Tag Archives: pharmacist

Novel Controls on Physician Dispensing

As you know, I’m not a fan of physician dispensing. In limited cases, there can be benefits from patient compliance and convenience and from immediate treatment. However, my opinion is that in most cases physician dispensing creates a motivation to continue prescribing (because revenue to the physician is at stake) and causes patient safety issues (by bypassing the people who really understand drugs — pharmacists and pharmacies — and possibly not taking into account drug interactions).

On top of that, physician dispensing can increase lost time by an injured worker, as documented in a study of Illinois. When evaluating the differences between physician-dispensed and non-physician-dispensed medications, the study found:

  • For physician-dispensed, non-narcotic drugs — medical costs ▲ 39%, indemnity costs ▲ 27%, lost-time days34%, average total claim ▲ 31%, # of prescriptions = 2.99
  • For physician-dispensed narcotic drugs — medical costs ▲ 78%, indemnity costs ▲ 57%, lost-time days ▲ 85%, average total claim ▲ 64%, # of prescriptions = 3.20

Several states have tried to combat inappropriate physician-dispensing over the past few years, using fee schedule and rules and even felonies as countermeasures. Some efforts have been successful, while others have just created a continuing cat-and-mouse game for repackagers and physicians vs. payers.

Well, effective Jan. 1, 2016, Nevada instituted its own type of reform, specific to workers’ comp. The bill does not appear to be ambiguous or up for interpretation. The bill (SB 231) was signed by the governor on May 27, 2015, but the intended (and unintended) ripple effects started last Friday. Read the entire act here. To highlight:

  • Section 1.1.a – A “provider of healthcare” can only provide an initial 15-day supply of Schedule II or III controlled substances to an injured worker. Note that this excludes pharmacists and hospitals, both reasonable carve-outs. Any subsequent such controlled substances must be dispensed by a pharmacy. Excellent.
  • Section 1.1.b – The “provider of healthcare” dispenser must include the original manufacturer’s national drug code (NDC) on bills and reports. Good. This doesn’t necessarily fix the issue of repackagers becoming “manufacturers” of unique (previously unnecessary) dosages and inflating prices, but …
  • Section 1.1.c – A repackaged drug must not be used. Booyah.
  • Section 1.1.d – For outpatient care, a non-prescription drug will not be reimbursable. Excellent.

While not all dangerous or clinically inappropriate drugs are Schedule II or III, these new rules should certainly make a dent in direct dispensing of those that are. This bill does not outlaw physician dispensing, but it does remove revenue motivation so a “provider of healthcare” will focus on the most clinically appropriate care (which may not be a drug). Working as a team, the “provider of healthcare” and the pharmacist should determine what, if any, drugs are clinically appropriate for the injured worker/patient.

It will be interesting to see how the repackaging industry responds. For an example of the state of the industry in Nevada, check out this website. (Nine uses of the word “revenue” on the repackager’s home page. Hmmmm.)

If you operate in Nevada, keep your eyes and ears open. And if you see reactions, please let us all know!

10 Strategies to Combat the Rx Abuse Epidemic – An Insurer's Perspective

The misuse and abuse of prescription drugs has taken a devastating toll on communities all across America. For insurance companies, the financial impact of rising opioid costs continues to cause concerns, as medical payments exceed indemnity payments.

In 1987, medical losses represented only 46 percent of the dollars spent on workers' compensation claims. Today, medical losses represent roughly 60 percent of the dollars spent on these claims.1 In the Winter edition of the NAMIC Mutual Insurance magazine, the article “Opioids: A Workers’ Compensation Epidemic” discussed the Accident Fund Insurance’s 60%/40% medical loss/indemnity loss split, in addition to calling opioids workers’ compensation’s current worst enemy.2

With approximately 20 percent of all medical spending going towards prescription drugs, workers' compensation, insurers have been working hard to mitigate these costs. Insurers have negotiated discounts with preferred providers, established comprehensive prescription drug networks, used advanced analytics to identify the most severe claims, promoted evidence-based pain diagnoses, leveraged utilization reviews, and invested in tort reform. All of these measures have been taken with the goal of reducing injured worker reliance on addictive prescriptions drugs and helping workers return to work sooner.

