At the 2015 Workers Compensation Research Institute (WCRI) Annual Issues & Research Conference, panels of experts discussed the cost and impacts of physician dispensing drugs. Physician dispensed drugs are prescribed drugs available to be purchased directly from the physician (or in the physician’s office). Alternatively, prescriptions are filled at a pharmacy, often times with a cheaper (generic brand) version of the drug. The WCRI conference panel, “Physician Dispensing: Costs and Consequences,” dealt with regulation reforms, how they affected the cost of drugs, and behavioral effects.
Workers Comp Matters host Alan Pierce attended the conference and sat down with two panelists to further discuss their panel topics. Dongchun Wang of WCRI discusses her research, the frequency and cost of physician dispensing and how it impacts workers compensation claim costs. The study analyzed reforms in the regulation of physician’s ability to dispense drugs across several states. Dr. Vennela Thumla of WCRI talks about her study on the relationship between physician dispensing and unnecessary opioid use (only in the state of Florida). She explains why this research is important and gives examples of opioid alternatives that emerged after a particular reform.
Ms Dongchun Wang is an economist at WCRI. Her research focuses on medical practice patterns and medical care delivered to injured workers. She is the lead author of several studies that evaluate physician dispensing reforms in a number of states in recent years and of several other WCRI studies on utilization of workers’ compensation pharmaceuticals and prescribing patterns of opioids. During her tenure with WCRI, she has participated in earlier editions of the CompScope™ benchmarks and several public policy studies. She holds a master’s degree in applied economics and did her graduate work in applied econometrics, labor economics, and industrial organization at the University of North Carolina at Chapel Hill.
Dr. Vennela Thumla is a policy analyst at WCRI. She conducts research examining costs, prices, and utilization of pharmaceuticals in state workers’ compensation systems, focusing on prescribing patterns of opioids and physician dispensing. She is also involved in a research project examining the self-reported outcomes of injured workers, including recovery of health and functioning, speed and sustainability of return to work, and access to care. Dr. Thumula received her Ph.D. from the University of Mississippi, School of Pharmacy.
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Workers Comp Matters: 2016 Workers Compensation Research Institute Conference: Cost and Impacts of Physician Dispensing Drugs – 5/5/2015
Advertiser: This is Workers Comp Matters, hosted by attorney Alan S. Pierce. The only Legal Talk Network program that focuses entirely on the people and the law in workers compensation cases. Nationally recognized trial attorney, expert and author, Alan S. Pierce is a leader, committed to making a difference when workers comp matters.
Alan Pierce: Welcome to Workers Comp Matters, here on the Legal Talk Network. I am your host, Alan Pierce, of the law firm Pierce Pierce & Napolitano. We are coming to you today from Boston, Massachusetts at the Workers Compensation Research Institute and we are very pleased to have a couple of exciting guests. Before we get started, we would like to thank our sponsors, Case Pacer, practice management software dedicated to the busy trial attorney. To learn more, go to CasePacer.com. And also PINow, find a local private investigator anywhere in the US. Visit PINow.com to learn more. My first guest today is Ms. Dongchun Wang. Dongchun is an economist at the Workers Comp Research Institute, and her research has been focused on medical practice patterns and medical care delivered to injured workers. She is the lead author of several studies that evaluate physician dispensing reforms in a number of states and she has participated and authored several WCRI studies on utilization of workers’ compensation pharmaceuticals and prescribing patterns of opioids. During her tenure with WCRI, she has participated in earlier editions of the CompScope benchmarks and several public policy studies. She holds a master’s degree in applied economics and did her graduate work in econometrics, labor economics, and industrial organization at the University of North Carolina at Chapel Hill. Dongchun, we welcome you very much to Workers Comp Matters.
Dongchun Wang: Thank you so much Alan, thank you for inviting me.
Alan Pierce: We heard you speak today and you presented some materials regarding the impact of physician dispensing reforms. Tell us what the origins of that study was. What were you focused on identifying and learning?
Dongchun Wang: We started doing the study and monitoring of the physician dispensary reforms like a couple of years ago. So we do this kind of study on an annual basis and we have a data base. We collect data from multiple data sources in multiple states. So we’re just looking at the data and monitoring and evaluating the impact of the reforms physician dispensing on the frequency and cost of physician dispensing.
