandardizetheeffective treatment of acute and chronic conditions. When treatments adhere totheguidelines,injuredworkersshouldbenefitbyreceivingearlyaccesstoappropriatetherapies,whichcanpotentiallyshortenthelengthofdisability.Andultimatelyasemployeesreturntowork,thedrainonemployersandinsurersshould be lessened/contained.

TheTXproposedformularydividesprescriptiondrugsintotwodistinctgroups(withathird,lesswell-definedgroup).One,asetofmedicationsdeemedappropriateforfirst-lineusearedesignatedas“Y”drugs.Asecondsetofmedications,designated“N,”areconsideredtobeinappropriateasfirst-linetherapy;theseagentswouldrequireapre-authorization,definedasa“StatementofMedicalNecessity”(SOMN)priortoreimbursement.

Thenewpolicy,asstructured,willnoteliminatetheneedtomaintaincontinuousoversight of therapy and may present several challenges for payers and providers.Theexactprocessformanaging“N”medications,andtheirnecessarypre-authorizationSOMNforms,isstillrelativelyunknown.Thereforetherecouldbedelayedaccessto“N”drugsduringtheonsetofthenewguidelines,whilethephysician-providedSOMNisapproved.Doctorsmayalsofacechallengesinprovidingthe“writtenstatementandsupportingevidence-baseddocumentation”requiredwitheachSOMN(§134.500,ODG)andquestionsstillremainregardingthestandardizationofthisrequirement.

Thelackofaquantitativerestrictionon“Y”drugsintheODGaddsfurtherquestions.Thatis,whilean“N”drugwouldbesubjecttopre-authorizationirrespectiveofitsintendeduse,a“Y”drughasnodefinedutilizationlimits:aclinicallyinappropriatedose(eithersub-orsuper-therapeuticdoses)ofa“Y”medicationcanbeprescribed,withoutsanction.

Byitsnature,theODGisonlyatool.Itdoesnotobviatetheneedfortheclinical,therapeutic input that must go along with every approval or disapproval decision atthepayerlevel.Ithasbeennotedthat“Y”doesn’tequal“compensable”and“N”doesn’tequal“inappropriate”—eachrequestmustbeevaluatedinthecontextofitsplaceintherapyforagiveninjury.

Whiletheneteffectoftheclosedformularyisexpectedtobepositiveforallstakeholders,thereare“unknown,unknowns”associatedwithitsimplementation—thatis,thereareeffectsthatcannotbecurrentlypredicted.Overall,theODGandtheclosedformularyproposedbytheTDIisastepintherightdirection.Untiltheaboveissuesareadequatelyaddressed,however,manyunknownsstillexist.HealthesystemscontinuestobeactivelyengagedintheTXsituationandwill proactively address the new closed formulary with its clients.

HealthesystemsNewslettersOfferInsightintoEmergingClinicalandComplianceIssuesHealthesystemsoffersitsclientsavaluabletoolforstayingup-to-dateoncurrentandemergingissuesfacingtheworkers’compensationindustry.Electronicnewslettersfeaturinginformationoncomplianceandlegislativeissues,aswellasclinicalandpharmacyissuesaredelivereddirectlytosubscribersinboxes.

ThenewslettersofferedincludetheCompliance Quarterly,featuringgovernmentand compliance related content and the Rx Postscript, a digest of new and current pharmacy and drug therapy information.

Individuals can sign up to receive either of these valuable newsletters by visiting www.healthesystems.com/newsletters.

Keep up-to-dateonindustrynews,alerts

and hot topics withtheHealtheNewsfeed.

Visit:healthesystems.com

Itisexpectedthattheseissues,aswellasissuesnotyetidentified,mayhaveunintended consequences and impact the success of the program in yet unknown ways.

l07 08l

TXtoAdoptClosedFormularyBasedonODGTheTexasDivisionofInsurance(TDI)hasbeenengagedintheprocessofadoptingaclosedformularybasedontheWorkLossDataInstitute’sOfficialDisabilityGuidelines(ODG).Whileimplementingaformularybasedonevidence-basedtherapeuticguidelinessuchastheODGhasmanybenefits,theproposedprocessalsoleavesseveralimportantquestionsunanswered.Itisexpectedthattheseissues,aswellasissuesnotyetidentified,mayhaveunintendedconsequences and impact the success of the program in yet unknown ways.