To address the opioid epidemic, a number of strategies have been developed at both the national and state levels in consultation with medical professionals, law enforcement, insurance companies, and public health and drug prevention experts. In October 2013, the Trust For America’s Health (TFAH) issued a report titled, “Prescription Drug Abuse: Strategies to Stop the Epidemic” identifying ten strategies being employed at the State level.3 In this article, we will provide a brief recap of the strategies and share our thoughts on some insurance company considerations.

Although no single strategy is a “silver bullet” that will alleviate the opioid epidemic, each strategy must be considered in the context of the unique circumstances that exist in each state. Ultimately, these efforts could play a role in helping insurance companies mitigate opioid related costs going forward.

A Recap of the 10 Strategies

1. Prescription Drug Monitoring Program: Does the state have an operational Prescription Drug Monitoring Program (PDMP)?

The TFAH report noted that 49 states have an active PDMP. These programs hold the promise of being able to quickly identify problem prescribers and individuals misusing and diverting drugs. The Prescription Drug Monitoring Program Center of Excellence at Brandeis University, the National Alliance for Model State Drug Laws, the Alliance of States with Prescription Monitoring Programs and other organizations have stressed the importance of PDMPs in fighting prescription drug abuse and misuse and improving patient safety. These organizations have also issued a variety of recommendations and leading practices for PDMPs including interstate operability, mandatory utilization, expanded access, real-time reporting, use of proactive alerts, and integration with electronic medical records.

On September 13, 2013, the American Society of Health-System Pharmacists web site discussed how PDMP programs are gaining steam.4  Specifically, they mentioned how New York became the first state to require that prescribers consult the State’s PDPM registry before prescribing Schedule II, III or IV controlled substances.   From an insurance company perspective, understanding how effective PDMP programs are with controlling physician prescriber behavior can help claim adjusters and actuaries gain a better understanding of medical costs going forward.

Of note, Missouri is currently the only state without a PDMP. From our perspective, this raises concerns that Missouri could be targeted by individuals looking to illegally sell/purchase prescription drugs and profit from their misuse and abuse. Without the tracking and monitoring of prescriptions, some patients may find it convenient to cross the border in order to fill their medications in Missouri. Not surprisingly, on November 21, 2013, KCTV News (Kansas City) published a story titled “Missouri a hot spot for 'doctor shopping' for Rx drugs” which seems to support this concern.5

2. Mandatory Use of PDMP: Does the State require mandatory use of PDMPs by providers? (i.e., any form of a mandatory use requirement).

The TFAH report found only 16 States require use of the PDMP by providers (and then only in certain situations) and of those States, only eight States require use of the PDMP before the initial dispensing of a controlled substance. From our perspective, it isn’t surprising that some professionals find the lack of enforcement troubling, especially given the recommendation from the Prescription Drug Monitoring Program Center of Excellence at Brandeis University that utilization of PDMPs be mandated for all prescribers.

Some providers have expressed genuine discontent with the mandatory use of the PDMP, since it increases their administrative burden and may reduce the time they can spend with patients.  However, this additional burden has to be weighed against the benefits of mandatory PDMP usage which can help prevent an addict from filling duplicate prescriptions, identify a stolen prescription pad, or highlight a provider who is obviously writing phony subscriptions. 

Ultimately, the majority of health-care providers rank patient health and safety as a priority, and given the undeniable prevalence of the prescription diversion and abuse, their goal can only be furthered by using the PDMP.  Lastly, from an actuarial perspective, the mandatory use of PDMP’s would increase the ability of States to measure the true value/effectiveness of PDMP efforts.

3. Doctor Shopping Law: Does the state have a doctor shopping statute?

Doctor shopping is the practice of seeing multiple physicians and pharmacies to acquire controlled substances — for a person’s own use and/or for reselling purposes. The TFAH report noted that all States have laws in place that either:

a) Make it a criminal offense to obtain drugs through fraud, deceit, misrepresentation, subterfuge, or concealment of material fact.

b) Make doctor shopping illegal.

c) Prohibit patients from withholding information that they have received either a controlled substance or prescription order from another practitioner, or the same controlled substance or one of similar therapeutic use within a specified time interval.

Doctor shopping laws are aimed at deterring individuals from one method of wrongfully obtaining prescription drugs. In Tennessee, the Office of the Inspector General has used these laws very effectively.