Alan Pierce: Let’s begin by defining how it terms. How would you differentiate physician dispense drugs from what I as a consumer would go to my pharmacy, CVS or Walgreens and pick up a prescription?
Dongchun Wang: When we talk about prescriptions, we are basically talking about prescriptions that are either dispensed at physicians offices or at pharmacies. But when we’re talking about physician dispensed prescriptions, we’re talking about those that could be that you go to physician’s offices and get the prescription filled at the office. Or if it’s a medical center, occupational medical center or clinic, if they dispense prescriptions there and we also identify them as physician dispensed prescriptions.
Alan Pierce: What would be the term for prescriptions we would pick up at the pharmacy?
Dongchun Wang: If you pick up prescriptions from the pharmacy, that would be pharmacy dispensed prescriptions.
Alan Pierce: So I am assuming that there is a price differential between the costs that a workers comp insurance company would pay for a prescription for Vicodin that the doctor gave the patient as opposed to the Vicodin the patient would pick up at the local pharmacy.
Dongchun Wang: Yes, indeed, and if you’re looking at some of the slides that I was showing this morning, that prior to the reforms the physician prices, basically prices for physician dispense back then, was much higher than the pharmacy prices for the same drug. And oftentimes it would be double, triple, sometimes four times as high as pharmacy prices.
Alan Pierce: And where is the additional money going? Where is the profit point for this? Is this at the physician’s office as opposed to the normal retail supplier of the prescription?
Dongchun Wang: In our data we do not track each step in the whole channel. What we observe is basically what’s the payer paid for prescriptions dispensed. So I’m not able at this point to decompose that for you to basically say how many of the dollars goes to where.
Alan Pierce: There is a term and an acronym that came up in your talk, AWP, which is average wholesale price. Is that the base line that you use to measure cost?
Dongchun Wang: No, actually, average wholesale price is just reference price and it’s not even linked to the cost. It’s just like a tag price. So manufacturers can not sign the price and it’s called average wholesale price, but it’s not linked to cost.
Alan Pierce: Now when you mentioned before reforms and after reforms, let’s talk about what is the reforms. Are these done on a state by state basis or is there something broader that has reformed the methodology of payment?
Dongchun Wang: If you’re looking at workers comp, workers comp is basically a state level system. So most of the reforms are within workers comp and in a couple of states, there are some legislative changes like Florida pending physicians from dispensing.
Alan Pierce: Florida prevents physicians from dispensing?
Dongchun Wang: Pending physicians from dispensing schedule 2, schedule 3; opioids, that’s like a state level, the Pill Mill Bill. That’s a state level legislation. But most of the reforms are though regulatory channel within workers comp. If you look at 18 states that already made changes, those are the changes made to the reimbursement rules. Government reimbursement for the workers comp physician dispense, the workers comp pharmaceuticals.
Alan Pierce: Can I assume not every state allows physician dispense medications?
Dongchun Wang: In the US there are 5 or 6 states where physician dispensing is not allowed in generally and there are a couple of states where physician dispensing is allowed, but it’s infrequent in practice.
Alan Pierce: What were the major findings from your study as to the cost impact of reforming the ability of physicians to dispense medications?
Dongchun Wang: If you’re looking at the impact of those reforms that are focusing reducing the cost of physician dispensing. Indeed, they had positive impact and we’ve seen substantial price reductions after reforms and we see that in all the reform states we studied. However, we also see the price differentials remain considerable after reforms and we retribute that to several factors. But most importantly, there’s some evidence emerging about the new strand products that are quickly picked up by some physician dispensers. When they dispense those drugs they pay much higher prices. So in a sense, some states outweigh the saving as a result of reform, so we see the price increases. For example, I talked about the price increase for Vicodin in Illinois after reforms.
Alan Pierce: And in Illinois, is this Vicodin?
Dongchun Wang: It’s Vicodin and we were talking about the new strands which is two and a half milligrams of Hydrocodone and 325 milligrams segment of them.
Alan Pierce: So these are higher doses.
Dongchun Wang: No, they’re not higher doses. If you compare the strands with other existing strands, this is actually the lowest. So they’re not stronger but they’re more expensive.