Theopportunitiesthatcanberealizedthroughtheuseofaclosedformularyarelargelyintuitive.Evidence-basedtreatmentguidelinesliketheODGcanminimizereimbursementuncertaintyamongproviders,andstandardizetheeffective treatment of acute and chronic conditions. When treatments adhere totheguidelines,injuredworkersshouldbenefitbyreceivingearlyaccesstoappropriatetherapies,whichcanpotentiallyshortenthelengthofdisability.Andultimatelyasemployeesreturntowork,thedrainonemployersandinsurersshould be lessened/contained.

TheTXproposedformularydividesprescriptiondrugsintotwodistinctgroups(withathird,lesswell-definedgroup).One,asetofmedicationsdeemedappropriateforfirst-lineusearedesignatedas“Y”drugs.Asecondsetofmedications,designated“N,”areconsideredtobeinappropriateasfirst-linetherapy;theseagentswouldrequireapre-authorization,definedasa“StatementofMedicalNecessity”(SOMN)priortoreimbursement.

Thenewpolicy,asstructured,willnoteliminatetheneedtomaintaincontinuousoversight of therapy and may present several challenges for payers and providers.Theexactprocessformanaging“N”medications,andtheirnecessarypre-authorizationSOMNforms,isstillrelativelyunknown.Thereforetherecouldbedelayedaccessto“N”drugsduringtheonsetofthenewguidelines,whilethephysician-providedSOMNisapproved.Doctorsmayalsofacechallengesinprovidingthe“writtenstatementandsupportingevidence-baseddocumentation”requiredwitheachSOMN(§134.500,ODG)andquestionsstillremainregardingthestandardizationofthisrequirement.

Thelackofaquantitativerestrictionon“Y”drugsintheODGaddsfurtherquestions.Thatis,whilean“N”drugwouldbesubjecttopre-authorizationirrespectiveofitsintendeduse,a“Y”drughasnodefinedutilizationlimits:aclinicallyinappropriatedose(eithersub-orsuper-therapeuticdoses)ofa“Y”medicationcanbeprescribed,withoutsanction.

Byitsnature,theODGisonlyatool.Itdoesnotobviatetheneedfortheclinical,therapeutic input that must go along with every approval or disapproval decision atthepayerlevel.Ithasbeennotedthat“Y”doesn’tequal“compensable”and“N”doesn’tequal“inappropriate”—eachrequestmustbeevaluatedinthecontextofitsplaceintherapyforagiveninjury.

Whiletheneteffectoftheclosedformularyisexpectedtobepositiveforallstakeholders,thereare“unknown,unknowns”associatedwithitsimplementation—thatis,thereareeffectsthatcannotbecurrentlypredicted.Overall,theODGandtheclosedformularyproposedbytheTDIisastepintherightdirection.Untiltheaboveissuesareadequatelyaddressed,however,manyunknownsstillexist.HealthesystemscontinuestobeactivelyengagedintheTXsituationandwill proactively address the new closed formulary with its clients.

HealthesystemsNewslettersOfferInsightintoEmergingClinicalandComplianceIssuesHealthesystemsoffersitsclientsavaluabletoolforstayingup-to-dateoncurrentandemergingissuesfacingtheworkers’compensationindustry.Electronicnewslettersfeaturinginformationoncomplianceandlegislativeissues,aswellasclinicalandpharmacyissuesaredelivereddirectlytosubscribersinboxes.

ThenewslettersofferedincludetheCompliance Quarterly,featuringgovernmentand compliance related content and the Rx Postscript, a digest of new and current pharmacy and drug therapy information.

Individuals can sign up to receive either of these valuable newsletters by visiting www.healthesystems.com/newsletters.

Keep up-to-dateonindustrynews,alerts

and hot topics withtheHealtheNewsfeed.