In the Long Island Newsday article “State’s new prescription pain pill system snags apparent doctor shoppers”, New York State’s online system discovered 200 instances of apparent doctor shopping in the first three days of use.6   With diversion and addiction on the rise, anything we can do to keep opioids out of the hands of those who shouldn’t access them is a move in the right direction. The more illegal pills taken out of circulation, the less likely an addicted injured worker will be able to further any bad habits.

4. Support for Substance Abuse Services: Has the state expanded Medicaid under the Affordable Care Act, thereby expanding coverage of substance abuse treatment?

The TFAH report noted that in 2011, 21.6 million Americans age 12 and older needed treatment for a substance abuse problem, but only 2.3 million received treatment at a substance abuse facility. This shortfall represents a “treatment gap” where treatment is not readily available for millions of Americans who are in need of assistance. The TFAH report found that 24 states and the District of Columbia have expanded Medicaid under the Patient Protection and Affordable Care Act (ACA), thereby expanding coverage of substance abuse treatment. However, it is unclear whether the remaining 26 States will expand their Medicaid coverage and substance abuse treatment efforts.

The authors have experienced firsthand the need for additional substance abuse treatment during the radio shows we host on Rx Drug abuse issues.  Several callers have expressed frustration over not being able to receive substance abuse treatment either for themselves or a loved one and want to know where they can go to find help.  Sadly, some Americans have resorted to committing a crime so they could receive free treatment while incarcerated.

Fortunately for some workers’ compensation claimants, a number of insurance companies have been proactively leveraging pain management programs to help wean injured workers off of addictive opioids.  This not only improves the quality of life of for the injured worker and his/her family, but benefits the employer through the employee’s return to work and the insurance company’s lower expenditure on medical.

5. Prescriber Education Requirement: Does the state require or recommend education for prescribers of pain medications?

The TFAH report noted it is important to educate providers about the risks of prescription drug misuse to prevent providers from prescribing incorrectly and/or to ensure they consider possible drug interactions when prescribing a new medication to a patient. The report also noted that most medical, dental, pharmacy, and other health professional schools currently do not provide in-depth training on substance abuse and students may only receive limited training on treating pain.

In July of 2012, the Food & Drug Administration (FDA) approved a Risk Evaluation and Mitigation Strategy (REMS) for extended release opioids that require manufacturers to fund voluntary painkiller training programs, at little to no cost, to all U.S. licensed prescribers. The FDA then issued a letter to prescribers, which was distributed by the American Medical Association (AMA), American Academy of Family Physicians (AAFP), the American Academy of Physician Assistants (AAPA), the American Academy of Pain Management (AAPM) and ASAM, which recommended that prescribers take advantage of those educational programs. However, the FDA did not make attendance by prescribers mandatory, a decision which drew criticism from some individuals that believed REMS should be mandatory.

How critical is the need for re-education regarding prescribing of opioids? In May of 2013, Dr. Thomas R. Frieden, the Director of the Centers for Disease Control and Prevention stated in a PBS interview: “When I went to medical school, the one thing I was told was completely wrong. The one thing I was told was if you give opioids to a patient who is in pain, they will not get addicted.  Completely wrong. Completely wrong. But a generation of doctors, a generation of us grew up being trained that these drugs aren’t risky.”7 If Dr. Frieden is correct, then the TFAH’s finding that only 22 States either require or recommend prescriber education for pain medication prescribers indicates that we have a long way to go in stemming the Rx Drug abuse problem. 

However, it is important to note that some insurance companies are doing their part in helping to educate prescribers. As noted on the Employers’ Insurance Company website, the company’s opioid program takes proactive measures to help control the flow of narcotics by involving the workers’ compensation insurance carrier, injured employees, workers’ compensation physicians and pharmacy benefit managers. The first prong of their program focuses on training physicians to recognize the signs of opioid abuse and encourages them to consider other effective pain management alternatives.8 It is insurance company efforts like this, in combination with FDA REMS, Physicians for Responsible Opioid Prescribing (PROP)9, and state and federal efforts that will help stem the Rx drug abuse problem.

6. Good Samaritan Law: Does the state have a law in place to provide a degree of immunity from criminal charges or mitigation of sentencing for an individual seeking help for themselves or others experiencing an overdose?

Per the TFAH report, 17 states and the District of Columbia have a law in place to either provide a degree of immunity from criminal charges or mitigation of sentencing for an individual seeking help for themselves or others experiencing an overdose. These laws are designed to encourage people to actually help those in danger of an overdose, as opposed to walking away or not even making the call to 911.

