Paduda: Drug Profiteering Rampant in Certain States

Friday, October 7, 2022 | 0

The Workers Compensation Research Institute's webinar on interstate variations in drug payments reminds us that lax regulations and absent legislators cost taxpayers and employers millions.

Joe Paduda

Slides are here and are free to access. The report itself is here, available free to members and for a nominal fee for nonmembers.

There’s a tenfold variation across the 28 states studied by WCRI, with Wisconsin, Minnesota and Massachusetts around $22 in quarterly drug spend per claim, but Louisiana and Florida are right around $200. A far higher percentage of claimants get scripts in the two high-spend states than in those on the lower end, and I’ll bet most of those are from dispensing physicians and attorney-represented workers using mail-order pharmacies.

WCRI looked at data from non-COVID claims less than 3 years old in 28 states from Q1 2018 to Q1 2021.

Top takeaway: Overall quarterly drug payments dropped from $102 in Q1 of 2015 to $68 in Q1 of 2021, but Pennsylvania, Florida and Connecticut — states with physician dispensing and/or mail order pharmacy problems — actually saw an increase, largely driven by dermatological agents.

Want more evidence of the rampant profiteering enabled by lax regulations and compromised legislators?

Dermatological payments account for about 20% of payments in the median state, although there’s a wide variation, from 6% in the lowest state to more than half (52%) of payments in the highest state.

These dermatological agents are almost always combos of lidocaine, menthol, diclofenac sodium and other generics; profiteers mix ’em up and bill at a huge markup.
Pennsylvania is especially egregious: The vast majority of these dermatologicals are pharmacy-dispensed, and the average price paid was over $300.

Physician-dispensed drugs accounted for more than half of drug costs in several states, including Florida.

It’s not just dermatologicals. California saw a big jump in NSAIDS driven by fenoprofen and ketoprofen, both questionable medications that have become darlings of the physician dispensing/mail order profiteers.

There’s good news, too. After dermos, NSAIDs have the next highest payment across all drug groups at 18%, while opioids account for about 7% in the median states — way down from 13% in the same quarter three years ago.

I’d note that this is for claims younger than 3 years and likely reflects the successful effort to avoid prescribing opioids to patients better served by other therapies.

What does this mean for you?

Pennsylvania, Florida, Louisiana and Connecticut, stop screwing employers and taxpayers.

Joseph Paduda is co-owner of CompPharma, a consulting firm focused on improving pharmacy programs in workers’ compensation. This column is republished with his permission from his Managed Care Matters blog.