Specialty Drugs Show No Signs of Slowing Down
A decade ago, high-cost specialty drugs were commonly referred to as “injectable drugs” and were used to treat conditions not typically covered in workers’ compensation, such as cancer, rheumatoid arthritis and multiple sclerosis.
“Today, however, new specialty drugs are emerging that will be used to treat other chronic and inflammatory conditions,” said Joe Boures, president and CEO of Healthcare Solutions, an Optum company providing specialized pharmacy benefit management services to the workers’ compensation market.
“Payers in the workers’ comp market are just beginning to feel the cost impact of greater utilization of these drugs, which come with expensive price tags.”
Specialty drugs are often manufactured using biologic rather than chemical methods, and they are no longer just administered by injections. New specialty drugs can also be inhaled or taken orally, likely contributing to the rise in their utilization.
“There isn’t a standard definition of specialty drugs, but they are generally defined as being complex to manufacture, costly, require specialty handling and distribution, and they difficult for patients to take without ongoing clinical support or may require administration by a health care provider,” said Boures.
In 2014, more than a quarter of all new therapies that the FDA approved were through its biologics division. Biologics, and similar therapies, are representative of a future trend in prescription drug spend.
“As the fastest growing costs in health care today, specialty drugs have the potential to change the way prescription benefits are provided in the future,” said Jim Andrews, executive vice president of pharmacy for Healthcare Solutions.
Workers’ Compensation payers may not recognize how specialty drugs are affecting their drug spend. Specialty medications can be masked through major medical costs.
Specialty drugs like Enbrel®, Humira® and Synvisc® can be processed as a major medical expense via paper bills (typically under a miscellaneous J-code) and therefore, not recognized by payers as a pharmacy expense.
This leaves payers with little visibility into the costs of these medications within their book of business and a lack of tools to control these costs.
Due to the high costs of specialty medications, special due diligence should be utilized when claimants receive these medications, said Andrews.
“Healthcare Solutions recommends that claimants using specialty drugs are monitored for proper medication handling and that the medication is administered appropriately, as well as monitoring the claimant to determine whether the medication is having its desired results and if there are any side effects,” he said.
“At $1,000 per pill for some of these specialty medications, making sure a claimant can tolerate the side effects becomes vital to managing the cost of the claim.”
Hepatitis C drugs have made their way to the workers’ compensation market, largely through coverage of healthcare workers, who have exposure to the disease.
“Traditional drug treatments that began in the 1990’s had a success rate of 6% and costs ranging from $1,800 to over $88,000,” said Andrews.
“The new Hepatitis C specialty medications have a treatment success rate of 94-100%, but cost between $90,000 and $226,000.”
Although the new treatments include higher drug costs, the payer’s overall medical costs may actually decrease if the Hep C patient would have required a liver transplant as part of the course of treatment without the drugs.
While the release of new Hepatitis C medications in 2014 demonstrated the potential impact specialty medications can have on payers, there are some specialty medications under development that target larger claimant populations.
Pfizer Inc. and Eli Lilly and Company are currently developing tanezumab, a new, non-narcotic medication to treat chronic pain, which is common in workers’ compensation claims.
Tanezumab has demonstrated benefits of reducing pain in clinical trials and may provide non-addictive pain relief to claimants in the future. This may change how pain management is treated in the future.
Healthcare Solutions has a specialty medication program that provides payers discounted rates and management oversight of claimants receiving specialty medications.
Through the paper bill process, Healthcare Solutions aids payers in identifying specialty drugs and works with adjusters and physicians to move claimants into the specialty network.
A central feature of the program is that claimants are assigned to a clinical pharmacist or a registered nurse with specialty pharmacy training for consistent care with one-on-one consultations and ongoing case management.
The program provides patients with education and counseling, guidance on symptoms related to their medical conditions and drug side effects, proactive intervention for medication non-adherence, and prospective refill reminder and follow-up calls.
“The goal is to improve patient outcomes and reduce total costs of care,” said Boures.
This article was produced by Healthcare Solutions and not the Risk & Insurance® editorial team.