Visit:healthesystems.com

Itisexpectedthattheseissues,aswellasissuesnotyetidentified,mayhaveunintended consequences and impact the success of the program in yet unknown ways.

l07 08l

Florida Physician Dispensing of Repackaged Drugs andEmergingBillingTrendsPhysician dispensing of repackaged medication continues to be a heavily debatedsubject,particularlyinFlorida.Physicianproponentscitein-officedispensing of repackaged medications helps to reinforce patient compliance with treatmentplans.However,opponentsarequicktopointoutthatrepackagedmedications dispensed in a physician setting are marked up in price by as much asfivetimesmorethantheallowablefeeschedule,andthissignificantincreaseincostfaroutweighstheconveniencebenefit.

In2010,abilltolimitthereimbursementofrepackagedmedicationspassedintheFloridaLegislaturebutwaslatervetoedbyFloridaGovernorCharlieCrist.Despitetheveto,aFloridaschooldistricthasrecentlytakenafirmpositiononeliminating physician dispensing and the district estimates a savings of over $700KperyearbyreducingthepricetothePharmacyBenefitManager(PBM)contract rate.1

RecentlyquotedinanarticleinRisk&InsuranceMagazine,DarylCorr,presidentofHealthesystemssaid,“Drugre-packagers—companiesthatbreakdowntheoriginal packaging of a drug into different quantities and repackage it — are proliferatinginFlorida.Whenrepackagingoccurs,theoriginalNationalDrugCodeofthedrugthatisrepackagedismodifiedtoanewnumber,whilealsoassigning a new average wholesale price. In most cases the re-packager sets thenewaveragewholesalepricetoaninflatedrate.TheFloridafeescheduleuses the average wholesale price as the pricing benchmark; therefore the end resultisaninflatedcosttothepayer/employer.CompanieslikeHealthesystems,though,havetheabilitytoidentifythesetransactionsandre-pricethembacktoacomparablerateoftheoriginaldrug.”2

Healthesystemshasrecentlyidentifiedanemergingtrendinrepackageddrugbillingwhereinre-packagersbypasstheoriginalNationalDrugCode(NDC)numberusedtodeterminereimbursementbyusingNDCcodesthatdonotutilizethe“repackindicatorfield”inmostnationalrecognizedpharmacydatabases,suchasMedi-Span.Healthesystemsisproactivelyaddressingthisissue with its clients and has implemented solutions to address this challenge.

Compliance Updates

Alaska’sDepartmentofLaborrecentlyissuedregulations,effectiveJuly31,2010,requiring generic medications to be dispensed for injured workers. Generics shouldbeutilizedinmostcases,exceptwhere the provider has indicated brand dispensing is medically necessary. Patients requesting brand medications over generic will be responsible for the difference between the brand and generic drug costs if a generic is available and there is no medical rationale to dispense a brand name drug.

ArizonaTheArizonaIndustrialCommissionrecentlypublishedits2010FeeScheduleeffectiveOctober1,2010.The2010feeschedule now directs payers to reimburse medicinesatthefeeschedulerates,absenta contractual agreement between the pharmacyandpayer.TheICAalsoclarified,“networkdiscountsmaynotbeappliedinthe absence of a contractual agreement withthepharmacyauthorizingsuchdiscounts.”TheIndustrialCommissionalsoadded new language providing guidance on the direction of injured workers into a provider network.

California’s Department of Industrial Relations has adopted new rules on posting noticesandnotificationrequirementsforemployers participating in Medical Provider Networks.ThenewregulationsbecameeffectiveOctober8,2010.

LouisianaOfficeofWorkers’Compensationwillrequiree-billingby2012.LouisianaGovernorBobbyJindalsignedSenateBill255intolawonJune4,2010,pavingthewayfortheLouisianaWorkers’CompensationCommissiontoadoptruleson electronic billing.

RegulatorsfromacrossthenationgatheredlastmonthinLosAngelesattheAnnualConferenceoftheInternationalAssociationofIndustrialAccidentBoardsandCommissions(IAIABC).Aspecialsession,AnswerstoYourQuestionsAboutAdoptingMedicalTreatmentGuidelines,tookplaceSeptember22ndandhighlightedthe growing trend towards adopting treatment guidelines and a panelsharedexcellentinsightintotheprocessofevaluatingandimplementing the guidelines.