Alan Pierce: I don’t study this and I certainly don’t pay for it, I’m not associated with an insurance company, but when my client goes to his doctor or her doctor complaining of pain and the doctor prescribes Vicodin, I can tell you all he or she wants is to get a pain relief. To my client, it doesn’t matter where he or she gets the prescription.
Dongchun Wang: Well that’s probably one of the reasons in a couple of reform states. For example, in Pennsylvania, in 2014 they made changes to basically restrict physician dispensing to a short timeframe. So that basically says, if you really suffer pain and you need Vicodin, you can get a couple of pills to relieve and then you go to the pharmacy to fill it up.
Alan Pierce: So the pharmacies are cheaper than physicians, that’s what you’ve found.
Dongchun Wang: Yes.
Alan Pierce: And of course, if you look on the broad picture among hundreds, thousands, or tens of thousands of patients, claimants, injured workers, and insurance companies, a small savings per pill or a small savings per prescription adds up to millions of dollars or tens of millions of dollars?
Dongchun Wang: We do not have accurate estimate on how much money the reforms will help to save, but certainly workers comp is a big program. But just look at the markups between physician prices and pharmacy prices, that would say something.
Alan Pierce: Now after reform, has your study revealed significant downturn in costs?
Dongchun Wang: We are pretty much evaluating the cost for individual drugs because there’s some technical complexity if you’re trying to estimate cost savings and we haven’t really done a study to estimate cost savings because of the reforms.
Alan Pierce: Would it be a fair statement that the reforms are basically focused on price?
Dongchun Wang: Yeah, because prior to reforms, this whole wave of repackaged drugs that get into workers compensation and those repackaged drugs were charged and paid much higher prices and that’s the exact issue that the workers comp reforms have been trying to address. To keep the prices for physician dispense to repackaged drugs.
Alan Pierce: And by repackaged drugs, is that just a synonym for physician dispensed drugs? They would take drugs and repackage them or is there something broader?
Dongchun Wang: Physician dispensing drugs is actually a broader term, so if you’re talking about repackaged drugs, that’s the repackagers who buy a big bottle of pills and open the bottle and put them into a small packet like 30 or 15 pills. And that adds some convenience to the physicians when they dispense prescriptions, but physicians can also dispense readily-made bottles.
Alan Pierce: What time period did your study cover and about how many states did it involve?
Dongchun Wang: In the previous version of the multistates covered, we covered 21 states and we went back to 2009 or 2010 and the latest study we have the data up to the first quarter of 2013.
Alan Pierce: So what’s next? Do you have the next step of study based on what you’ve uncovered thus far?
Dongchun Wang: Yes, this is a lineup research we’re doing on an annual basis and we’re still in the process of collecting data. So we add one more year of prescription data to our database and we’re cleaning it up and we’re trying to see the latest trends and patterns in the data for the states we study.
Alan Pierce: And did you have any findings that surprise you in this study?
Dongchun Wang: Well one thing that really jumped out, as I mentioned in my presentation, that was the increase in the prices for Vicodin in Illinois, because when you talk about those price focus reforms, the whole goal is to reduce the cost of physician dispensed drugs. But instead of seeing the price reduction, you’re seeing the price actually increase, substantially. That came up as a surprise and we digged a bit further and found those new strand struck products that are dispensed by physicians.
Alan Pierce: Well, I want to thank you very much. We’re going to conclude this part of the program. After a brief break, we’re going to be joined by Dr. Vennela Thumula, and she presented a paper on physician dispensing drugs, whether that leads to unnecessary opioid use. So Ms. Wang, I want to thank you very much for your study, for participating in Workers Comp Matters, and thank you very much for joining us.
Dongchun Wang: Thank you Alan, thank you for having me.
Alan Pierce: We are going to take a break and we are going to be back in a few minutes.
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Alan Pierce: Welcome back to Workers Comp Matters, this is Alan Pierce and we’re going to continue our discussion from the Workers Compensation Research Institute. My next guest is Dr. Vennela Thumula. Dr. Thumula is a policy analyst here at WCRI. She conducts research examining costs, prices, and utilization of pharmaceuticals in state workers compensation systems, focusing on prescribing patterns of opioids and physician dispensing. She is currently involved in a research project examining the self-reported outcomes of injured workers, including recovery of health and functioning, speed and sustainability of return to work, and access to care. Dr. Thumula received her Ph.D. from the University of Mississippi, School of Pharmacy, and Dr. Thumula, welcome to Workers Comp Matters.
