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Drug Repackaging Bill Not Ready for Prime Time for Good Reason
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Last Thursday, Senate Health Regulation Committee Chairman Rene Garcia, R-Hialeah, postponed a vote on a bill restricting the price physicians can charge workers' comp patients for repackaged drugs.
He did it because he sensed he might not have the votes to move the bill along, that maybe a majority of senators on the committee are beginning to realize they're being hustled.
Good for them. They're being good and hustled.
The numbers plain don't add up.
The insurance industry claims that physicians overprice for dispensing drugs in their own office. It claims that if the price of those drugs were capped at three times the drug manufacturers' wholesale price, plus a $4.18 dispensing fee -- as pharmacy-dispensed drugs are now -- it would save the state some $62 million in workers' comp rates.
Folks, it would not save the state $62 million.
In the first place, the rationale for that figure, the formula, doesn't exist. It's a mirage, a hallucination, a rabbit the National Council on Compensation Insurance pulled out of a hat.
In March 2010 the NCCI said savings to the state would be $34 million; in April 2010, $100 million; and since March 11, 2011, $62 million. Which is it? Does anybody know?
Every time a member of a pertinent House or Senate committee asks for the carfax on this measure, HB 511 or SB 668, they get gang-banged by the insurance and business lobbies, who refer to a 1,000-page NCCI report that includes not a single one of the insurance industry's guesstimates.
Looking at the background on this bill, perhaps some of the senators are having trouble with the "trust me" school of legislating on SB 668.
There's only one fair way to add up the numbers on this bill, and that is to assess the universe of claims.
- You take the total number of claims, direct from statistics on page 83 of Chief Financial Officer Jeff Atwater's 2010 pharmaceuticals report. That total is $186 million.
- Now you take the total number of claims in which drugs were dispensed from pharmacies. That is $120 million.
- Finally, you take the total number of claims coming from doctors who dispense drugs in their office. That is $63.3 million.
- Some 1.1 million workers' comp prescriptions were filled at pharmacies last year, averaging out to a cost of $121 per prescription.
- Some 460,000 prescriptions were written and dispensed in doctors' offices in 2010, averaging out to $137 per prescription.
- What is the difference? It works out to $16 per prescription. Doctors who prescribe are charging $16 per prescription more across the universe of all prescriptions for workers' comp in Florida.
- That $16 difference comes to $8 million -- not $62 million, as the bill's lobbyists would have you believe. And quite frankly, that $8 million will drop further when the 2011 figures come out, with the elimination of Class 2 and Class 3 drugs -- Oxycontin and the like.
"Doctors aren't Walgreens, they can't buy-in hundreds of thousands of pills at one time to keep their prices down," said Derek Edson, a retired Fort Lauderdale osteopath who has cared for hundreds, perhaps thousands, of workers' comp patients. "This is the way we get the best patient outcomes. We get them their drugs instantly, get them back to work as soon as they can. The drugs and how quickly the patient begins a course of them, that's the key to a full recovery and getting back to work quickly."
Why does Florida need a cap for dispensing physicians? Beats me.
Florida is a carrier-directed state. The state can order a workers' comp patient to see a specific doctor. The state can order a patient to see only a doctor who sends his patients to a pharmacy to get a prescription filled. But it doesn't. It doesn't because Edson is correct. Patient outcomes are infinitely better when doctors prescribe. Employers know it and so does the state.
What that means is that, theoretically, the state can always -- that is, 100 percent of the time -- choose to send its workers' comp patients to doctors who don't dispense drugs, who send their patients to pharmacies to fill their prescriptions instead.
"This is why we don't need a cap," argues lobbyist Tom Panza, a Florida attorney for Automated Healthcare Solutions, which offers software to self-dispensing physicians. "We have a failsafe. The state is already in charge of the whole show. If dispensing physicians are so greedy, why doesn't the state just skip right over them?"
According to the Office of the Chief Financial Officer, in 2010 the total bill in Florida for all physician-dispensed workers' comp meds was $63.3 million. Panza says, "If we assume we can save $62 million of that, it will leave us $1.3 million to run one-third of a workers' comp program in the fourth largest state in the nation. That comes to about $2.60 for every prescription. It is totally, utterly absurd."
Panza says it all. Senators, do the math. You'll have to -- the bills' sponsors most certainly have not.
Reach Nancy Smith at nsmith@sunshinestatenews.com or at (850) 727-0859.
