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Would a Formulary Help in California?

Introducing a closed pharmaceutical formulary into California workers’ compensation could produce two main benefits. The first is to further lower the cost of pharmaceuticals by either restricting or eliminating certain medications. The second is to reduce the possibility of drug addiction.

An October 2014 California Workers’ Compensation Institute (“CWCI”) report titled, “Are Formularies a Viable Solution for Controlling Prescription Drug Utilization and Cost in California Workers’ Compensation” states that pharmaceutical costs could be reduced by 12%, or $124 million, by introducing the Texas workers’ compensation pharmaceutical formulary.

To achieve the second benefit, an assembly member introduced AB1124 to establish an evidence-based medication formulary and wrote, “The central purpose of our workers’ comp system is to ensure injured workers regain health and get back to work. When workers get addicted to dangerous medications, goals of the program are not met. An evidence-based formulary has proven to be an effective tool in other states and should be considered in California.”

To confirm whether these benefits could be achieved through the introduction of the Texas formulary, a review of the CWCI study and the opioid medications available under the Texas formulary was conducted. The findings, summarized below, suggest that the answer is no.

Although California does not restrict or limit medications in treating injured workers, it does limit the prices paid and provides an opportunity to question prescribed medications that appear to be out of the ordinary. Medi-Cal prices (California’s Medicaid health care program) are used for establishing the maximum prices for workers’ compensation medications, in contrast to states such as Texas, which use the average wholesale price (AWP).

A review of two cost-saving examples that referenced specific medications calculated projected savings based on CWCI’s ICIS payment data for prescriptions paid between Jan. 1, 2012 and June 30, 2013.

The first example compared 50mg Tramadol prices from five different suppliers. The highest was $190, followed by $23, $18, $12 and $8 per script. Here, CWCI suggested that the manufacturer of the highest-priced script be removed from the California formulary. From mid 2009 through 2013, however, the unit price for 50mg Tramadol from the supplier of brand name Ultram and at least 10 other suppliers in California was nine cents, so the AWP for a script was $2. So, overpaying for medications is an issue even if the $190 supplier is removed.

The Workers’ Compensation Research Institute (WCRI) also reported that California claims administrators paid a unit price of 35 cents for 5mg Cyclobenzaprine and 70 cents for 10mg while the unit price from Californian suppliers was 10 cents for 10mg and 15 cents for 5mg. Again, the prices suggest that California claims administrators were paying more than the maximum prices.

Based on randomly selected manufacturers and strengths of the top 20 medications identified in the 2013 NCCI prescription drug study, California’s prices were on average 20% lower than the AWP and in some cases as little as 1/24th the cost. California prices were found to be at the lowest retail price range compared with those published on goodrx.com. Pharmacies located in Los Angeles, Miami and Dallas were used for comparison. Findings suggested employers in California workers’ compensation are paying no more than the general public for medications, whereas in Texas employers are paying more by using the AWP.

The second example compared script prices of seven opioid agonists, including Tramadol and Oxymorphone. Oxymorphone was the highest-priced script at $600 and Tramadol the lowest at $60 per script, suggesting a saving of as much as $540 if Tramadol were to be prescribed instead of Oxymorphone.

But prescribing oxymorphone when tramadol could suffice or vice versa could be regarded as an act of gross negligence by the physician. On the World Health Organization (WHO) analgesic ladder, tramadol and codeine are weak opioids regarded as “step two” while acetaminophen and NSAIDs are “step one.” “Step three” opioids include medications such as morphine, oxycodone and oxymorphone, which all differ in their pharmacodynamics and pharmacokinetics, so choosing one or more to treat pain becomes a balance between possible adverse effects and the desired analgesic effect. Oxymorphone (stronger than morphine or oxycodone) is recommended for use only when a person has not responded to or cannot tolerate morphine or other analgesics to control their pain.

A list of opioid medications published by Purdue Pharma was used to identify which opioids were excluded from the Texas formulary. The list of more than 1,000 opioid analgesics was prepared by Purdue to comply with the state of Vermont law 33 V.S.A. section 2005a, requiring pharmaceutical manufacturers to provide physicians with a list of all drugs available in the same therapeutic class. Being in the same class, however, does not necessarily mean they are interchangeable or have the same efficacy or safety.