Dr. Vennela Thumula: Thank you, Alan, thanks for having me on your show.
Alan Pierce: Today’s topic that you spoke on in the paper and the research report is titled, Does Physician Dispensing Lead to Unnecessary Opioid Use. Ms. Wang, who was a guest just before you spoke a bit about physician dispensing as opposed to the other ways my clients or injured worker population gets their medications. So you are looking primarily at the use of opioids from physician dispensed offices. Tell us first of all, let’s define opioids. I think we know what those are but give us a description for the laiman. What are opioids?
Dr. Vennela Thumula: You commonly hear of these drugs called Oxycodone Percocet in the news. We refer to them as opioids and sometimes as narcotics. These are a class of pain medications that are commonly used in the workers compensation system.
Alan Pierce: And there are various strengths and various effectiveness both shortterm and longterm?
Dr. Vennela Thumula: Correct, there are some short-acting opioids. Vicodin, for example, is a short-acting opioid and there are long-acting opioids. Oxycodone, usually is an extended release product, so you take it one a day as opposed to taking multiple medications a day. And there are different schedules of opioids. Now schedule 2, an example of that would be oxycodone. What it means is that it has a higher potential for abuse and addiction compared to opioids that are in schedule 3 or schedule 4.
Alan Pierce: I think we heard from our previous guest that there is a cost differential between the opioids or the pharmaceuticals that I would get at CVS or Walgreens as opposed to what I would get from a physician. Was your study focused on cost or was it more focused on the necessity or the frequency or amount of opioid prescriptions?
Dr. Vennela Thumula: So historically, most of the WCRI studies about physician dispensing have focused on crisis. Florida is one of the states that we have looked at in that context. This particular study does not address crisis and cost, it’s mainly focused on how a particular reform in Florida has changed the prescribing and dispensing patterns of physician dispensers, how it led to a behavioural shift.
Alan Pierce: We have had prior Workers Comp Matters shows on the effect of long term opioid use on the entire system of workers comp. There are certain questions as to the efficacy of long term use of oxycodone, for example, how safe that is. I think we can all agree that when these drugs were put on the market, they were really designed for short term intense pain, usually post-surgical pain, and we have learned, painfully, through history, that a lot of my clients become addicted. They become dependant and this has health consequences for them, it has health consequences for their family. It certainly has cost consequences, and it also leads to other problems. So there are efforts in most states through either chronic pain treatment guidelines or other methods of dealing with and controlling the use of opioids in particular to not only save the health of our workers, but obviously to reduce cost. So I know in Florida, that was a particular problem for many years. I think our prior guest referred to it as a Pill Mill Bill, which was a piece of legislation that was aimed at directing some changes in the ability of these mills, these offices that dispense opioids. So I take it the impetus for your research here was to find out once a legislature, once a system puts limits on what a physician could dispense, what effect that would have on the use of opioids. Would that be a fair characterization?
Dr. Vennela Thumula: That is correct. When we first heard about the Florida Pill Mill Bill, what we tried to see was what is happening to the utilization of opioids after the ban and how things have changed. We did not expect to see the opioids to go away, we expected the opioids to shift to the pharmacies.
Alan Pierce: So I guess that leads to the question: what did you find? Did you find what you expected or did you find something different?
Dr. Vennela Thumula: We did find something different. What we expected was a similar read of prescribing. What we found was a decrease in the prescribing rates. Effectively, we looked at 12 months of prescription utilization among injured workers after the ban came into effect, and we saw a 12% reduction in workers who initiated opioids in the first 12 months after their injury.
Alan Pierce: So once there was a limit on what a physician was prescribing in terms of opioids, what was the alternative? What would or could physicians prescribe that may not be in the class of a strong opioid?
Dr. Vennela Thumula: The ban was specific to physician dispensing of schedule 2 and schedule 3 opioids. They could prescribe all other pain medications. We saw an increase in the workers who got nonsteroidal antiinflammatory drugs like ibuprofen, and we also saw an increase in weaker opioids like tramadol.
Alan Pierce: And did you find that after the initial prescription for the nonsteroidal anti inflammatories of the weaker opioids that there was a return to the class 2 of the stronger opioids or did it remain at the lower level?
