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The Opioid Epidemic

Zohydro Draws Ire of Docs, WC Payers

Physicians and advocacy groups are taking a stand against the FDA’s approval of a new extended release opioid.
By: | October 15, 2014 • 4 min read
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On Sept. 28, 2,000 members and supporters of the Fed Up! Coalition marched on Washington, D.C. in the hope of getting the federal government to pay more attention to the opioid epidemic currently thriving in the U.S.

The Fed Up! Coalition is an umbrella group of medical professionals, addiction treatment experts and consumer groups who oppose the FDA’s actions when it comes to releasing and marketing opioid painkillers.


“Between 1999 and 2011, 175,000 Americans have died of opioid overdoses. That’s 145,000 from painkillers, and 30,000 from heroin,” said Andrew Kolodny, M.D., president of the advocacy group Physicians for Responsible Opioid Prescribing. “And we haven’t heard one word from the president. He’s not seeing that his agencies are working in a coordinated fashion to make the crisis worse. He’s even cut spending on addiction treatment.”

The latest installment in the conflict is the FDA’s approval of Zohydro ER in October of last year. The extended release drug that contains at least double the amount of hydrocodone found in Vicodin was approved despite an 11-2 vote by the FDA advisory committee to keep it off the market. It also lacks abuse deterrent features such as an anti-crushing design.

It will take several years to determine what kind of impact a powerful painkiller like Zohydro will have on workers’ compensation care, but the reaction to the FDA’s apparently lenient approval process demonstrated increased awareness of opioid addiction in the U.S. and renewed efforts to stem the flow in new drugs into the market.

“Had the FDA been doing its job in the late ’90s, we wouldn’t have this epidemic.”— Dr. Andrew Kolodny, president, Physicians for Responsible Opioid Prescribing

“Approval of Zohydro was just one very bad decision in a long line of bad decisions by the FDA all clearly putting the interest of industry ahead of public health,” Kolodny said.

That long line of bad decisions began, according to Kolodny, with the approval of Oxycontin in 1995 and decision by its manufacturer, Purdue Pharma, to market the drug as a treatment for common chronic conditions like low back pain. Such highly addictive drugs should only be indicated for end of life care as a comfort measure, or for short periods of severe acute pain, he said.


“I don’t think any of these types of opioids have a particular purpose for anyone other than the very end stages of life, for comfort measures only. And even then, I don’t think this should be released without abuse deterrent technology,” said Sherri Hickey, director of medical management for Safety National. “When you increase the dosage, there comes a point when the drug no longer relieves pain and will actually cause pain. We’ll see an increase in this condition – hyper-algesia – when Zohydro hits the market here.”

“Had the FDA been doing its job in the late ‘90s, we wouldn’t have this epidemic,” Kolodny said. “Even had they started to do their job in early 2000s, if they had narrowed the indication on the label, so drug companies couldn’t market them for chronic pain, the epidemic never would have gotten as bad. Not only didn’t they do that, they changed the rules to make it easier for drug companies to get new opioids on the market. They opened the spigot. The FDA also spent 10 years blocking up-scheduling of hydrocodone combination products.”

Kolodny and Hickey both say Zohydro’s impact on the market has so far been minimal, possibly due to the bad press surrounding it. Hickey said Safety National has only one patient out of the thousands in its system taking the painkiller.

The FDA defended their position in an article published in the Journal of The American Medical Association, stating that criticisms of Zohydro really applied to extended-release opioids as a whole and would require broader policy changes to address. It said, for example, that abuse-deterrent features have not been validated by enough solid evidence to justify including such technology in the manufacture of Zohydro.

It made the determination that “Zohydro ER met the current safety and efficacy standard for approval,” and cited other efforts it had made “improve the safe use of the class,” including working toward “better and more comprehensive abuse-deterrent formulations available across the class of opioids” and tightening safety labeling to “clarify the intended patient population.”

It also claimed that fears surrounding Zohydro are overblown, citing the low levels at which it has been prescribed. In July 2014, the article said, Zohydro “represented 0.23 percent of the 1.6 million ER/LA opioid analgesic prescriptions and .02 percent of the nearly 18 million prescriptions dispensed for all opioid analgesics during the month.” The FDA encouraged critics to broaden their focus to “the more than 100 other opioid products on the market – the known drugs that have caused serious public health consequences for more than a decade.”


As of April, two states – Vermont and Massachusetts – issued rules specific to Zohydro, requiring physicians to consult state prescription drug monitoring programs, screen patients for abuse risk and document medical need before turning to the drug. If such practices can indeed spread to other high strength opioids, the FDA may get the message that healthcare providers and workers’ comp payers are indeed fed up.

Katie Siegel is a staff writer at Risk & Insurance®. She can be reached at
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Prescription Costs

Physician Dispensing Increases as Lawmakers Consider Action

A new report says the prices have increased for medications dispensed by physicians but not for those dispensed by pharmacies.
By: | October 15, 2014 • 3 min read
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Nearly 30 percent of medications given to Pennsylvania’s injured workers in 2012-13 were dispensed by physicians. At the same time, the same providers were paid almost half the total amount spent for all prescriptions in the workers’ comp system.

