By Nikki Wilson, Pharm.D./MBA, Mitchell
Are you aware of the top medications driving cost in your pharmacy program?
Although every program is inherently different, a few key categories should be afforded extra scrutiny. These relatively low volume, high impact drug categories not only have an effect on spend, but also on claims outcomes, making them particularly important to understand and address. Let’s look at these categories and strategies to mitigate their impact on your program.
Key High Impact Drugs
Six drug categories fall into the “high impact” grouping, including compounds, compound kits, topicals combo packs, price outliers and specialty medications. Below we will examine each one in turn:
Compounds are created by combining, mixing or altering the ingredients of two or more drugs to meet the specific needs of a patient. The practice of compounding can play an important role in patient care in limited, specific circumstances; however, their use typically creates more challenges than benefits. Compounds are not approved by the Food and Drug Administration (FDA); therefore, their efficacy and safety is in question. Product identification can often be difficult, with many NDCs, bulk ingredients and HCPCS J-codes. There is also the question of medical necessity – according to medical guidelines, the majority are not medically appropriate (for instance, see ODG Guidelines). Compounds are typically filled out-of-network, making it difficult to verify their medical necessity for injured workers.
It can be common in workers’ comp to see medications that haven’t been studied and FDA-approved for topical use compounded into a “pain cream.” An example of this is using bulk powder ingredients such as gabapentin, an anticonvulsant commonly prescribed orally for chronic, nerve-related pain. These compounded products often contain several active drug components combined. This compound mix would not have been evaluated by the FDA, which means there is rarely direct evidence that this new mixture is safe and/or that the active ingredient(s) will even be adequately absorbed in order to produce the intended clinical effect.
The following is an example of an order for compounded topical cream that might be prescribed for chronic pain: diclofenac 30%; cyclobenzaprine 2%; gabapentin 8%; tramadol 5%; lidocaine 5%; capsaicin 0.05%, menthol 10%, camphor 5% PCCA Lipoderm Base
In this case, four of the active ingredients can be found in topical over-the-counter products (lidocaine, capsaicin, menthol, camphor), and the remaining ingredients are typically prescribed for oral use with the exception of diclofenac, which is commercially-available orally or by topical prescription at lower strengths.
Compound kits contain two or more pre-measured drug ingredients that are combined immediately prior to use based on a prescription order and are sold together as one product. Similar to compounds, there are challenges with identification (unique NDC for co-packaged, pre-measured ingredients), medical necessity, patient safety and efficacy and price inflation. Unfortunately, no easily-identifiable NDC list exists for this category, which means monitoring is particularly important.
This category plays off the concept of compounding where, once again, the individual components are often available separately or in a different formulation at a much lower cost. The separate ingredients are pre-measured and in their own containers, so all the pharmacist must do is open the seals and combine according to the package directions immediately prior to dispensing, then bill under one NDC. The single product NDC is advantageous to billers because it can curtail some of the controls payors have in place to identify compounded products. These kits can be popular because they save the dispenser time and effort, reimbursement is more reliable and the pricing markup is comparatively higher than other approaches.
Let’s consider the example of baclofen, a common prescription oral tablet medication prescribed as a muscle relaxant in workers’ comp. Baclofen is also commercially-available as a prescription oral liquid. A compounder could purchase baclofen bulk powder and combine this with an oral solution base to make baclofen solution; or the dispenser could use the compound kit product that includes one bottle of baclofen powder and one bottle of grape-flavored suspension that can be mixed and billed under one NDC at a considerable mark-up.
Topicals have increased in price rapidly in recent years. Two categories of topicals are prescription topicals and private-label topical analgesics (PLTA). Prescription topicals have gone through FDA approval and have good evidence to support their use for specific indications. PLTA topicals, on the other hand, have not gone through FDA approval. Neither category is recommended as a first-line therapy over more cost-effective alternatives (i.e., oral medications or over-the-counter options).
An example of this is the PLTA New Terocin, which is a combination of methyl salicylate, capsaicin and menthol. New Terocin AWP at the time of this publication is $487.08, whereas two over-the-counter medications with the same ingredients cost merely $30.
Combo or convenience packs consist of multiple, commercially-available products that are packaged together for sale with a common therapeutic purpose. Most of the individual components are available at a much lower cost. They can include items like durable medical equipment and over-the-counter medications, which are available on the market separately for relatively low cost. However, packaged together, the price can inflate. As with compound kits, there is not a readily-available category list of NDCs that can be referenced to easily mitigate the impact of these combo packs.
One combo pack containing lidocaine patches, kinesiology cross tape and sterile alcohol prep pads currently carries an AWP of $4,970. Comparatively, equivalent quantities of these same items purchased separately would run about $133 total.