The TFAH report noted that a study conducted after passage of Washington’s 911 Good Samaritan Law found that 88 percent of prescription painkiller users indicated that once they were aware of the law, they would be more likely to call 911 during future overdoses. Thus, this strategy may well be critical in helping stem the toll of Rx Drug abuse until prescribing practices can be modified.

7. Support for Narcan Use: Does the state have a law in place to expand access to, and use of, Narcan (a/k/a, Naloxone) for overdosing individuals given by lay administrators?

Narcan is an FDA approved drug that can be used to counter the effects of prescription painkiller overdose. It is not a controlled substance; has no abuse potential; and, can be administered by minimally trained laypeople. The TFAH report found that 17 states and the District of Columbia have a law in place to expand access to, and the use of, Naloxone for overdosing individuals given by lay administrators. In addition, Washington and Rhode Island are currently implementing collaborative practice agreements where Narcan can be distributed by pharmacists.

As was noted in the article “Naloxone Expansion in California Will Enable Family, Friends To Save Lives At Home,” Californians are now able to reverse overdoses at home with a lifesaving injectable drug called Narcan, which can be administered through the nose or intravenously to a person suffering from an opiate overdose.10

8. Physical Exam Requirement: Does the State require a healthcare provider to either conduct a physical exam of the patient, a screening for signs of substance abuse or have a bona fide patient-physician relationship that includes a physician examination, prior to prescribing prescription medications?

Per the TFAH, 44 States and the District of Columbia have such a requirement. Unfortunately, the State laws vary regarding the circumstances under which an exam is required (for example, for all drugs or just specified prescriptions) and the consequences for prescribing without a required examination (i.e., whether there is criminal liability). While this is a promising strategy, wouldn’t unanimity between the States make this strategy even more effective?

The authors question whether “a physical exam requirement” is a better strategy than simply requiring a drug screen. While increased costs may be associated with such a strategy, a urine drug screen is the single most useful test to determine if someone is abusing controlled substances or diverting drugs they have been prescribed.

9. ID Requirement: Does the State have a law requiring or permitting a pharmacist to ask for identification prior to dispensing a controlled substance?

Pharmacists, as the dispensers of prescription drugs, play an important part in the distribution chain. Recognizing this role, the DEA took significant enforcement action in 2013 against national pharmacy chains for allegedly failing to recognize unusual sale volumes of controlled substances in several of their pharmacies.

The TFAH report found that 32 States have laws requiring or permitting a pharmacist to request an ID prior to dispensing a controlled substance. These laws vary in type from requiring presentation of an ID in all circumstances versus those where the purchasers are unknown to the pharmacist. In addition, some States require photo identification and others accept a broader range of government IDs.

The authors note that this “strategy” may represent one of the easier hurdles for drug seekers to circumvent given the ease of falsifying ID’s.  However, the battle against opioid addiction is a battle of inches, and the ID check represents one more step a possible abuser has to overcome to support their bad habit.

10. Pharmacy Lock-In Program:  Does the State’s Medicaid plan have a pharmacy lock-in program that requires individuals suspected of misusing controlled substances to use a single prescriber and pharmacy?

The TFAH report noted that in order to help healthcare providers monitor potential abuse or inappropriate utilization of controlled prescription drugs, some States have implemented programs requiring high users of certain drugs to use only one pharmacy and get prescriptions for controlled substances from only one medical office.  Lock-in programs are believed to help avoid doctor shopping while ensuring appropriate pain care for patients.

Forty-six states and the District of Columbia were noted to have a pharmacy lock-in program under the State’s Medicaid plan where individuals suspected of misusing controlled substances must use a single prescriber and pharmacy.  From discussions with pharmacists, it isn’t always easy for a pharmacist to question a treating physician about whether a prescription is valid.  From the authors’ experience, we have received a number of anecdotal reports of physicians treating pharmacists in a less than respectful manner when a pharmacist questioned whether a prescription was valid.  In these cases, the pharmacists are simply trying to do their best to help curb prescription drug diversion.  In our view, the Lock-In strategy helps strengthen the professional relationships between doctors and pharmacists.

How are the States Doing with Implementing the Strategies?

