Zohydro Draws Ire of Docs, WC Payers
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.
Physician Dispensing Increases as Lawmakers Consider Action
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.
A Renaissance In U.S. Energy
America’s energy resurgence is one of the biggest economic game-changers in modern global history. Current technologies are extracting more oil and gas from shale, oil sands and beneath the ocean floor.
Domestic manufacturers once clamoring for more affordable fuels now have them. Breaking from its past role as a hungry energy importer, the U.S. is moving toward potentially becoming a major energy exporter.
“As the surge in domestic energy production becomes a game-changer, it’s time to change the game when it comes to both midstream and downstream energy risk management and risk transfer,” said Rob Rokicki, a New York-based senior vice president with Liberty International Underwriters (LIU) with 25 years of experience underwriting energy property risks around the globe.
Given the domino effect, whereby critical issues impact each other, today’s businesses and insurers can no longer look at challenges in isolation one issue at a time. A holistic, collaborative and integrated approach to minimizing risk and improving outcomes is called for instead.
Aging Infrastructure, Aging Personnel
The irony of the domestic energy surge is that just as the industry is poised to capitalize on the bonanza, its infrastructure is in serious need of improvement. Ten years ago, the domestic refining industry was declining, with much of the industry moving overseas. That decline was exacerbated by the Great Recession, meaning even less investment went into the domestic energy infrastructure, which is now facing a sudden upsurge in the volume of gas and oil it’s being called on to handle and process.
“We are in a renaissance for energy’s midstream and downstream business leading us to a critical point that no one predicted,” Rokicki said. “Plants that were once stranded assets have become diamonds based on their location. Plus, there was not a lot of new talent coming into the industry during that fallow period.”
In fact, according to a 2014 Manpower Inc. study, an aging workforce along with a lack of new talent and skills coming in is one of the largest threats facing the energy sector today. Other estimates show that during the next decade, approximately 50 percent of those working in the energy industry will be retiring. “So risk managers can now add concerns about an aging workforce to concerns about the aging infrastructure,” he said.
Increasing Frequency of Severity
Current financial factors have also contributed to a marked increase in frequency of severity losses in both the midstream and downstream energy sector. The costs associated with upgrades, debottlenecking and replacement of equipment, have increased significantly,” Rokicki said. For example, a small loss 10 years ago in the $1 million to $5 million ranges, is now increasing rapidly and could readily develop into a $20 million to $30 million loss.
Man-made disasters, such as fires and explosions that are linked to aging infrastructure and the decrease in experienced staff due to the aging workforce, play a big part. The location of energy midstream and downstream facilities has added to the underwriting risk.
“When you look at energy plants, they tend to be located around rivers, near ports, or near a harbor. These assets are susceptible to flood and storm surge exposure from a natural catastrophe standpoint. We are seeing greater concentrations of assets located in areas that are highly exposed to natural catastrophe perils,” Rokicki explained.
“A hurricane thirty years ago would affect fewer installations then a storm does today. This increases aggregation and the magnitude for potential loss.”
On its own, the domestic energy bonanza presents complex risk management challenges.
However, gradual changes to insurance coverage for both midstream and downstream energy have complicated the situation further. Broadening coverage over the decades by downstream energy carriers has led to greater uncertainty in adjusting claims.
A combination of the downturn in domestic energy production, the recession and soft insurance market cycles meant greatly increased competition from carriers and resulted in the writing of untested policy language.
In effect, the industry went from an environment of tested policy language and structure to vague and ambiguous policy language.
Keep in mind that no one carrier has the capacity to underwrite a $3 billion oil refinery. Each insurance program has many carriers that subscribe and share the risk, with each carrier potentially participating on differential terms.
“Achieving clarity in the policy language is getting very complicated and potentially detrimental,” Rokicki said.
Back to Basics
Has the time come for a reset?
Rokicki proposes getting back to basics with both midstream and downstream energy risk management and risk transfer.
He recommends that the insured, the broker, and the carrier’s underwriter, engineer and claims executive sit down and make sure they are all on the same page about coverage terms and conditions.
It’s something the industry used to do and got away from, but needs to get back to.
“Having a claims person involved with policy wording before a loss is of the utmost importance,” Rokicki said, “because that claims executive can best explain to the insured what they can expect from policy coverage prior to any loss, eliminating the frustration of interpreting today’s policy wording.”
As well, having an engineer and underwriter working on the team with dual accountability and responsibility can be invaluable, often leading to innovative coverage solutions for clients as a result of close collaboration.
According to Rokicki, the best time to have this collaborative discussion is at the mid-point in a policy year. For a property policy that runs from July 1 through June 30, for example, the meeting should happen in December or January. If underwriters try to discuss policy-wording concerns during the renewal period on their own, the process tends to get overshadowed by the negotiations centered around premiums.
After a loss occurs is not the best time to find out everyone was thinking differently about the coverage,” he said.
Changes in both the energy and insurance markets require a new approach to minimizing risk. A more holistic, less siloed approach is called for in today’s climate. Carriers need to conduct more complex analysis across multiple measures and have in-depth conversations with brokers and insureds to create a better understanding and collectively develop the best solutions. LIU’s integrated business approach utilizing underwriters, engineers and claims executives provides a solid platform for realizing success in this new and ever-changing energy environment.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty International Underwriters. The editorial staff of Risk & Insurance had no role in its preparation.