ElizabethMiller,SpecialAssistanttotheChair,NewYorkStateWorkers’CompensationBoard(NYSWCB)isintheprocessofrollingouttreatmentguidelinesinNY.AsapanelmemberattheforumMs.Millerremarked,“Thekeytoasuccessfulimplementationisoutreachandeducation,formedicalproviders,theirstaff,claimspeopleandevenourAdministrativeLawJudgesandattorneys.Thesepiecesallneedtoworktogethertoensureinjuredworkersaregettingqualitycaremoretimely.Withbettertreatment,yougetbetteroutcomes.”NewYork’sMedicalTreatmentGuidelinesbecomeeffectiveDecember1,2010.

Given the positive impact the medical treatment guidelines have had,itisnotsurprisingthatworkers’compensationagenciesareembracingthebenefitsoftheguidelineswithintheirrulesandregulations.Washington’sDepartmentofLaborandIndustry(DLI)wasthefirsttolookatadoptionoftreatmentguidelines,publishingitsdiagnosisspecificguidancein1988,whichaddressedinpatientadmission criteria for non-surgical back pain. Within a year of this publishedguidance,theDLIreporteda60%decreaseintheseadmissions,aconsiderableimpactinarelativelyshorttimeframe.1

In1992,Colorado’sDivisionofWorkers’Compensationadoptedtheir own version of treatment guidelines. Panelist Dr. Kathryn Mueller,MedicalDirectorfortheColoradoWorkers’CompensationDivisionsaid,“Thesetreatmentguidelinesaremorethanatoolforutilizationreview;theyarebestpracticesforbettermedicaloutcomes.”ColoradoupdatedtheirguidelinesonThoracicOutletSyndromein2010andareworkingonmoreupdateswhichwillbeposted on their website in the future.

Asadvancesinmedicineandtechnologyevolve,soshouldthetreatment guidelines which are used as the standard of care. It is important that regulators consider the implications of adopting guidelinesandrespondquicklywheretechnological,legalorothertrends impact the process.

Florida lawmakers recently took steps toward preventing drug diversionandabuseinthestatebypassingSB2272.Thebillwillplace additional controls on many of the non-institutional pain management clinics which have cropped up across the state in recentyears.Themeasuresareintendedtoreducedrugdiversion,prevent doctor shopping and curb the growing number of out-of-statepatientswhocometoFloridaforprescriptiondrugs.Thebillwill also directly impact Florida injured workers receiving treatment atpainmanagementclinics.Thebill,whichwassignedintolawinJune2010,becameeffectiveonOctober1,2010.

TheFloridaBoardofMedicineisintheprocessofdraftingrulestosupporttheintentofthebill.Pertheproposedrules,injuredworkers being treated at pain clinics regulated by this new law will berequiredtosubmittomandatorydrugtesting.Testingwillberequiredpriortotheinitialfillofanycontrolledsubstance,andonarandom basis at least twice a year. Physicians will be required to test injured workers to verify they are taking medications as prescribed without a special request from the adjuster or the medical case manager.

In order to comply with the adopted rules there is a tremendous amountofworktobecompletedbytheBoardofMedicine.TheDivisionofWorkers’Compensationmayalsoneedtoconsidertheadditionofnewcodes,orspecificreimbursementrulesformandatorydrugtestinginitsHealthCareProviderReimbursementManual.IftheDivisionofWorkers’Compensationaddsspecificguidancetothereimbursementmanual,theywillbesettingclearguidelines for providers that not only is testing required for workers inapainmanagementsetting,butreimbursementwillbemadebasedonaspecificcode.

ThenewrulesareexpectedtobeadoptedpriortoJanuary2011,uponcompletionoftheofficialrulemakingprocess.

MedicalTreatmentGuidelinesOverthepastseveralyearsanumberofworkers’compensationstateagenciesadoptedorexploredtheuseofmedicaltreatmentguidelinesasthestandardofcareforinjuredworkers.BothMinnesotaandNewYorkadoptedguidelinesthissummerandLouisianaandMontanaregulatorsareworkingtowardsadoptingguidelines by year end. At least four other states are considering treatmentguidelinesintheir2011agendas.Inrecentyears,treatment guidelines have become a common platform for providers and payers to ensure timely and appropriate delivery of healthcare to injured workers.

