Workers' comp prescription drug costs continue to level off, report finds
In a previous report, NCCI noted a significant slowdown in the growth of the prescription drug share of workers' comp medical costs for services provided in 2005. In its update, researchers saw a continued leveling off through 2006, the latest data available. Researchers said that, according to the Center for Medicare & Medicaid Services, the rate of increase in drug spending for all payers -- including group health and workers' comp -- dropped by almost half from an annual average of 14 percent for the period 1996-2003 to an annual average of 7.6 percent for the period 2003-06.
According to the report, the prescription drug cost per claim rose at an annual average rate of 30.4 percent from service years 1998 to 2004, fell slightly in 2005, and rose again slightly in 2006. Researchers said recent preliminary data indicates that price change, not utilization change, drove the slight increase in total cost.
Study highlights other key findings. Among the highlights of the report, researchers found that:
--Utilization has decreased two years in a row.
After nearly a 20 percent increase in 2003-04, utilization has declined for the second straight year.
--Some costly drugs removed from the market. Researchers partly attributed the slower growth of the prescription drug share of workers' comp medical costs for services to the fact that the previously popular Cox-2 inhibitor anti-inflammatory drugs Vioxx® and Bextra® were removed from the market in late 2004 and early 2005. The removal of these drugs is associated with a drop in the number of prescriptions per claim for claimants who had been getting these drugs. Researchers said no single drug or handful of drugs stands out as an apparent replacement for Vioxx® and Bextra®.
--Cost share of anti-inflammatories and analgesics dropped five points in the past two years. Anti-inflammatories
comprised 25 percent of prescription drug costs in 2003, according to the report. Three years later, researchers said the share has fallen 10 percentage points.
--Use of generic drugs is on the rise. The study found that generic use in 2006, when generics were available, was 90 percent, up slightly from the previous year. Without approval of new generics, the maximum additional savings that can be realized from the use of generic equivalents is 12 percent, researchers said.
"Use of generic drugs, when available and appropriate, is one key to keeping drug costs down," the report stated. "Logically, the more generics available on the market, the greater the potential for additional drug cost savings."
Researchers said OxyContin®, a popular drug prescribed to workers' comp claimants, has been the subject of some interesting patent battles. In 2005, a federal appeals court ruled that the patents on OxyContin® were not enforceable. A year later, that same court vacated its previous ruling. However, in September, the patent holder for OxyContin® granted a generic manufacturer limited rights to produce and sell a generic form of the drug. Researchers said approval of new generics by the Food and Drug Administration may help keep costs down.
Costs may accelerate in future. NCCI said that according to the Center for Medicare & Medicaid Services, prescription drug spending growth is expected to slow to 6.7 percent in 2007, primarily due to slower drug price growth. However, researchers said prescription drug spending growth is expected to accelerate from 2008 through 2017, driven by several factors, including a projected leveling off of growth in the generic dispensing rate; an expectation of new drugs continuing to come into the market; and evolving treatment guidelines that call for earlier introductions of pharmacotherapy.
NCCI did, however, highlight a couple of emerging issues that may have an impact on prescription drug share of workers' comp medical costs. They are:
--An alternative to average wholesale price.
Researchers pointed to a study by the Workers Compensation Research Institute that found that 28 states have workers' comp prescription drug fee schedules that are based on average wholesale price.
"The controversy over the use of AWP as a benchmark for prescription drug reimbursement is not new," the report noted. "Few will disagree that the use of AWP as a pricing mechanism is flawed, but the challenge has always been finding a suitable alternative."
--Repackaged drugs in workers' comp.
According to the report, a relatively new emerging issue to workers' comp is physician-dispensed prescription drugs, commonly known as repackaged drugs. NCCI said these are drugs purchased in bulk and repackaged into individual prescription sizes for physician dispensing.
"In addition to potential price differences, there is concern that physician-prescribing behavior might also lead to increased utilization, or overprescribing, further increasing costs," the study noted.
December 16, 2008
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