UR Nation End of Month Regulatory News Summary

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announcement-updated_4-1-15
CA DWC Proposing Significant Updates to MTUS

The California DWC is proposing a significant update to its Medical Treatment Utilization Schedule (MTUS) in order to incorporate changes made by ACOEM. Most of the proposed changes track updates that ACOEM made to its treatment guidelines in 2016 and earlier this year, but one proposed change dates back to 2011(Hip and Groin Guideline) and another one to 2013 (Elbow Disorders).

The CA DWC proposes to incorporate by reference these changes made by ACOEM:

ACOEM Guidelines

A public hearing has been scheduled for Sept. 6, 2017 to permit all interested persons the opportunity to present comments. The public hearing will be conducted at the Elihu Harris State Office Building at 1515 Clay Street, Oakland California. Individuals wishing to submit written comments by email can email Maureen Gray, Dept. of Industrial Relations, at dwcrules@dir.ca.gov. Emails will be accepted up and until 5:00 pm on Sept. 6, 2017.

Federal Task Force Forming on Pain Management

The U.S. Department of Health and Human Services has given notice in the Federal Register that they are seeking nominations for members to serve on an advisory task force aimed at reviewing best practices for pain management. The establishment of the task force is authorized by Sec. 101 of the Comprehensive Addiction and Recovery Act of 2016 (CARA). The task force will include representatives of federal agencies as well as others from the private sector who represent a range of disciplines and views.  The panel is slated to have up to 30 members.

The task force will make recommendations on the development of best practices for pain management and pain medication prescribing. The recommendations will then be disseminated to federal agencies and the public. The plan is for the task force to meet at least twice a year. The deadline for nominations is Sept. 27.

Insys Therapeutics Settles Opioid Lawsuit with State of Illinois

Insys Therapeutics has agreed to pay the State of Illinois $4.45 million to settle a lawsuit claiming it used deceptive marketing practices to sell its highly addictive drug Subsys. Specifically, the lawsuit alleges that Insys illegally marketed its painkiller, which was originally approved for treating cancer patients, to doctors who prescribed high volumes of opioids for chronic pain.

In a press release, Illinois Attorney General Lisa Madigan commented on why the lawsuit was filed. “Insys pushed a highly addictive opioid in complete disregard for patients’ health to increase company profits. It’s unethical, greedy behavior by companies like Insys that is responsible for creating the opioid epidemic and resulting overdose deaths in our state.”

The press release also states that “Madigan’s investigation…revealed Insys was marketing Subsys broadly as a treatment for chronic pain, including back and neck pain, despite the lack of FDA approval for those uses. Insys also pushed doctors to prescribe higher and more expensive doses of Subsys, contrary to FDA mandates designed to keep patients on the lowest effective dose.” The press release goes on to describe how doctors across the country were rewarded with expensive dinners and payments for speaking engagements.

The attorney general intends to use the $4.45 million settlement to address the significant increase in opioid abuse in communities throughout Illinois.

NJ Proposing New Rules for PBMs

New Jersey insurance regulators have proposed new rules that would force PBMs to be more transparent. The proposed N.J.A.C. 11:4-62 would require PBMs to disclose their sources for pricing generic drugs, update their pricing information every 7 days, and establish a reasonable process so that contracted pharmacies could access maximum allowable cost lists in a timely manner. Maximum allowable cost lists are generated by PBMs and include the maximum amount that a plan will pay for generic drugs and brand name drugs with generic equivalents. The new proposed rules would require all PBMs to put language in their contracts with pharmacies that the contract complies with the new proposed rules.

Marshall McKnight, spokesman for the New Jersey Dept. of Banking and Insurance, said that the rule is being proposed to conform to the statute created by SB 2301, the 2016 legislation that limits which prescription drugs can be placed on a generic list, prohibits a PBM from penalizing a pharmacy for substituting a generic drug in place of another drug, and requires PBMs to reimburse pharmacies for price corrections approved under an appeals process.

John Norton, director of public relations for the National Community Pharmacists Association, a frequent critic of PBMs, said the proposed rules appear to be an attempt by New Jersey to crack down on “nebulous” contracting practices.  “A very strained relationship is made worse by the fact that some PBMs own mail-order pharmacies and like to steer patients with chronic conditions to those pharmacies.”

Joe Paduda, president of PBM consortium CompPharma, said that PBMs fulfill many beneficial purposes, including serving to comply with complex billing processes, which include electronic data interchange requirements and national standards.  They also give insurers buying power.  “Retail pharmacies, primarily independent chains, are just frustrated with their apparent inability to know what they’re going to get paid on a regular basis, and that’s what’s driving this.  There are so many different stakeholders in this, so it’s a little disingenuous to say PBMs are pocketing rebates.  While PBMs do generate cash off rebates, they’re not the only entity making money.”

Spending on Compounds Continues to Drop

Part 3 of Coventry’s 2016 Drug Trends Report (the third in a four part series) shows that progress is being made on reducing the amount of compounds in workers’ comp.  Coventry drew on data from its First Script PBM, and compared it with what it calls “unmanaged” prescriptions that it tracks through bill review.

According to the report, the highest level of spending on compounds was seen last year in Texas and Pennsylvania, where it was about 50% and 48% of total drug spending, when the claim as not managed by a PBM.  While still high, those numbers are down from 2015 when about 55% of unmanaged drug spending in those states were attributable to compounds.