The TFAH report found that the States’ implementation of the 10 strategies vary widely. For example, 11 States have implemented at least 8 of the 10 strategies. 4 States have implement at least 9, and only New Mexico and Vermont have implemented all 10. Interestingly, in 2010 New Mexico ranked #2 in drug overdose mortality rate per 100,000 residents (which includes both prescription drug and illicit drug overdoses) while Vermont ranked 42nd. It will be interesting to see what advances, if any, New Mexico makes in the Rx drug abuse/misuse war during the next several years with all 10 strategies in place.

On the flip side, South Dakota is the only state with just 2 of the strategies in place.  However, it ranked 50th in drug overdose mortality rate per 100,000 residents in 2010, suggesting the State may not have a misuse/abuse problem of significance. However, two states, Missouri and Nebraska, have only three of the promising strategies in place. In 2010, Missouri ranked 7th in drug overdose mortality rate per 100,000 residents, while Nebraska ranked 49th. With no PDMP, it will be interesting to watch where Missouri ranks in future studies.

With over 60 percent of workers’ compensation payments going towards medical costs, it will be important for insurers to pay close attention to state specific efforts to combat prescription abuse. With the right amount of actuarial research and advanced analytics, workers’ compensation insurers can develop a better understanding of their opioid exposed population and the prescribing habits of the physicians treating their injured workers.  To the extent insurance companies can leverage the above strategies in combination with their own analytics, physician educational efforts, evidence-based pain diagnoses, utilization reviews, and tort reform efforts (e.g., In 2011, the 79th Texas Legislature adopted a closed formulary system which led to a 70 percent decrease in Schedule II narcotic costs11), we believe insurers can move the needle on reducing opioid abuse and addiction.

In the end, these opioid risk management strategies may not only generate dollar savings to workers compensation insurers as workers return to work sooner, but will help improve the quality of life for the injured worker and his/her family.

Footnotes

1 http://www.ncci.com/

2 http://www.namic.org/in/13winterpre.asp

3 http://healthyamericans.org/reports/drugabuse2013/TFAH2013RxDrugAbuseRpt12_no_embargo.pdf

4 http://www.ashp.org/menu/News/PharmacyNews/NewsArticle.aspx?id=3951

5 http://www.kctv5.com/story/24039604/missouri-a-hot-spot-for-doctor-shopping-for-rx-drugs

6 http://www.newsday.com/news/region-state/state-s-new-prescription-pain-pill-system-snags-apparent-doctor-shoppers-1.5995395

7 http://www.pbs.org/newshour/extra/daily_videos/prescription-drug-abuse-can-have-fatal-consequences/

8 http://www.employers.com/AGENTS/BLOG/post/2013/10/07/Opioid-Program-Shows-Results.aspx

9 http://www.supportprop.org/

10 http://www.huffingtonpost.com/2013/10/11/naloxone-expansion-california_n_4081044.html

11 http://www.riskandinsurance.com/story.jsp?storyId=533355286

Authors

Kevin Bingham collaborated with Alix C. Michel and David J. Ward in writing this article.

Alix C. Michel is an attorney at Michel & Ward, a firm based in Chattanooga, TN specializing in the defense of all types of healthcare professionals, hospitals, longterm care facilities, and educating society on the dangers of RX Drug Diversion and strategies to help in the fight against same.

David J. Ward is an attorney at Michel and Ward, a law firm based in Chattanooga, TN. Michel and Ward defends and advises physicians, healthcare providers, longterm care facilities, and others in professional malpractice litigation, professional licensing investigations, and healthcare practice issues.

This article first appeared on December 2, 2013 on PropertyCasualty360.com. © 2013 PropertyCasualty360, A Summit Professional Networks website.

California SB 863, a Guide to Building and Monitoring Networks with Intelligence, Part 3

This is Part 3 of a multi-part series on building and monitoring networks with intelligence. Part 1 can be found here and Part 2 can be found here.

California has defined how medical networks in Workers’ Compensation should be structured and managed. Part 1 and Part 2 of this series described how California’s SB 863 LC 4616 (b) (2) and LC 4616 (b)(3) takes medical provider network directives to a new level. The key imperative is, “Every MPN must establish and follow procedures continuously to review the quality of care, performance of medical personnel, utilization of services, facilities, and costs. However, a few additional key points should be considered when selecting and monitoring medical providers for the California MPN or any network.