Comments (6)
You exactly prove my point! Physician-dispensed repackaged meds are LESS expensive than pharmacy-dispensed brands -- period. However, your comparison to USDA choice meat is intentionally misleading since the FDA ensures that generic medication is equivalent to the efficacy of brands! But your interest in brand medication is impressive for other reasons.
The REAL point is who you really are and why you've been chosen to lead the misguided, inaccurate charge against physician dispensing. According to your website you and your partner, Helen Knight, run CompPharma which "is a consortium of work comp PBM's"(Pharmacy benefit Managers). Also, "Nine of the nation's eleven largest PBM's are members and together they account for over 75% of work comp drug spend."
You've been cloaking yourself in the garb of a reformer -- lobbying around the country and speaking at seminars to bash the many advantages of physician dispensing -- to instead redirect the prescriptions to your PBMs and PBM's closed-door mail order pharmacies. The BIG money in workers comp medication comes from two places for you and your members.
First is the rebate and/or coupon money paid by brand manufacturers. The real number of brand medications filled by pharmacies is 40-45% and up to a 25% rebate is paid by the brand manufacturer to your PBM. Those are the facts -- but your self-interest of protecting your massive profits is not really able to hide behind your bogus campaign against physician dispensing. The rebates can easily be $50 per med! Many lawsuits have and are being filed by State Attorneys General against PBM's for not crediting the employer (eg NY vs Express Scripts) for those dollars. As a result, many states are legislating transparency laws to require the rebate "kick back'" money to be credited to the employers.
Second, the PBM-owned "Closed Door" Mail Order Pharmacies place patients on long-term prescriptions of 3 months or more to increase their own profits. I spoke to a patient yesterday who was receiving meloxicam from the PBM's mail order pharmacy for 6 months, even though the prescription was only for one month. The physician didn't know the prescriptions continued to be sent at all, much less in 3-month quantities. Obviously, this was a very dangerous situation and wouldn't have happened had the physician been allowed by the insurance carrier to dispense.
The biggest driver for medication costs is the legal form of kickback called a rebate or coupon that PBMs take from brand manufacturers for putting their drug on formulary. Coventry Health Care, Inc, an insurance carrier that owns a workers comp PBM (First Script), stated in its 2011 annual report that they have "receivables" of $310.7 and $314.9 million at December 31,2010 and 2009, respectively ( SEC Form 10-K, Fiscal year ended Dec 21, 2010, page 53).
Last year the amount paid to PBMs for rebates was $122 Billion. Where is your outrage about that reality?
Not one employee in the country, much less Florida, has a workers comp insurance card in their pocket. Workers comp patients are not supposed to pay one penny of their care! Florida doesn't require employers to report an injury to their insurance carrier for 21 days after an injury. When patients are injured at work, the ONLY place they can get their medication 100% of the time is from their physician. They wait critical weeks and even months trying to get their meds from pharmacies.
The problem for you is that when physicians dispense, the drug money is diverted away from your PBMs. Anyone with common sense recognizes physician dispensing as the most efficient form of access to care. No one talks about what happens to the patients whose health and lives -- and families -- are affected by their not being able to get their meds, since the claim information isn't available to them.
Imagine if was your foot was infected from a crush injury at work and you didn't have the money to pay for brand antibiotics and pain medication at the pharmacy!
So, Mr. Paduda, it's time to get honest about your real agenda and your real motivation -- protecting your own profits in the PBMs by hiding your direct self interest and engaging in fiction disguised as truth.
Its time to worry more about injured workers, their families, their access to healing and their rights and not this false sense of righteous indignation that so permeates this debate from the profiteers
The truth is out.
Todd Wilder
American for Patients Rights
I'm not sure how I proved your point. Let me see if I can explain this a little more simply for you.
Physician dispensed generic meds are far more expensive than retail dispensed generic medications. As has been well documented by WCRI and NCCI, the price differential is from 50% more to 700% more.
Physicians do not dispense brand medications because they cannot benefit from an inflated price by dispensing a repackaged brand drug; brand drugs cannot be repackaged. As you know, a repackager can set their own price; physician dispensers and their enablers garner enormous profits by manipulating this loophole to increase the price of drugs.
This increases employers costs, and increase taxes for Floridians. Refer to the Miami-Dade School Systems' statement that paying inflated prices for physician dispensed drugs cost about $700,000.
That's about eight teachers in a school system hard pressed to make ends meet.