The list showed available strengths and included (1) immediate and extended release, (2) agonists such as fentanyl, oxycodone, hydrocodone, oxymorphone, tramadol, codeine, hydromorphone, methadone, morphine, tapentadol and levorphanol and (3) combinations such as acetaminophen with codeine, oxycodone with acetaminophen, oxycodone with asprin, oxycodone with ibuprofen, hydrocodone with acetaminophen, hydrocodone with ibuprofen, acetaminophen-caffeine with dihydrocodeine, aspirin-caffeine with dihydrocodeine and tramadol with acetaminophen.

It appears that extended-release medications used for around-the-clock treatment of severe chronic pain have been excluded or are not listed in the Texas formulary, with a few exceptions. For example, 80mg OxyContin (Oxycodone) ER 12 hour (AWP $18, Medi-Cal $15) is excluded. 120mg Hysingla (Hydrocodone) ER 24 hour (AWP $41, Medi-Cal $34) is not listed. However, 200mg MS Contin (Morphine) ER 12 hour (AWP $31, Medi-Cal $26) and 100mcg Fentanyl 72 hour transdermal patch in both brand name and generic forms are approved under the Texas formulary. Immediate-release generic medications such as oxycodone, hydromorphone and hydrocodone with acetaminophen in all strengths are approved, but immediate-release hydrocodone with ibuprofen and oxymorphone in either immediate or extended release are excluded.

Would the objective of AB1124 be achieved by utilizing the Texas formulary? The above review suggests it would not. All the opioid medications available through the Texas formulary have the potential to cause addiction and be abused, possibly leading to death either accidentally or intentionally. As an example, the executive director of the Medical Board of California has filed accusations against Dr. Henri Eugene Montandon for unprofessional conduct including gross negligence. His patient was found dead with three 100mcg fentanyl patches on his upper chest. The autopsy revealed he potentially had toxic levels of fentanyl, codeine and morphine in his bloodstream at time of death. These three opioids are available under the Texas formulary.

An article published on the website www.startribune.com described the challenges in treating returning soldiers from combat duty. The article discusses Zach Williams, decorated with two Purple Hearts who was found dead in his home from a fatal combination of fentanyl and venlafaxine, an antidepressant. Venlafaxine in both immediate- and extended-release form is approved in the Texas formulary. In addition, the following statement was made in a 2011 CWCI study into fentanyl: “Of the schedule II opioids included in the Institute’s study, the most potent is fentanyl, which is 75 to 100 times more powerful than oral morphine.”

The top 20 medications identified by the 2013 NCCI prescription drug study were also compared with the Texas formulary, and six medications were found to be excluded, including three extended-release opioids, OxyContin (Oxycodone), Opana ER (Oxymorphone) and the once-daily Kadian ER (Morphine). The twice-daily, extended-release morphine MS Contin, however, was approved. Flector, a non-steroidal anti-inflammatory transdermal patch used for acute pain from minor strains and sprains, was excluded, as was carisoprodol a muscle relaxant classified by the DEA as a Schedule IV medication (the same as Tramadol). The Lidocaine transdermal patch, which is a local anesthetic available in both brand name and generic. was also excluded. Lidocaine patches have been found to assist in controlling pain associated with carpal tunnel syndrome, lower back pain and sore muscles. Apart from carisoprodol, it would appear the remaining five were excluded from the Texas formulary because of their high price rather than concerns regarding their safety or potential for abuse.

The U.S. Food and Drug Administration (FDA) is responsible for the approval of all medications in the U.S. Its approved list is the U.S. pharmacy formulary (or closed formulary). California workers’ compensation uses this list for treatment and the Medi-Cal formulary for medication pricing. In comparison, Texas workers’ compensation uses its own formulary, which is a restricted list of FDA-approved medications, and pays a higher price for approved medications than California’s system does.