Beyond legislation
Escalating problems in the industry with Opioid overuse and abuse, as well as physicians who are dispensing medications from their offices are additional factors that must be considered. While the California SB 863 legislation does not address these issues, the data should be scrutinized to identify physicians who demonstrate unfavorable prescriptive practices. Analyzing the data to evaluate physician performance in that regard is essential to vetting physicians for membership in a network. It is also crucial to monitoring networks going forward.

Opioid Over-Prescribers
Workers’ Compensation literature is replete with information about Opioid overuse and abuse with its disastrous human and resource waste. Unfortunately, measures taken to curb inappropriate prescribing behavior are few and vary widely across the country.

Simply stated, the best way to reduce Opioid abuse is to avoid Opioid over-prescribers. Analysis of the data will identify the perpetrators. They should never be a part of a Workers’ Compensation medical network.

Back to California – CURES
California has a program that approaches the problem by monitoring patient utilization of prescribed Schedule II drugs and making that information available to authorized prescribers and distributors (pharmacies) of controlled drugs.

California’s program is called CURES (Controlled Substance Utilization Review and Evaluation System, and PDMP (California Prescription Drug Monitoring Program).1 The California Department of Justice, has a Prescription Drug Monitoring Program (PDMP) system which “allows pre-registered users including licensed healthcare prescribers eligible to prescribe controlled substances, pharmacists authorized to dispense controlled substances, law enforcement, and regulatory boards to access timely patient controlled substance history.

The California Attorney General's Office said that if doctors and pharmacies have access to controlled substance history information at the point of care it will help them make better prescribing decisions and cut down on prescription drug abuse in California. The role of the CURES/PDMP ensures that well-informed prescribers and pharmacists can and will use their professional expertise to evaluate their patients’ care and assist those patients who may be abusing controlled substances.

The state’s database known as the Controlled Substance Utilization Review and Evaluation System (C.U.R.E.S) contains over 100 million entries of controlled substance drugs that were dispensed in California. Each year the CURES program responds to more than 60,000 requests from practitioners and pharmacists. The online CURES/PDMP system will make it much easier for authorized prescribers and pharmacists to quickly review controlled substance information via the automated Patient Activity Report (PAR) in an effort to identify and deter drug abuse and diversion through accurate and rapid tracking of Schedule II through IV controlled substances.”

Submission Of Controlled Substance Data
Pursuant to Health & Safety Code Section 11190, and Business & Professions Code Section 1170, all licensees who dispense Schedule II through IV controlled substances must provide the dispensing information to the Department of Justice on a weekly basis in a format approved and accepted by the Atlantic Associates Inc. (AAI) and the Department of Justice (DOJ). Similarly, pursuant to California Health and Safety Code Section 11165(d), dispensing pharmacies and clinics must provide weekly dispensing reports to the DOJ on Schedule II, III, and IV prescription drugs.

For purposes of creating an intelligent MPN, ensure any physician under consideration for an MPN in California is a member of CURES/PDMP. That notwithstanding, the data should be monitored continuously to determine actual performance.

Physician-Dispensed Medications
Another prescription abuse issue not addressed by the California legislation is physician-dispensed medications. While it is portrayed as a patient convenience, and probably is, the medications are prepackaged and extraordinarily costly. Once again, this practice can be monitored in the data. Bills reflecting drugs dispensed by the treating doctor are not monitored by Pharmacy Benefits Managers (PBM). Rather, they appear in normal provider billing.

Networks With Intelligence
All medical provider networks serving any jurisdiction should analyze integrated data, meaning all data associated with claims. Integrated data is sourced from claims level systems, bill review systems, PBM systems, and other sources such as utilization review to understand the broad spectrum of claims and all individuals, organizations, and events touching them. The goal is to select best-in-class doctors by objectively identifying excellent provider performance.

Authors
Karen Wolfe collaborated with Margaret Wagner to write this article. Ms. Wagner is President and CEO of  Signature Networks Plus. She is considered an expert in network selection, monitoring and management, thereby creating Networks with Intelligence™ for clients.