A new report from the Massachusetts-based Workers Compensation Research Institute updates a previous study that looked at the prevalence and costs of physician-dispensed prescriptions in the state. It says in many cases the prices paid for physician-dispensed medications increased while the prices paid to pharmacies for the same drugs did not change or decreased.


“With an additional year of data, we continued to find higher and growing prices paid to dispensing physicians for drugs commonly dispensed to injured workers in Pennsylvania,” the report said. “In 2012/2013, physicians dispensed 29 percent of workers’ compensation prescriptions and were paid 48 percent of what was spent for all prescriptions for injured workers. This was an increase from 17 percent of all prescriptions and 17 percent of total prescriptions costs four years earlier.”

While supporters of physician dispensing say it is more convenient for patients and improves access and patient compliance to the prescribed drugs, opponents argue the costs are too high and according to some research does not lead to optimal outcomes. The WCRI report looks specifically at the prices paid for physician-

dispensed vs. pharmacy-dispensed medications.

Ibuprofen was the drug most commonly dispensed by physicians in Pennsylvania at an average cost of $0.74. The same pill dispensed by a pharmacy costs an average of $0.26, a difference of 186 percent. The report also noted that the price paid for physician-dispensed ibuprofen increased 20 percent in four years while the price for the same drug dispensed at a pharmacy decreased by 11 percent.

The report says the markup of Carisoprodol, a muscle relaxant, averaged 841 percent — $0.51 per pill dispensed by a pharmacy vs. $4.84 dispensed by a physician.

Among opioid prescriptions, oxycodone-acetaminophen (sold as Percocet) cost $0.64 per pill from the average pharmacy compared to $3.55 when dispensed by a physician. The most common opioid dispensed by physicians, hydrocodone-acetaminophen (sold as Vicodin), costs an average $0.40 per pill at a pharmacy vs. $1.38 from a physician.

Some medications commonly dispensed by physicians were “much less likely to be dispensed at pharmacies,” the report said, “which may mean that physicians who do not dispense them are less likely to write prescriptions for these medications.” Examples included naproxen sodium (Aleve), and omeprazole (Prilosec).

The report comes as the issue of physician dispensing is being considered by Pennsylvania legislators. Current law sets the maximum reimbursement amount at 110 percent of the average wholesale price for pharmacies as well as physician dispensers.

“The intention is to set reimbursement rates at the same levels for the same drugs regardless of the dispensing point,” the report said. “However, physicians in Pennsylvania often dispensed and billed for repackaged drugs, which were paid at higher prices than what pharmacies were paid for the original products of the same drugs.”


Amended legislation before the state Senate would limit reimbursements for physician-dispensed prescription drugs to 110 percent of the AWP of the original manufacturer National Drug Code, or the AWP of the least expensive clinically equivalent drug if the original manufacturer NDC is not included in the bills from physicians seeking reimbursement, the report explained. The bill also would limit physician dispensing of the more restrictive Schedule II and Schedule III opioids.

Nancy Grover is co-Chair of the National Workers’ Compensation and Disability Conference and Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at
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Sponsored: Helmsman Management Services

Six Best Practices For Effective WC Management

An ever-changing healthcare landscape keeps workers comp managers on their toes.
By: | October 15, 2014 • 5 min read

It’s no secret that the professionals responsible for managing workers compensation programs need to be constantly vigilant.

Rising health care costs, complex state regulation, opioid-based prescription drug use and other scary trends tend to keep workers comp managers awake at night.

“Risk managers can never be comfortable because it’s the nature of the beast,” said Debbie Michel, president of Helmsman Management Services LLC, a third-party claims administrator (and a subsidiary of Liberty Mutual Insurance). “To manage comp requires a laser-like, constant focus on following best practices across the continuum.”

Michel pointed to two notable industry trends — rises in loss severity and overall medical spending — that will combine to drive comp costs higher. For example, loss severity is predicted to increase in 2014-2015, mainly due to those rising medical costs.

Debbie discusses the top workers’ comp challenge facing buyers and brokers.

The nation’s annual medical spending, for its part, is expected to grow 6.1 percent in 2014 and 6.2 percent on average from 2015 through 2022, according to the Federal Government’s Centers for Medicare and Medicaid Services. This increase is expected to be driven partially by increased medical services demand among the nation’s aging population – many of whom are baby boomers who have remained in the workplace longer.

Other emerging trends also can have a potential negative impact on comp costs. For example, the recent classification of obesity as a disease (and the corresponding rise of obesity in the U.S.) may increase both workers comp claim frequency and severity.