Implementing an evidence-based formulary, such as in Texas, may result in an injured worker’s not having the same choice of medications as a patient being treated for pain under California’s Medicaid healthcare program. How can this be morally justified? Will we see injured workers paying out-of-pocket to receive the medications necessary to control their pain?

Claims administrators can greatly reduce pharmaceutical costs through their own initiatives by (1) ensuring that they pay no more than the Department of Industrial Relations (DIR) published price for a medication, (2) ensuring that physicians within their medical provider network (MPN) treat pain using the established pharmacological frameworks such as the WHO analgesic ladder, (3) ensuring that quantities and medication strengths are monitored, along with how a person has responded to analgesics, (4) ensuring that, when controlling pain with opioids, there is a heightened awareness for potential abuse, misuse and addiction, (5) establishing a multimodal pain management regimen including non-pharmacological therapies such as acupuncture, aerobics, pilates, chiropractic and physical therapy tailored to a person’s medical condition and, (6) for chronic pain, considering introducing an Internet-delivered pain management program based on the principles of cognitive behavioral therapy.

The progress of many of these initiatives can be automatically monitored through a claims administrator’s technology solution, where a yellow or red flag is raised when prices paid exceed the legislated maximum amounts, when a pharmacological step therapy or progressive plan has been breached or when non-pharmacological therapy goals have not been achieved.

Using these initiatives, as opposed to restricting specific manufacturers or medications through a closed formulary, will undoubtedly yield a far better outcome for the injured worker and lower the cost to the employer, benefiting all involved.

Stop Overpaying for Pharmaceuticals

Legislators in all jurisdictions have attempted to rein in the cost of pharmaceuticals in workers’ compensation in an effort to reduce insured employers’ workers’ compensation premiums.

California, in particular, passed legislation between 2002 and 2007 to reduce pharmaceutical costs, yet expected reductions have not been forthcoming. Attention needs to focus on whether claims administrators have taken full advantage of this legislation and whether they could be doing more to help reduce the cost of pharmaceuticals.

A recent Workers Compensation Research Institute (WCRI) study titled “Are Physician Dispensing Reforms Sustainable?” found that the average price paid in California for 5mg and 10mg Cyclobenzaprine, a muscle relaxant, ranged from $0.35 to $0.70 per tablet (from the first quarter of 2010 through the first quarter of 2013). An independent study of Medi-Cal pharmaceutical prices used for California Workers’ Compensation found, however, that since 2009, 10mg Cyclobenzaprine has been priced at $0.10 per tablet and as low as $0.05, while 5mg Cyclobenzaprine has been priced at $0.16 per tablet and has also been as low as $0.05. The comparison suggests that claims administrators have overpaid.

The 2006 California Commission on Health and Safety and Workers’ Compensation (CHSWC) study titled “Impact of Physician-Dispensing of Repackaged Drugs on California Workers’ Compensation, Employers Cost, and Workers’ Access to Quality Care” also showed significant cost differences. For example, an insured employer’s estimated total cost for each tablet dispensed at the correct Medi-Cal price of $0.10 was $0.29 per tablet. For each tablet dispensed at a price of $0.35, estimated total costs increased by between $0.70 and $0.99. When dispensed at $0.70 per tablet, estimated total costs increased by between $1.69 and $1.98 per tablet. This significant increase is directly caused by claims administrators paying far more than the published Medi-Cal price.

What can claims administrators do to ensure they do not overpay for medications?

First: Monitor medications dispensed. Second: Ensure that no more than the legislated maximum price is paid.

The California Department of Industrial Relations (DIR) website provides a medication pricing inquiry screen requiring entry of a National Drug Code (NDC) and other details taking approximately 10 seconds to obtain the price of a medication on the date it was dispensed. In addition, current pharmaceutical pricing data is available that can be loaded into a claims administrator’s computer system or program, such as a spreadsheet. To complement the DIR’s offerings, the U.S. Food and Drug Administration (FDA) website also provides NDC inquiry and download facilities, plus a downloadable file of suppliers of medications showing their labeler code(s) along with their company name. The labeler code is the first of three parts associated with the NDC identifying the supplier of the medication. For claims administrators wanting to know more about medications, the FDA offers the “Orange Book” for download, listing all FDA-approved medications along with therapeutic equivalence evaluations. With all this free information, California workers’ compensation claims administrators have no excuse for overpaying.