1 http://oag.ca.gov/cures-pdmp

5-Year Analysis Of Pharmacy Burglary And Robbery Experience

Background
Burglaries and robberies represent a significant expense to pharmacies in the United States. Beyond direct insurance costs, which are driven by loss experience, pharmacists experience financial, business interruption and psychological costs. Pharmacists are concerned about armed robberies, and even finding that a store has been burglarized overnight can be upsetting and cause the expenditure of thousands of dollars in an effort to prevent reoccurrence. Beyond what is covered by insurance, customers pay deductibles that can easily be exceeded as a result of criminal efforts to gain entrance. Pharmacists that are victimized face hours of dealing with police, the Drug Enforcement Administration, board of pharmacy, contractors and their insurance company. As state and national efforts increase to address the underlying problem of prescription drug diversion, pharmacists face increasing administrative and regulatory compliance costs.

When we seek methods to effectively combat the problem, it is important to understand the larger problem of prescription drug diversion and how it fuels pharmacy burglaries and robberies. Described by the Centers for Disease Control as having reached epidemic proportions in the United States, demand for prescription narcotics, coupled with a widely available supply, create an environment that is ripe for criminal activity.

  • While the U.S. represents only 4.6% of the world's population, we consume 80% of the global opioid supply.
  • Five million Americans use opioid painkillers for non-medical use.
  • We experience almost 17,000 deaths from prescription narcotic overdoses annually. In a 4 year period, that is more deaths than we experienced during the Vietnam War.
  • Morphine production was at 96 milligrams per person in 1997. By 2009, that number increased eight-fold.

The origins of the problem are complex, but are based on a cycle of over-prescribing that has occurred over the past two decades. While well intentioned, liberal prescribing coupled with aggressive marketing, incentives and even encouragement to physicians to relieve pain at all costs sparked the fire. Unchecked by adequate physician education on drug diversion and dependency, and a lack of appropriate chronic pain management protocols, demand and dependency increased. As demand increased, so did production levels, opportunities for profit and creative methods of diversion.

Pharmacy crime involves every part of the distribution chain from manufacture through wholesale, retail, and ultimately to the end user. Pharmacists have been victims of deceptive practices, prescription fraud, employee diversion, burglaries and robberies. According to the Centers for Disease Control, prescription drug diversion, measured by drug overdose deaths and pharmacy crime, is at epidemic proportions.

National And State Actions Taken To Address The Problem
Significant efforts continue to be taken at the national and state levels to combat the problem, with various degrees of success. Each of these has a direct impact on how customers conduct business. Unfortunately, most will have no short term impact on reducing the probability of pharmacy burglaries, robberies or employee diversion.

Prescription Drug Monitoring Programs — Inputting data on prescriptions written and prescriptions filled, particularly for opioid based narcotics is an effective measure for identifying doctor shoppers, abusers and other drug seekers. While the programs are in place in 49 states, most do not connect with each other. This allows a drug seeker to get a prescription in one state and have it filled in another. Use of the program varies significantly by state between being mandatory, voluntary or somewhere in between. In addition, many of the programs are set up on a “free trial” basis for 5 years. As the trial periods are expiring, funding is becoming difficult to continue the programs, notably in California and Florida. Most pharmacists support these programs; however, there has been some resistance by major chains and various state medical associations — in large part objections are based on the time it takes to enter data.

Drug Courts — Intended to allow persons committing crimes to recover, many of these courts eliminate or significantly reduce sentencing for burglars and, in some cases, robbers. This results in a significant level of resentment by pharmacists who are victims of crime.

Drug Enforcement Administration Strike Forces — In the past several years, the Drug Enforcement Administration has shifted a major portion of resources from illicit drug enforcement activity to prescription narcotics. One of the focal areas has been on monitoring the flow of narcotics to pharmacies. These efforts have resulted in sanctions and subpoenas against distributors such as Cardinal Health and Amerisource Bergen, as well as arrests of physicians and pharmacists. In some areas of the country, there are complaints of narcotic shortages as distributors restrict shipments. This pushes drug seekers to other states and areas where enforcement is not as aggressive.

Changing Prescription Patterns — Where states have increased penalties against prescribing physicians and pharmacists for filling prescriptions when they “should have known better,” some physicians have decreased or stopped writing scripts for certain narcotics and some pharmacists have pulled them from the shelves. As chronic pain treatment guidelines are implemented and physician education on drug diversion and addiction increases, we can expect tighter controls on the management of prescription narcotics.

Treatment For Abuse And Addiction — A reality in the war against prescription narcotic diversion is that the demand exists and that the long term solution requires treatment programs that take time, cost money and are much more difficult to manage than writing and filling prescriptions. Until these programs become more available and acceptable, drug seekers will continue to find ways to obtain narcotics, including committing crimes against pharmacies.