Price outliers include medications and products within the same category that have exponentially higher costs compared to the same or similar readily-available, clinically-appropriate and more cost-effective alternatives.
An example of this is when a particular manufacturer prices a medication (say, prescription ibuprofen 800mg) at a unit price well over other manufacturer’s prices. One manufacturer may provide the drug at $0.07 per unit, where others could escalate the cost up to $13.31 per unit (these numbers are based on the AWP of ibuprofen 800mg in August 2020). For a 30-day prescription, the price can increase drastically for a drug that is therapeutically equivalent to lower-cost options but priced higher by a particular manufacturer. The difference would result in additional costs of over $14,000 annually for something as simple as ibuprofen.
There is not a standard definition for what constitutes a specialty medication, but these medications are typically used to treat patients with challenging, chronic or rare conditions. Specialty medications represent relatively low volume but they continue to be a major area of pharmaceutical development and can be associated with significant costs (often more than $600 per month). Specialty medications do have their place in care, including some therapeutics with the potential to completely cure rather than just treat disease, but identification and management of specialty medications to ensure appropriate place in therapy is critical.
The specialty category also includes biologics and biosimilars, which are more complex than traditional chemical drugs as they structurally mimic compounds found in the body. There are several additional management considerations for biologics, including ensuring the patient does not have an adverse or immune-related reaction, following handling requirements carefully, adhering to any required companion diagnostic testing and any frequent monitoring needs and attesting that the patient closely stays on track with treatment. Biosimilars are somewhat like generics for biologics in that they are highly similar to the original biologic reference product in intended use, safety, purity and potency, but at a lower cost. However, biosimilars are not able to be automatically substituted out like a generic medication would for a branded drug – the prescribing physician has to authorize the substitution.
Examples include the biologic Humira® (adalimumab) and its biosimilar counterpart Amjevita® (adalimumab-atto), which are both used to manage rheumatoid arthritis. Each contains the same active compound, but Humira® is the reference product developed by manufacturer AbbVie while Amjevita® was made by Amgen with FDA approval based on evidence that Amjevita® is highly similar to Humira® with no clinically-meaningful differences.
How to Manage High Impact Pharmaceuticals
Regardless of the use case, it is an important part of pharmacy management to review the safety, appropriateness, and efficacy of the drugs in your program. Careful oversight becomes paramount considering these categories can have an outsized impact on costs and overall claim outcomes. A few strategies include:
Planning: Smart Set Up
- Create robust formulary management that includes customization, plan edits, and drug list control
- Set up point-of-sale controls to allow review prior to dispensing where possible and appropriate
Identification: Find the Outliers
- Provide medication information to decision-makers for incoming prior authorizations
- Monitor and report on outlier medications and patterns so leadership can review and address any opportunities for outreach and discussion
- Incorporate bill review data to capture prescriptions outside the PBM
Follow the Evidence: Let Guidelines Direct You
Develop (or your PBM should provide) a clinical solution to support your overall pharmacy program that is grounded in established guidelines (CDC, ODG, etc.) and evidence-based recommendations including:
- Clinician engagement for oversight, education and coordination
- Medication review such as Drug Utilization Assessment, Peer-to-Peer Review or formal Utilization Review (UR)
- Lab monitoring and diagnostic testing where appropriate
Educate & Collaborate:
- Consult with clinical and/or pharmacy program resources to coordinate optimal care
- Establish reporting and analytics to continually evaluate and enhance your pharmacy program
- Plan ongoing stewardship meetings to optimize your program to deliver the best outcomes for your injured workers and your organization
About Nikki Wilson
Nikki Wilson is a Pharm.D. who graduated with her Doctor of Pharmacy and Masters of Business Administration (MBA) from Creighton University. As a licensed Pharmacist, Wilson has over 11 years of comprehensive industry experience through leadership roles overseeing prescription home delivery programs, clinical pharmacy operations and benefit management, and product development.
Headquartered in San Diego, Calif., Mitchell International, Inc. delivers smart technology solutions and services to the auto insurance, collision repair, disability and workers’ compensation markets. Through deep industry expertise, connections throughout the insurance ecosystem and advanced technology such as artificial intelligence, extended reality and cloud-based solutions, Mitchell enables its customers and clients to succeed in today’s ever-changing environment. Each month, Mitchell processes tens of millions of transactions for more than 300 insurance providers, 20,000 collision repair facilities and 70,000 pharmacies. Its comprehensive solution and service portfolio empowers clients to restore lives after a challenging event.
Mitchell, Genex and Coventry have recently aligned their joint industry expertise and advanced technology solutions into a combined organization of more than 6,000 associates committed to simplifying and optimizing property, casualty and disability claims processes and services.
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