For jurisdictions that utilize the average wholesale price (AWP) to set their maximum price for a medication, claims administrators will need to license pricing information from sources such as Medi-Span (Wolters Kluwer Health) or Red Book (Truven Health Analytics). Both offer extensive pharmaceutical information for download into a claims administrator’s computer system or, alternatively, use of the vendor’s inquiry facilities.

The passing of legislation in California that set the same prices for medications regardless of dispenser (i.e. pharmacy, mail order/PBM or physician) has provided opportunities for medications to be dispensed by a physician without paying a higher price and for more accurate and timely details relating to medications being available to claims administrators.

The invoice a physician submits (either paper or electronic), includes services rendered at the person’s medical appointment with a report outlining their current medical conditions and other pertinent information, including the date of their next medical appointment. Receiving billing details on the same invoice for medications dispensed, which would include the NDCs, quantities dispensed and prices charged, provides the claims administrator with an excellent opportunity to review the appropriateness of the medication against the diagnosis and treatment plan as well as the prices charged, all in one step. In addition, there is the opportunity to review any physician treatments that differ from the norm (i.e. guidelines), which may be necessary so as not to interfere with any non-work-related treatments under the control of the person’s own physicians.

In cases of pain management and where step-therapy is used, the claims administrator can ensure that physician-dispensed medication quantities are limited to the next medical appointment and assist in determining when the person may be able to either return to work or stay at work during their recovery. In many cases, acute pain is treated with acetaminophen (aka paracetamol) and nonsteroidal anti-inflammatories (NSAIDs), allowing a person to either stay at work or return to work earlier. At times, however, narcotic analgesics may be required to control pain that blocks pain receptors to the brain, slowing the person’s cognitive function and reaction times, possibly restricting their ability to either stay at work or return to work early.

Claims administrators also have the opportunity to monitor a physician’s pharmacy formulary to ensure they are dispensing medications from suppliers with the lowest or the average lowest price for a medication. Claims administrators should never have to pay the “no substitution” price for a physician-dispensed medication. For some medications, the Medi-Cal “no substitution” price can be much higher than the regular price.

Considering that claims administrators currently perform some form of medical bill review, to include pharmacy price and utilization verification would add minimal additional effort to the overall medical bill payment process, regardless of whether the physician’s invoice is received on paper or electronically.

Claims administrators with computer systems that monitor medications through the NDC have the opportunity through physician dispensing to invoke timely automated processes based on the NDCs shown on the physician’s invoice. For example, if claims administrators use an adaptation of the biopsychosocial and shared-decision making frameworks (i.e. collaboration) to address a stay at work (SAW) or early return to work (ERTW), a more empathetic approach to claims handling is required. This SAW/ERTW approach can be enhanced through invoking processes based on the physician’s submitted NDCs, which may include: a pre-defined questionnaire associated with distress and risk, focusing on somatic and emotional symptoms: a pre-existing anti-depressant medications questionnaire that establishes whether the person is already taking anti-depressants’ as well as a cultural sensitivity questionnaire relating to a person’s religious or spiritual beliefs and their cultural and language preferences. The results from these questionnaires can directly influence the medical treatment pre-authorized by the claims administrator as well as assist in determining when the person is likely to return to “normality.” All this information directly influences the cost of the claim, which in turn determines the future premiums paid by the insured employer. For claims administrators who do not have capabilities such as these in their computer systems, there are systems available.

Having physician-dispensed medications billed in a timely way on the same invoice as other medical services improves both transparency and accountability. This recent WCRI study has highlighted that insured employers in California may have paid higher premiums for policy periods from 2011 through 2014, caused by claims administrators overpaying for the 5mg and 10mg Cyclobenzaprine medications, which was only brought to the attention of the workers’ compensation community in 2015.