As to your assertions about PBMs making more money on brand drugs, that is simply untrue. In fact, there is more margin in generics than in brand, and PBMs work very hard to move brand prescriptions to generics when a generic is available. You may want to read up on the drug trend reports from PMSI, ESI, Progressive Medical, and other workers comp PBMs. If you do, you'll note they take noticeable pride in their generic efficiency rate.
The generic efficiency rate is simply the percentage of time a PBM processes a generic when a generic is available to replace a brand drug. Most are well up in the high-ninety percent range; that is, whenever and wherever it is appropriate for a PBM to get an injured worker to use a generic, they do.
You may also not be aware that physicians are the ones who prescribe drugs; if a physician prescribes a sole-source brand, the PBM has to fill that script.
I don't know where you get your information re workers comp rebates, but you are mistaken.
Rebates get paid when a PBM selects a drug for a therapeutic class, and makes that part of a "formulary" with financial incentives for members to use drugs on the formulary. That simply cannot and is not done in workers comp; there are no formularies or copays or other mechanisms to preferentially encourage use of one brand drug vs another. I can't speak to the group health world; perhaps that is what you are referring to.
As to your claim that pharma paid PBMs $122 billion in rebates in 2010, that's just plain ludicrous. Total PBM revenues were $159 billion that year; are you really saying that all but $37 billion of their revenues were from rebates? That is just amazingly wrong.
I won't get into your statements about Coventry's financials, except to suggest you look at Aetna's, or UHG's. You'll note that in the footnotes they detail the source of those receivables - the vast majority are insurance premiums. Not rebates, as you ingenuously imply.
I've been up front about my affiliation with CompPharma. Who, pray tell, funds "Americans for Patients Rights"? Why is only 10% of your funding for lobbying? Who are your members?
This boondoggle is living off borrowed time only because these folks are factoring in campaign dollars out of their profits.
Unfortunately your "assessment of the universe of claims" misses a key point. Drugs dispensed by physicians are almost all generics, which cost much less than brand drugs.
The mix of scripts filled by retail pharmacies is about 30-35% brand:70-65% generic. For workers comp, the cost per day of supply of a generic medication in 2010 was $2.71, 70% less than the $9.01 cost of a brand.
Retail pharmacies fill brand scripts; dispensing physicians rarely do. That is why the math used by Mr Panza et al is nonsensical.
Think of it this way. You can buy cheap hamburger or you can buy USDA choice filet mignon. Both are "meat", but you can't compare the two.
Similarly, you can't compare the average cost of a pound of meat from a store that only sells cheap burger to one that sells mostly steaks, and a lot of USDA choice filets as well.
There is a very real difference in the price of exactly the same pill dispensed by a physician and a retail pharmacy. There's absolutely no question about that. I would encourage you to do more research and correct the misstatements in your piece.
As to NCCI's different figures, they are based on different periods studied, as their testimony and accompanying documents clearly state.
regards
Joe Paduda
President, CompPharma LLC
Thank you for making a very important point -- we agree with you dispensing physicians who see injured workers do prescribe generic medications to keep costs down. So they are doing their part to get injured workers back to work faster and making the suystem more efficient.
To your comments about Mr. Panza's math -- I beg to disagree -- if anyone's math should be questioned it is the NCCI's breakdown of the workers compensation rate increase. In fact, several members of the legislature sitting on committees addressing the physician dispensing bills have asked the same questions --- why don't these numbers add up.
And finally, I hope there will come a time very soon when the concerns of the injured workers and their families are more readily reflected in the concerns expressed by you, the insurance companies you represent and the Florida legislature.
Thank you,
TODD WILDER
Executive Director
Americans for Patients Rights
Physician dispensing drives up costs, as the price charged by physicians dispensing medications is anywhere from 50% - 700% higher than the same drug dispensed by a retail store.
You may beg to disagree, but you don't cite any data or research or in any way refute my statement. As to why members of the legislature haven't asked those questions, perhaps it is because they're influenced by large contributions from organizations who are taking money from employers and taxpayers to enrich a select few, organizations you are enabling and supporting.
Do not lecture me about concerns about injured workers. I do not represent insurance companies and resent your assertion that I do. Most physicians dispensing drugs to injured workers are ignoring the very real threats to patient safety inherent in that practice. Moreover, data indicates that patients dispensed medications by physicians have longer disability durations and higher medical costs than those who receive meds from retail pharmacies. Your claims of return to work and efficiency are not supported by any data.
Joe Paduda
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