FloridaBoardofMedicineProposesNewRulesforPainManagementClinics

l09 10l

“CompanieslikeHealthesystems,though,have the ability to identify these transactions and re-price them back to a comparable rate oftheoriginaldrug.”-Daryl Corr, President

Florida Physician Dispensing of Repackaged Drugs andEmergingBillingTrendsPhysician dispensing of repackaged medication continues to be a heavily debatedsubject,particularlyinFlorida.Physicianproponentscitein-officedispensing of repackaged medications helps to reinforce patient compliance with treatmentplans.However,opponentsarequicktopointoutthatrepackagedmedications dispensed in a physician setting are marked up in price by as much asfivetimesmorethantheallowablefeeschedule,andthissignificantincreaseincostfaroutweighstheconveniencebenefit.

In2010,abilltolimitthereimbursementofrepackagedmedicationspassedintheFloridaLegislaturebutwaslatervetoedbyFloridaGovernorCharlieCrist.Despitetheveto,aFloridaschooldistricthasrecentlytakenafirmpositiononeliminating physician dispensing and the district estimates a savings of over $700KperyearbyreducingthepricetothePharmacyBenefitManager(PBM)contract rate.1

RecentlyquotedinanarticleinRisk&InsuranceMagazine,DarylCorr,presidentofHealthesystemssaid,“Drugre-packagers—companiesthatbreakdowntheoriginal packaging of a drug into different quantities and repackage it — are proliferatinginFlorida.Whenrepackagingoccurs,theoriginalNationalDrugCodeofthedrugthatisrepackagedismodifiedtoanewnumber,whilealsoassigning a new average wholesale price. In most cases the re-packager sets thenewaveragewholesalepricetoaninflatedrate.TheFloridafeescheduleuses the average wholesale price as the pricing benchmark; therefore the end resultisaninflatedcosttothepayer/employer.CompanieslikeHealthesystems,though,havetheabilitytoidentifythesetransactionsandre-pricethembacktoacomparablerateoftheoriginaldrug.”2

Healthesystemshasrecentlyidentifiedanemergingtrendinrepackageddrugbillingwhereinre-packagersbypasstheoriginalNationalDrugCode(NDC)numberusedtodeterminereimbursementbyusingNDCcodesthatdonotutilizethe“repackindicatorfield”inmostnationalrecognizedpharmacydatabases,suchasMedi-Span.Healthesystemsisproactivelyaddressingthisissue with its clients and has implemented solutions to address this challenge.

Compliance Updates

Alaska’sDepartmentofLaborrecentlyissuedregulations,effectiveJuly31,2010,requiring generic medications to be dispensed for injured workers. Generics shouldbeutilizedinmostcases,exceptwhere the provider has indicated brand dispensing is medically necessary. Patients requesting brand medications over generic will be responsible for the difference between the brand and generic drug costs if a generic is available and there is no medical rationale to dispense a brand name drug.

ArizonaTheArizonaIndustrialCommissionrecentlypublishedits2010FeeScheduleeffectiveOctober1,2010.The2010feeschedule now directs payers to reimburse medicinesatthefeeschedulerates,absenta contractual agreement between the pharmacyandpayer.TheICAalsoclarified,“networkdiscountsmaynotbeappliedinthe absence of a contractual agreement withthepharmacyauthorizingsuchdiscounts.”TheIndustrialCommissionalsoadded new language providing guidance on the direction of injured workers into a provider network.

California’s Department of Industrial Relations has adopted new rules on posting noticesandnotificationrequirementsforemployers participating in Medical Provider Networks.ThenewregulationsbecameeffectiveOctober8,2010.

LouisianaOfficeofWorkers’Compensationwillrequiree-billingby2012.LouisianaGovernorBobbyJindalsignedSenateBill255intolawonJune4,2010,pavingthewayfortheLouisianaWorkers’CompensationCommissiontoadoptruleson electronic billing.