Considering that expected savings from the enacted California legislation relating to pharmaceuticals have not been forthcoming, it is only a matter of time before insured employers conduct their own studies investigating how much has been overpaid for dispensed medications and how much this overpayment may have increased their premiums since 2007. Depending on the findings from this type of study, a possible outcome could result in California workers’ compensation insurers being forced to restate their claims costs associated with pharmaceuticals and all pharmaceutical overpayments by their claims administrators to be treated as an expense outside of their workers’ compensation insurance portfolio.

When Is It Right to Prescribe Opioids?

Opioids have been used for thousands of years in the treatment of pain and mental illness. Essentially everyone believes that opioids are powerful pain relievers. However, recent studies have shown that taking acetaminophen and ibuprofen together is actually more effective in treating pain. Because of this, it is helpful for medical professionals and patients to understand the history of these opioid medications and the potential benefits of using nonsteroidal anti-inflammatory drugs (NSAIDs) instead.

Extracted from the seedpod of the poppy plant, opium was the first opioid compound used for medicinal purposes. The active ingredients of opium are primarily morphine, codeine and thebaine. Opium and its derivatives have had more impact on human society than any other medication. Wars have been fought and countless lives have been lost to the misuse, abuse and overdose of opioids. It is also clear, however, that many received comfort from pain when there was no other alternative. For thousands of years, opium products provided the only effective treatment of pain and were also used to treat anxiety and depression. Tolerance, dependence and addiction were identified early as a problem with opioids.

In 1899, Bayer produced and introduced aspirin for wide distribution. It became the first significant alternative to opioids for treating pain. Aspirin not only relieves pain but also reduces inflammation and is in the class of NSAID medications. Aspirin was commonly used for mild pain such as headache and backache. Other NSAID medications followed with the development of ibuprofen in 1961, indomethacin in 1963 and many others over the next 20 years. While these drugs are not addictive or habit-forming, their use and effectiveness were limited by side effects and toxicity. All NSAID medications share some of the same side effects of aspirin, primarily the risk of gastrointestinal irritation and ulcer. These medications can also harm renal function.

Acetaminophen was created in 1951 but not widely distributed until 1955 under the trade name Tylenol. Acetaminophen is neither an opioid nor an NSAID. Tylenol soon became another medication that was useful in the treatment of pain, offering an alternative to the opioid medications and to aspirin. Acetaminophen avoids many of the side effects of opioids and NSAIDs b­ut carries its own risk with liver toxicity.

Efficacy in acute pain

Since the development of acetaminophen, medical professionals have had the choice of three different classes of medications when treating pain. Those decisions are usually made by considering the perceived effectiveness of each medicine and its side effects along with the physical status of the patient. For example, acetaminophen should not be taken by someone with advanced liver damage; NSAIDs should not be given to an individual with advanced kidney disease or stomach ulcers; and opioids pose a potential risk to anyone with a personal or family history of addiction.

Although many have long been believed that opioids are the strongest pain medications and should be used for more severe pain, scientific literature does not support that belief. There are many other treatments that should be utilized for treating pain. Studies have shown NSAIDs are just as strong as the opioids.

Number needed to treat

When considering the effectiveness or the strength of pain medications, it is important to understand one of the statistical measures used in clinical studies: the number needed to treat (NNT). NNT is the number of people who must be treated by a specific intervention for one person to receive a certain effect. For example, when testing pain medications, the intervention is the dose of pain medication, and the effect is usually 50% pain relief. That is considered effective treatment, allowing people increased functional abilities and an improved quality of life (Cochrane. org, 2014). So the question becomes, how many people must be treated with a certain dose of a medication for one person to receive 50% pain relief (effective relief)?

A lower NNT means the medicine is more effective. A product with an NNT of 1 means that the medicine is 100% effective at reducing pain by 50% — everyone who takes the medicine has effective pain relief. A medicine with an NNT of 2 means two people must be treated for one to receive effective relief. Or, alternatively, one out of two, or 50%, of people who take the medicine get effective pain relief. An example of a medicine that would not be a good pain reliever would be one with a NNT equal to 10. In such a case, you would have to treat 10 people for one to receive effective pain relief. Basically, the medication with the lowest NNT will be the most effective. For oral pain medications, an NNT of 1.5 is very good, and an NNT of 2.5 would be considered good.