Keynote Speaker Driven to Improve Health Care
2014 NWCDC opening keynoter speaker Dr. L. Casey Chosewood, senior medical officer and director of the Office for Total Worker Health Coordination and Research at NIOSH.
Employers and workers’ compensation payers have grown increasingly interested in delivering quality health care that mitigates the rising costs of chronic health conditions, lengthy disabilities, and stubborn claims.
Yet determining what defines quality health care remains a challenge.
That is why the National Workers’ Compensation and Disability Conference® & Expo selected Arthur M. Southam M.D. to deliver the opening keynote presentation at this year’s event scheduled for Nov. 11-13 at Mandalay Bay in Las Vegas.
Southam is executive VP health plan operations for Kaiser Foundation Health Plan Inc. and Kaiser Foundation Hospitals. He is known for driving measured improvements in medical care quality delivered by Kaiser, which serves 9.6 million health-plan members. As a speaker, Southam is also respected for captivating audiences with his passion for health care.
“Kaiser is an organization that has achieved multiple awards in terms of clinical excellence and the highest star rating from Medicare and medical group health programs,” said Denise Gillen-Algire, director, managed care and disability in corporate risk management for Albertsons Safeway Inc., and the conference’s program co-chair.
The keynote will focus on “leveraging what organizations have been able to do on the group health side and how we can use those tools in workers’ comp, and why that is important to employers.”
“So many organizations talk about either quality-focused networks or provider quality or quality outcomes, but how do you define ‘quality’ and how do you get there?” — Denise Gillen-Algire, director, managed care and disability in corporate risk management, Albertsons Safeway Inc.
Kaiser is the recipient of multiple awards from a variety of organizations, including the National Committee for Quality Assurance, U.S. News and World Report’s Top Hospitals, the Leapfrog Group, and J.D. Power and Associates.
“So many organizations talk about either quality-focused networks or provider quality or quality outcomes, but how do you define ‘quality’ and how do you get there,” Gillen-Algire said. “That’s how we came to Dr. Southam for the presentation.”
Several studies from leading workers’ comp research organizations have suggested that injured workers with comorbid conditions such as diabetes, obesity, and hypertension have higher costs per claim and longer disability durations. Thus, employers and other claims payers are increasingly interested in quality health care that can help improve claims outcomes when more injured workers suffer from those conditions.
“That’s the context. So if that’s the case, how do you check the quality of your providers, hospitals, your delivery system,” said Cyndy Larsen, area vice president for Kaiser On-the-Job, sales and account management. “Dr. Southam will discuss how did [Kaiser] get from where we were maybe 10 or 20 years ago to all these outside parties — like the NCQA, Leapfrog and J.D. Power and Associates — ranking us up there. What types of things had to be in place?”
Employers need to understand the importance of employees’ overall health and its impact on the workers’ comp system. Conference organizers say Southam’s experience on the group health side can demonstrate how workers’ comp can make similar improvements that lead to better outcomes.
“Really, group health is the bigger piece of the pie, and when you think of (the nation’s) total medical spend, workers’ comp is 2 or 3 percent,” Gillen-Algire said.
As Gillen-Algire explained, injured workers should be viewed in terms of their overall health, not just the occupational injury at hand.
“That’s absolutely a focus,” she said. “You can’t split a person into pieces. A person doesn’t come to you as a 2 percent problem over here and the rest over here in group health. [It’s important to] be able to tie what organizations are doing on the group health side and why that is important for workers’ comp in employee health outcomes.”
Southam will deliver the opening keynote address, Achieving Excellence in Medical Treatment, on Wednesday, Nov. 11 at Mandalay Bay.
A Global Perspective
As any traveler knows, the world is full of uncertainty and dangerous places, where the challenges of simply trying to run a profitable business far from home are complicated by even greater risks, such as political violence, civil unrest, credit risk, corruption, expropriation of private assets by the government, and more.
Anyone doubting this need only take a look at current events. Some 70 percent of the world’s nations currently have serious corruption problems throughout their governmental and civil service framework. Nearly 40 percent of all nations are experiencing some form of significant civil unrest. Signs of economic distress are everywhere, from falling oil prices to Eurozone debt crises to economic slowdown in China.