In California, compounds not managed by a PBM made up 40% of total drug costs in 2015, and dropped 22% in 2016.

Nationally, compounds accounted for just 2.5% of total drug spending in 2016 for First Script-managed prescriptions.  That was a decrease from a peak of 7.7% of total drug spending in 2014 and 5.4% in 2015.

Mark Pew, senior vice president at Prium, said “Another factor may be that payers have decided to ‘just say no’ to compounded medications.  It only takes a couple of ‘noes’ for the compounds to go away.”

Supreme Courts of Kentucky and Louisiana Make Opposite Rulings on Choice of Pharmacy

The Supreme Court of Louisiana made a ruling in Burgess v. Sewerage & Water Board of New Orleans that it is the employer, not the injured worker, who gets to choose the pharmacy to furnish prescription drugs.  Prior to this case, the lower courts in Louisiana had been split on the question, with the Second and Fourth Circuits allowing an injured worker to choose the pharmacy, while the Third and Fifth Circuits allowed the employer to choose the pharmacy.

Just recently the Supreme Court of Kentucky has weighed in on the same issue… and they have ruled the opposite.  In other words, it’s the injured worker, not the employer, who has the choice of pharmacy.  The really interesting thing about the case is that it involved the same “unauthorized pharmacy” from the Burgess case, IWP. IWP is a mail order pharmacy based in Massachusetts.

In the Kentucky case, Rita Merrick worked for Family Allergy and Asthma Associates, and suffered a back injury.  Ms. Merrick went on to have lumber spine surgery.  She received a medical card from Kentucky Employers Safety Association (KESA) that allowed her to purchase prescription drugs at specific local pharmacies at contracted prices.  KESA informed Ms. Merrick that the pharmacy program was administered by Joseph Medical, and that KESA would only pay prescription bills submitted through the Joseph Medical program.  But Ms. Merrick decided to get her prescriptions through IWP, stating that she had experienced hassles and delays with Joseph Medical.  As a result, KESA sought a court order requiring Ms. Merrick to use Joseph Medical to get her prescriptions filled.

At the same time as Ms. Merrick’s case was ongoing, four other cases, involving similar facts, were ongoing.  Each one involved an injured worker who was unhappy with KESA’s choice of pharmacy provider, Joseph Medical, and sought to use other pharmacies, including IWP.  These five cases were later consolidated, and the Supreme Court ruling encompasses all five cases.

The Supreme Court of Kentucky ruled that KRS 342.020 does not prohibit injured workers from choosing where they get their prescriptions filled, as the statute says injured workers get to choose their own “medical providers”.  The court specifically said that “medical providers” included pharmacies.  The court did this by looking at the KRS 342.0011 section on definitions.  In the definitions of “medical services” it lists “medical, surgical, dental, hospital, nursing and medical rehabilitation services, medicines, and fittings for artificial and prosthetic devices.”  The court reasoned that since medicines are medical services, a pharmacist is a medical provider.

The Supreme Court of Louisiana came to a different conclusion because that decision hinged on a difference in wording between the Kentucky and Louisiana statutes.  The Louisiana law states that injured workers get to pick a “physician”, and not a “provider”.  The Louisiana Supreme Court reasoned that “physician is very specific”, and did not extend this definition to choice of pharmacy.  The Supreme Court of Louisiana said that if the Louisiana Legislature had intended to allow an injured worker choice of pharmacy, they could have put that in the statute.

We at UR Nation believe that while we do not have a problem with the Supreme Court of Kentucky’s reasoning, we believe the end result is bad because the employer will now have a harder time controlling the injured workers’ ability to “doctor shop” for opioids, benzodiazepines, and other addictive drugs.

US DEA Proposing Another Reduction in the Opioid Production Quota

The U.S. Drug Enforcement Agency published notice that they propose another reduction in the opioid production quota.  You may recall that the DEA allows a certain amount of opioids to be produced every year.  The idea is to allow enough controlled substances to meet medical needs, while limiting the amount available for diversion from legitimate use.  Specifically, the DEA assigns individual quotas or caps to opioid drug manufacturers.

For fiscal year 2017 the DEA reduced the opioid quota by 25%.  And now in preparation for 2018, the DEA is proposing an additional 20% decrease.  DEA Acting Administrator Chuck Rosenberg attributed the reduction to the steady decrease in demand for opioids.  He said that this was, in part, due to prescription drug monitoring programs (PDMPs) and the CDC opioid prescribing guidelines, released in 2016.

Joe Paduda, principal at Health Strategy Associates, called the action more symbolic than meaningful.  But he did say that the DEA’s actions “shows the awareness of this issue has grown significantly.”

We believe this reduction in manufacturing is actually a good sign.  Look for the DEA to again cut the opioid manufacturing quota next year for fiscal year 2019.

Tom Swiatek

Tom Swiatek

As Assistant Vice President of Regulatory Services, General Counsel, and Editor in Chief of UR Nation, Tom Swiatek draws on his experience as an insurance attorney on both the general liability side, as well as on workers’ compensation matters. As a California Workers’ Compensation Section Member, Tom is leading the discussion with respect to the regulatory challenges and opportunities facing the workers’ compensation system.