Dr. Vennela Thumula: Surprisingly, very few patients who got these weaker opioids or nsaids after the ban came into effect eventually filled a stronger opioid at the pharmacy, which brings into question whether the stronger opioids that physician dispensers were prescribing before the ban were necessary.
Alan Pierce: Well it certainly dealt with the frequency of opioid use. How about the costs to the workers comp insurers? Was there an effect that’s been measured as yet to any decreasing cost?
Dr. Vennela Thumula: We have not looked at the impact of this particular form on costs, but Florida also implemented a price focused reform, like the one Dongchun talked to you about earlier in Florida. And we have this annual series of physician dispensing benching reports and we hope to see how the prices have changed in Florida for physicians and drugs with that study.
Alan Pierce: So would it be a fair summary of your study that when a physician dispenses a drug in the office that there is an increase of higher opioid use among the patient population than when the patient has to go elsewhere to fill the prescription?
Dr. Vennela Thumula: It appears to be the case. This ban was specific to opioids, so it raised the question whether opioids that were being prescribed as unnecessary. Now if a ban was placed on all physician dispensed drugs, we don’t know how the behavior is going to change then.
Alan Pierce: Now is your study limited to the state of Florida?
Dr. Vennela Thumula: Yes.
Alan Pierce: Are there any other states in which it is on the horizon that there will be a similar type of legislation to curb the use of physician dispensed opioids?
Dr. Vennela Thumula: I think in Tennessee in October 2013, a similar reform came into effect. There is a ban on physician dispensing of schedule 2 and 3 controlled substances. It’s not a ban but they’re not required to.
Alan Pierce: And just keep in mind, the fact that a physician is no longer allowed to dispense the opioid, the physician can still write out the script.
Dr. Vennela Thumula: Correct. The ban in Florida was on just dispensing. They can continue to prescribe these medications but there are several other provisions within the Florida Pill Mill Bill that require physicians to register as control substance prescribers if they want to continue.
Alan Pierce: And is this a profitable line of income string to a physician to be able to dispense as well as prescribe?
Dr. Vennela Thumula: This morning in the presentations, you might have seen the brochure that Alex Swedlow from California Workers Compensation Institute was showing you. Most of these physician dispensing companies market the physician dispensing idea concept to physicians talking about the money that is involved.
Alan Pierce: And let’s be clear and be fair to doctors in Florida and everywhere else. It isn’t every doctor’s office, it isn’t every doctor that treats injured workers that would be dispensing medication. There were specific clinics – the word mill has kind of a connotation of pejorative nature – but there were certain clinics specifically set up and designed for and looking for a client base of injured workers.
Dr. Vennela Thumula: That is a very great point, Alan, I should have brought it up. But when we are talking about the physicians and how the behavior has changed, we are talking about making differences about the average physician. But it could be driven by a very small proportion of physicians who were prescribing these strong opioids to begin with. It’s obviously not about all s physicians in Florida.
Alan Pierce: Yeah, and I can tell you, again, I’m a workers comp lawyer, so I just deal with my clients. When I have issues that has to do with whether the insurance company’s going to pay for it, I do not believe we have the ability here in Massachusetts to have these types of physician dispensed opioids. So here it’s not a problem or cost driver, but I can understand if you go around in various jurisdictions in the country that it could be. So I want to thank you very much for joining us today Dr. Thumula. Your presentation was excellent, it was timely, it was appropriate and it folds into the bigger issue that we are grappling with, which is the widespread use of opioids and the treatment of chronic pain. And more to that where there are other safer, less expensive – and again, it’s not for money purposes but it’s for health purposes – ways of dealing with my clients who suffer from chronic pain. I don’t like to see them going down the road of refilling their oxycodone month after to month after month. I have seen the effects, I have seen suicide, I have seen marriage breakups, I have seen problems with the law, I have seen families destroyed; not necessarily because the physicians or the system is out of whack, it is because nobody is ready to tackle the issue of how do you deal with chronic pain and one of the easiest things is here, take a pill. And I think we have learned painfully that is not the long term solution. It may be the short term solution but not the long term. So I want to thank you for being a guest again. This is Workers Comp Matters, this is Alan Pierce. I want to thank you for joining us and hope you listen to our future shows and go out and make it a day that matters.
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