Despite such geopolitical risks, the world still needs its businesses to continue running amid dangers that range from warfare and terrorism to punishing economic conditions caused by international sanctions, to simple graft and hostility toward foreigners.
For global and multinational companies, keeping an eye on their political risk profile is as important as handling worker safety, environmental impact, products liability, or any other insurable risk. Thankfully, political risk exposures are insurable as well, and Starr Companies is there to provide its clients with robust political risk insurance coverage, a suite of unique support services that truly is second to none, and the ability to educate clients on how to manage their political risk.
Political risk hazards generally fall into one of the following categories:
Breach of Contract and Non-Honoring of Financial Obligations
These related hazards involve the failure of a local actor to uphold their contractual or financial obligations to a foreign investor, and the inability or unwillingness of local authorities to intercede on the foreign investor’s behalf. This is perhaps the most common form of political risk hazard, as it is a major problem in any environment where there is substantial economic instability and/or corruption.
Confiscation of Property
Also known as “expropriation,” “ownership risk” and “nationalization,” this is when a government seizes property or assets without compensating the owners for them. An overt example of expropriation would be a revolutionary government seizing an office building or a factory belonging to a foreign-owned corporation. An example of creeping expropriation would be a series of successive events by a government to gradually deprive an investor of their property rights.
This is when the local laws change in such a way as to constrict foreign investors’ economic activity in some way. It could range from creeping expropriation to changing taxation or labor laws that might simply make it far less profitable or far less efficient for a foreign entity to operate in a local jurisdiction.
Inconvertability of Currency
Also known as “transfer risk,” this is when a government takes action to prevent the conversion of local currency to another form of currency, making it difficult or impossible for foreign investors to transfer their profits elsewhere. This tends to happen in countries undergoing some kind of political crisis, like when Zaire—now the Democratic Republic of Congo—declared a new national currency in 1980.
Property or income losses stemming from violence committed for political purposes, including, but not limited to declared and undeclared warfare, hostile actions taken by foreign or international forces, civil war, revolution, insurrection and civil strife (politically motivated terrorism or sabotage).
Kidnap and Ransom
Political violence might also manifest itself as a kidnap, ransom and extortion hazard, but that is typically covered by a separate, specialized policy.
To protect against these risks, insurers can provide comprehensive and custom-tailored political risk solutions, which at a client’s request can be broadened to cover investment contract repudiation, currency inconvertibility and political violence. Such policies typically last for periods of 5 to 10 years. Protected assets for this coverage include fixed assets (e.g., a factory, farm, warehouse or office), mobile assets (e.g., harvested natural resources, raw or manufactured inventory or mobile equipment), leased assets (e.g., aircraft, watercraft or construction vehicles) and investment interests in assets abroad (e.g., money dedicated to funding a foreign project, held in a host country bank and subject to expropriation).
Kidnap & ransom coverage protects company personnel and family by providing financial reimbursement for such an event. Depending on the insurer, some K&R programs also provide independent expert consultancy before and after a potential act of kidnapping, ransom or extortion.
Great insurance coverage isn’t enough to adequately protect against political risk, however. Businesses need extra support to stay on top of their exposures, and to know what the latest geopolitical developments are.
Starr Companies, for example, does this through Global Risk Intelligence, a specialized team of political risk experts with long-standing backgrounds in national intelligence and international affairs. GRI delivers to Starr clients a unique risk advisory service that spans the gamut of commercial property & casualty exposures. GRI also produces two assets that are extremely helpful. The first is the Executive Intelligence Brief, a world-class monthly analysis of ongoing geopolitical developments (especially in emerging markets) available exclusively to a carefully selected readership of top executives. The second is the Global Risk Matrix, a quarterly ranking of the overall political security risk of every country on the planet.
The world’s geopolitical landscape is changing at a remarkable pace, with new risks and uncertainties arising in even the unlikeliest of places. And yet, as business becomes ever more globalized, insurers can provide their clients with tailored coverage to absorb the losses that stem from political turmoil. By finding the right insurer, with the financial strength to cover their risks as well as the analytical acumen to help turn risk into opportunity, businesses can create partners in prosperity anywhere in the world.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Starr Companies. The editorial staff of Risk & Insurance had no role in its preparation.