Treating chronic pain

Despite the widespread use of opioid medications to treat chronic pain, there is no significant evidence to support this practice. A recent article reviewing the evidence regarding the use of opioids to treat chronic non-cancer pain concluded, “There is no high-quality evidence on the efficacy of long-term opioid treatment of chronic nonmalignant pain.” (Kissin, 2013, p. 519) A recent Cochrane review comparing opioids with placebo in the treatment of low back pain came to a similar conclusion. This review said that there may be some benefit over placebo when used for short-term treatment, but no evidence shows that opioids are helpful when used for longer than four months. There is no evidence of benefit over non-opioid medications when used for less than four months. (Chaparro et al., 2014)

Several other reviews have also concluded that no evidence exists to support long-term use – longer than four months – of opioids to treat chronic pain. (Kissin, 2013; Martell et al., 2007; McNicol, Midbari, & Eisenberg, 2013; Noble et al., 2010)

Epidemiologic studies have also failed to confirm the efficacy of chronic opioid therapy (COT) for chronic non-cancer pain. A large study from Denmark showed that those with chronic pain who were on COT had higher levels of pain, had poorer quality of life and were less functional than those with chronic pain who were not on COT. (Eriksen, Sj.gren, Bruera, Ekholm, & Rasmussen, 2006)

In the last 20 years in the U.S., we have increased our consumption of opioids by more than 600%. (Paulozzi & Baldwin, 2012) Despite this increase, we have not decreased our suffering from pain. The Burden of Disease study in the Journal of the American Medical Association (JAMA) showed that Americans suffered as much disability from back and neck pain in 2010 as they did in 1990 before the escalation in the prescribing of opioids. (Murray, 2013) A study in JAMA in 2008 found, “Despite rapidly increasing medical expenditures from 1997 to 2005, there was no improvement over this period in self-assessed health status, functional disability, work limitations or social functioning among respondents with spine problems.” (Martin et al., 2008, p. 661)

It is currently estimated that more than 9 million Americans use COT for the treatment of chronic nonmalignant pain (Boudreau et al., 2009). When we consider the proven benefits of this treatment along with the known risks, we must ask ourselves how we can ethically continue this treatment.

The reality is we really don’t know if COT is effective. Anecdotal evidence and expert opinion suggest it may be beneficial in a few, select people. However, epidemiologic studies suggest that it may be doing more harm than good.

Terminal care

The treatment of incurable cancer, end-stage lung disease and other end-of-life situations are notable examples where opioid medications are absolutely indicated. Although opioid painkillers are not very good medications for the treatment of pain, they are very strong psychotherapeutic agents. They are excellent at relieving anxiety and treating depression for a limited time. Opioids cause beneficial changes to brain serotonin, epinephrine, norepinephrine, dopamine and endorphins. For short-term, end-of-life situations, these neuropsychiatric effects are likely beneficial. For terminal care, opioids are the medications of choice.

Conclusion

The opioid medications are often referred to as “powerful painkillers.” In fact, the evidence shows that they are mild to moderate painkillers and less effective than over-the-counter ibuprofen. They have, however, powerful side effects that harm hundreds of thousands of individuals every year in the U.S. Even if one disregards the public health problems created by the use of opioid painkillers, these medications still are not a good choice for the treatment of acute pain — regardless of the severity. In some situations, limited use is appropriate. But in the majority of situations in which opioid painkillers are used today, they are not appropriate.

The standard of care in the practice of medicine today is to provide the best treatment that causes the least harm. When there is a treatment that is proven to be both more effective and safer, it is the treatment of choice. The implication of this data for policymakers is critical. By implementing policy that puts restrictions on opioid prescribing to protect public health, policymakers will also improve the treatment of pain by guiding prescribers to use medications that are more effective. It is also important for the medical and dental communities to address this inadequate and unsafe treatment of pain and change practice standards to guide care that is more appropriate for what our patients need and deserve.

This is an excerpt from a paper that can be downloaded in its entirety from the National Safety Council.