RegulatorsfromacrossthenationgatheredlastmonthinLosAngelesattheAnnualConferenceoftheInternationalAssociationofIndustrialAccidentBoardsandCommissions(IAIABC).Aspecialsession,AnswerstoYourQuestionsAboutAdoptingMedicalTreatmentGuidelines,tookplaceSeptember22ndandhighlightedthe growing trend towards adopting treatment guidelines and a panelsharedexcellentinsightintotheprocessofevaluatingandimplementing the guidelines.

ElizabethMiller,SpecialAssistanttotheChair,NewYorkStateWorkers’CompensationBoard(NYSWCB)isintheprocessofrollingouttreatmentguidelinesinNY.AsapanelmemberattheforumMs.Millerremarked,“Thekeytoasuccessfulimplementationisoutreachandeducation,formedicalproviders,theirstaff,claimspeopleandevenourAdministrativeLawJudgesandattorneys.Thesepiecesallneedtoworktogethertoensureinjuredworkersaregettingqualitycaremoretimely.Withbettertreatment,yougetbetteroutcomes.”NewYork’sMedicalTreatmentGuidelinesbecomeeffectiveDecember1,2010.

Given the positive impact the medical treatment guidelines have had,itisnotsurprisingthatworkers’compensationagenciesareembracingthebenefitsoftheguidelineswithintheirrulesandregulations.Washington’sDepartmentofLaborandIndustry(DLI)wasthefirsttolookatadoptionoftreatmentguidelines,publishingitsdiagnosisspecificguidancein1988,whichaddressedinpatientadmission criteria for non-surgical back pain. Within a year of this publishedguidance,theDLIreporteda60%decreaseintheseadmissions,aconsiderableimpactinarelativelyshorttimeframe.1

In1992,Colorado’sDivisionofWorkers’Compensationadoptedtheir own version of treatment guidelines. Panelist Dr. Kathryn Mueller,MedicalDirectorfortheColoradoWorkers’CompensationDivisionsaid,“Thesetreatmentguidelinesaremorethanatoolforutilizationreview;theyarebestpracticesforbettermedicaloutcomes.”ColoradoupdatedtheirguidelinesonThoracicOutletSyndromein2010andareworkingonmoreupdateswhichwillbeposted on their website in the future.

Asadvancesinmedicineandtechnologyevolve,soshouldthetreatment guidelines which are used as the standard of care. It is important that regulators consider the implications of adopting guidelinesandrespondquicklywheretechnological,legalorothertrends impact the process.

Florida lawmakers recently took steps toward preventing drug diversionandabuseinthestatebypassingSB2272.Thebillwillplace additional controls on many of the non-institutional pain management clinics which have cropped up across the state in recentyears.Themeasuresareintendedtoreducedrugdiversion,prevent doctor shopping and curb the growing number of out-of-statepatientswhocometoFloridaforprescriptiondrugs.Thebillwill also directly impact Florida injured workers receiving treatment atpainmanagementclinics.Thebill,whichwassignedintolawinJune2010,becameeffectiveonOctober1,2010.

TheFloridaBoardofMedicineisintheprocessofdraftingrulestosupporttheintentofthebill.Pertheproposedrules,injuredworkers being treated at pain clinics regulated by this new law will berequiredtosubmittomandatorydrugtesting.Testingwillberequiredpriortotheinitialfillofanycontrolledsubstance,andonarandom basis at least twice a year. Physicians will be required to test injured workers to verify they are taking medications as prescribed without a special request from the adjuster or the medical case manager.

In order to comply with the adopted rules there is a tremendous amountofworktobecompletedbytheBoardofMedicine.TheDivisionofWorkers’Compensationmayalsoneedtoconsidertheadditionofnewcodes,orspecificreimbursementrulesformandatorydrugtestinginitsHealthCareProviderReimbursementManual.IftheDivisionofWorkers’Compensationaddsspecificguidancetothereimbursementmanual,theywillbesettingclearguidelines for providers that not only is testing required for workers inapainmanagementsetting,butreimbursementwillbemadebasedonaspecificcode.

ThenewrulesareexpectedtobeadoptedpriortoJanuary2011,uponcompletionoftheofficialrulemakingprocess.