SponsoredContent_LM“The true goal here is to think about injured employees. Everyone needs to focus on helping them get well, back to work and functioning at their best. At the same time, following a best practices approach can reduce overall comp costs, and help risk managers get a much better night’s sleep.”
– Debbie Michel, President, Helmsman Management Services LLC (a subsidiary of Liberty Mutual)

“These are just some factors affecting the workers compensation loss dollar,” she added. “Risk managers, working with their TPAs and carriers, must focus on constant improvement. The good news is there are proven best practices to make it happen.”

Michel outlined some of those best practices risk managers can take to ensure they get the most value from their workers comp spending and help their employees receive the best possible medical outcomes:


1. Workplace Partnering

Risk managers should look to partner with workplace wellness/health programs. While typically managed by different departments, there is an obvious need for risk management and health and wellness programs to be aligned in understanding workforce demographics, health patterns and other claim red flags. These are the factors that often drive claims or impede recovery.

“A workforce might have a higher percentage of smokers or diabetics than the norm, something you can learn from health and wellness programs. Comp managers can collaborate with health and wellness programs to help mitigate the potential impact,” Michel said, adding that there needs to be a direct line between the workers compensation goals and overall employee health and wellness goals.

Debbie discusses the second biggest challenge facing buyers and brokers.

2. Financing Alternatives

Risk managers must constantly re-evaluate how they finance workers compensation insurance programs. For example, there could be an opportunity to reduce costs by moving to higher retention or deductible levels, or creating a captive. Taking on a larger financial, more direct stake in a workers comp program can drive positive changes in safety and related areas.

“We saw this trend grow in 2012-2013 during comp rate increases,” Michel said. “When you have something to lose, you naturally are more focused on safety and other pre-loss issues.”

3. TPA Training, Tenure and Resources

Businesses need to look for a tailored relationship with their TPA or carrier, where they work together to identify and build positive, strategic workers compensation programs. Also, they must exercise due diligence when choosing a TPA by taking a hard look at its training, experience and tools, which ultimately drive program performance.

For instance, Michel said, does the TPA hold regular monthly or quarterly meetings with clients and brokers to gauge progress or address issues? Or, does the TPA help create specific initiatives in a quest to take the workers compensation program to a higher level?


4. Analytics to Drive Positive Outcomes, Lower Loss Costs

Michel explained that best practices for an effective comp claims management process involve taking advantage of today’s powerful analytics tools, especially sophisticated predictive modeling. When woven into an overall claims management strategy, analytics can pinpoint where to focus resources on a high-cost claim, or they can capture the best data to be used for future safety and accident prevention efforts.

“Big data and advanced analytics drive a better understanding of the claims process to bring down the total cost of risk,” Michel added.

5. Provider Network Reach, Collaboration

Risk managers must pay close attention to provider networks and specifically work with outcome-based networks – in those states that allow employers to direct the care of injured workers. Such providers understand workers compensation and how to achieve optimal outcomes.

Risk managers should also understand if and how the TPA interacts with treating physicians. For example, Helmsman offers a peer-to-peer process with its 10 regional medical directors (one in each claims office). While the medical directors work closely with claims case professionals, they also interact directly, “peer-to-peer,” with treatment providers to create effective care paths or considerations.

“We have seen a lot of value here for our clients,” Michel said. “It’s a true differentiator.”

6. Strategic Outlook

Most of all, Michel said, it’s important for risk managers, brokers and TPAs to think strategically – from pre-loss and prevention to a claims process that delivers the best possible outcome for injured workers.

Debbie explains the value of working with Helmsman Management Services.

Helmsman, which provides claims management, managed care and risk control solutions for businesses with 50 employees or more, offers clients what it calls the Account Management Stewardship Program. The program coordinates the “right” resources within an organization and brings together all critical players – risk manager, safety and claims professionals, broker, account manager, etc. The program also frequently utilizes subject matter experts (pharma, networks, nurses, etc.) to help increase knowledge levels for risk and safety managers.

“The true goal here is to think about injured employees,” Michel said. “Everyone needs to focus on helping them get well, back to work and functioning at their best.

“At the same time, following a best practices approach can reduce overall comp costs, and help risk managers get a much better night’s sleep,” she said.

To learn more about how a third-party administrator like Helmsman Management Services LLC (a subsidiary of Liberty Mutual) can help manage your workers compensation costs, contact your broker.

Email Debbie Michel

Visit Helmsman’s website

@HelmsmanTPA Twitter

Additional Insights 

Debbie discusses how Helmsman drives outcomes for risk managers.

Debbie explains how to manage medical outcomes.

Debbie discusses considerations when selecting a TPA.



This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Helmsman Management Services. The editorial staff of Risk & Insurance had no role in its preparation.

Helmsman Management Services (HMS) helps better control the total cost of risk by delivering superior outcomes for workers compensation, general liability and commercial auto claims. The third party claims administrator – a wholly owned subsidiary of Liberty Mutual Insurance – delivers better outcomes by blending the strength and innovation of a major carrier with the flexibility of an independent TPA.
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