Key Findings Presented In This Report
This report covers a 5-year analysis of burglaries and robberies occurring to Pharmacists Mutual customers.

These claims impact our bottom line. Data collected comes from claims department data as well as interviews with each customer victim by our claims department over the past two years. In many cases (where requested by the customer or due to the nature of the loss), follow-up investigation is also conducted by risk management. Information obtained has been used to educate customers, underwriters and field representatives about how the crimes are committed and preventive measures that can be employed to minimize the extent of loss.

What we've learned:

  • Frequency of pharmacy crimes (81% of PMC crimes are break-ins vs. armed robberies) has been relatively flat over the past 5 years compared to policy count. While we've seen an 18% increase in crimes over the past 5 years, policy count has grown by 21%. RxPatrol, the only other national pharmacy crime database, has seen a slight decrease over the past 2 years, however, 60% of RxPatrol reports are for armed robberies, primarily to national chains, and much of this decrease may have been as a result in aggressive measures to address the robbery problem in chain stores such as Walgreens and CVS.
  • Total incurred and average costs have increased steadily over the past 5 years.
  • Almost 70% of the crimes we see are under $5,000. 50% of costs come from the 9% of claims that are in excess of $25,000.
  • In 52% of cases, criminals enter through the front door or front window. One indication is that video surveillance, while at times helpful in identifying perpetrators, does not deter crime. Some of the most expensive burglaries have been those where criminals entered through the roof. Examination of these and side wall entries indicates the approach targets areas of the pharmacy that may not be adequately protected by alarm systems, or to circumvent motion detectors.
  • In 1/3 of cases, police respond within 5 minutes. When they do, arrests result in 21% of cases. Unfortunately, most crimes take less than 2 minutes. Bottom line, if they can get in, chances are they will be successful and will get away. In areas of the country where police response times exceed 30 minutes (rural and municipalities with budget constraints), pharmacies are effectively unprotected.
  • Most state boards of pharmacy require alarms, but situations remain where alarms are not present, are not functional or are ineffective. In many cases, maintenance and testing are non-existent, and there are suspicions that alarm codes may have been compromised.
  • If a criminal wants to try and burglarize or rob a pharmacy, the pharmacy will likely incur property damage. However, the size of the loss can vary from a few hundred dollars to tens or even hundreds of thousands of dollars depending on control measures that are in place.

    What really makes a difference in keeping loss costs low?

    • A well-designed, tested and reliable alarm system. Alarm codes need to be protected and police response needs to be adequate.
    • Protecting doors and windows to slow down or eliminate the possibility of entry. If the crooks cannot gain entrance within a few minutes, they will usually leave.
    • Installing a safe. The overwhelming majority of criminals are in and out in less than 2 minutes. Locking target drugs in a sound, well-secured safe can make a significant difference in the size of the loss.
    • Having a plan and training employees on what to do if a robbery occurs. This can mean the difference between life and death.

What We've Done At Pharmacists Mutual And What We Will Be Doing In 2013

  • Over the past two years, we have met with over 15 pharmacy associations and buying groups, have published numerous white papers and articles in our semi-annual publication “Pharmacists Mutual Risk Management” and have spoken with hundreds of customers who have experienced pharmacy crime first hand.
  • We have identified vendors of security products based on our loss experience. Where possible, we have arranged discounts for PMC customers who use these services.
  • In the fourth quarter of 2012, we provided training to underwriters about pharmacy trends and tools to assist them in evaluating protection levels at pharmacies and to address specific deficiencies.
  • For 2013, we will be implementing a pharmacy security evaluation matrix. The matrix, based on probability and loss severity data, will be used to assist pharmacies in assessing risk and in underwriting evaluation.
  • We plan to continue publication and education efforts.

Pharmacy Crime Frequency

Number of Pharmacy Commercial Policies

National Data

Pharmacy Crime Total Incurred Claims Cost

Pharmacy Crime Average Incurred Claim Cost

Frequency by Size of Incurred Loss

Robbery vs. Burglary

Method of Entry

Average Cost by Method of Entry

Video Surveillance

Arrest Rates and Video Surveillance

Police Response Times

Arrest Rate by Time of Response

Alarm Notification

Alarm Response Average Cost

Alarms and Sales