MedicalTreatmentGuidelinesOverthepastseveralyearsanumberofworkers’compensationstateagenciesadoptedorexploredtheuseofmedicaltreatmentguidelinesasthestandardofcareforinjuredworkers.BothMinnesotaandNewYorkadoptedguidelinesthissummerandLouisianaandMontanaregulatorsareworkingtowardsadoptingguidelines by year end. At least four other states are considering treatmentguidelinesintheir2011agendas.Inrecentyears,treatment guidelines have become a common platform for providers and payers to ensure timely and appropriate delivery of healthcare to injured workers.

FloridaBoardofMedicineProposesNewRulesforPainManagementClinics

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“CompanieslikeHealthesystems,though,have the ability to identify these transactions and re-price them back to a comparable rate oftheoriginaldrug.”-Daryl Corr, President

References

Medical Foods; page 3

1 US Food and Drug Administration. Guidance for Industry: Frequently Asked Questions About Medical Foods. Availableathttp://www.fda.gov/Food/FoodSafetyProduct-SpecificInformation/MedicalFoods/default.htm.AccessedOctober20,2010.2 PhysiciansTherapeuticsLLC.Availableathttp://www.ptlcentral.com.AccessedOctober20,2010.

Abuse-deterrent Opioids; page 5

1 Manachikanti,Laxmaiah,andSingh,Angelie,“TherapeuticOpioids:ATen-YearPerspectiveoftheComplexitiesandComplicationsofEscalatingUse,Abuse,and NonmedicalUseofOpioids.”PainPhysician,March2008

Florida Physician Dispensing; page 9

1 MichaelWhiteley,“SchoolDistrictSayingNotoRepackagedDrugPrices,”Workcompcentral,10/05/2010.2 DanReynolds,“Workers’CompIn-DepthSeries(Part1):TheTallahasseeShuffle.”Risk&Insurance,EmergingStrategiesforRisk.October15,2010issue. Availableathttp://www.riskandinsurance.com/story.jsp?storyId=533323010&topic=Main.AccessedNovember3,2010.

Medical Treatment Guidelines; page 101 WashingtonStateDepartmentofLaborandIndustries’OfficeoftheMedicalDirector,“MedicalTreatmentGuidelinesinWashingtonWorkers’Compensation,”June 2010.Availableathttp://www.lni.wa.gov/ClaimsIns/Files/OMD/MedTreat/Guidelinehistoryprocess.pdf.AccessedSeptember15,2010.

©2010Healthesystems.Updated11/03/10.

5100WestLemonStreetSuite311Tampa,FL33609800.921.1880 l TollFree800.758.5779 l CustomerServiceCenter800.964.1681 l DrugInformationLinewww.healthesystems.com

AboutHealthesystems

Healthesystems is a specialtyproviderof innovativemedical costmanagement solutions for theworkers’compensation industry. Our comprehensive products include a leading Pharmacy Benefit ManagementProgram, expert Clinical Review Services and a revolutionary Ancillary Benefit Management solution forprospectively managing ancillary medical services.

OurVerticēClaimsInformationPortaldeliversreal-timepharmacyandancillarybenefitmanagementprograminformation,reportsandtools.Thisintuitivewebportalallowsclaimsprofessionalstoaccesstoolsforquicklyandefficientlyprocessingprovidertransactions,runningreports,retrievingrelevantclinicalinformationandmany other functions.

Byleveragingpowerfultechnology,clinicalexpertiseandenhancedworkflowautomationtools,weprovideclientswithflexibleprogramsthatreducethetotalcostofmedicalcareandmanagedrugutilizationincludingthe overuse of narcotics and other problematic drugs, all while increasing the quality of care for injuredworkers.

AboutOurData

Data referenced in this document was produced using Healthesystems’ proprietary pharmacy databaseinformation.

Thecontentsofthisdocumentareforinformationalpurposesonly.Itisnotasubstituteforamedicalexam,nordoesitreplacetheneedforservicesprovidedbyamedicalprofessional.Theinformationprovidedinthisdocumentisnotintendedtodiagnose,treat,orcure.Everyefforthasbeenmadetoprovideaccurate,up-to-dateandcompleteinformation,butnowarrantyorguaranteeismadetothateffect.Healthesystemsisnotliableforanydirect,indirect,consequential,special,exemplary,orotherdamagesarisingfrom the use or misuse of any material or information provided in this document.

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