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By STEVE TUCKEY, who has written on insurance issues for a decade for several national media outlets

In August, the U.S. Food and Drug Administration approved the use of the pain-relieving drug developed by King Pharmaceuticals that aims to foil abusers who want to grind it up for their own recreational use.

Managed care consultant Joseph Paduda said so-called drug diversion, or the sale or distribution of pain drugs obtained through the workers' compensation system for personal profit or recreational use, remains a challenge for a number of reasons.

"Some payers don't do a very good job of tracking the pain medication that their claimants use," he said. "They don't mine the data to determine where there is more than one physician dispensing the same medication, or one physician dispensing multiple narcotic opioids."

Paduda, principal of Health Strategy Associates, said Embeda was the "first script out there specifically aimed at drug diversion." He believes it could it gain acceptance in those areas of the country, such as the Appalachian states, where there is a real concern about the issue.

Compounding represents a different challenge to workers' compensation stakeholders seeking to keep a lid on rising medical costs.

It takes place when a physician orders a drug made of several different ingredients that is not available from a manufacturer but rather from pharmacies that have specialized in the profitable practice.

"One of the problems with compounding medications is that to my knowledge there has never been any peer reviewed medical research that has established their effectiveness," Paduda said.

Because there is no established price, Paduda said, retail pharmacies charge what appears to be an "exorbitant" amount for these concoctions.

In Texas, the pharmacists are lobbying the Division of Workers' Compensation as it attempts to implement a legislative mandate to close the drug formulary, or list of approved drugs. They want to maintain the loose regulation of compounding but are facing opposition from the industry group Insurance Council of Texas (ICT).

"ICT members have reported that compounding has been an unnecessary system cost driver for prescription drug costs in other workers' compensation jurisdictions," the council noted in its comments filed with the division, as reported by workcompcentral.com.

Furthermore, the group argued that the Texas workers' compensation system was not established for the purpose of funding research, training or chemical analysis."Compounding should be an exception rather than a common practice when drugs are dispensed to injured workers in Texas," the group said, and urged that all compounded drugs should be preauthorized.

William Zachry, chairman of the California Fraud Assessment Commission, said other drug-related fraud gambits include dispensing higher priced or no generic drugs when cheaper or generic equivalents exist. In addition, doctors dispensing sample drugs, or in general acting as their own pharmacy can lead to fraud and abuse scenarios.

Paduda said that advocates of the practice of doctors dispensing their own drugs will claim that the injured worker will get the pain relief much quicker. Critics noted, however, that prices of repackaged drugs can be up to 20 times greater than if they were purchased at a retail pharmacy.

The ICT also noted that the practice of doctors dispensing drugs is a significant trend in California and Florida and could impede efforts in Texas to impose a closed formulary if that trend migrates to the state in any significant way.

Although the group did not condemn the practice it did say, "the prescribing and dispensing of drugs are two separate and distinct acts that are most often undertaken by two different entities."

October 1, 2009

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