2014 APRIL 2013 June 10, 2014 Administrative Items • Submit your questions via the webinar chat box or Email marketing@progressive-medical.com • Webinar recording will be available online at www.firstfilltosettlement.com shortly after the live session • No continuing education credits are available with this webinar 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 2 Presenters • Matthew Foster, PharmD Clinical Pharmacy Manager • Brian Allen, CIC Vice President of Governmental Affairs • Joe Anderson, MBA Director of Analytical Services • Tron Emptage, M.A., R.Ph. Chief Clinical Officer 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 3 Methodology • 2012 – 2013 • Combines data from Progressive Medical and PMSI into a single data set and was analyzed as one unit • Over 300,000 claims and nearly six million prescriptions were analyzed • Does not include transactions for clients with us fewer than two years Overall Cost and Utilization Trends • Strong network enforcement programs 7.8% Average Wholesale Price • Advanced analytics 6.3% • Holistic utilization management Average Cost per Days’ Supply • Collaborative clinical interactions 3.2% Product and Claim Mix 1.7% Average Prescription Cost per Claim 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 5 Therapeutic Classes • The top 10 classes represent 85% of the overall spend • Overall spend of long-term opioid analgesics decreased 7.2% • Generic utilization rate of 76% 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 6 COST MANAGEMENT Average Wholesale Price (AWP) Inflation • The upward trend continues • Both brand and generic medications affected 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 8 Average Wholesale Price (AWP) Inflation Brand Generic 20% Celebrex® Cymbalta® Lyrica® More than 20% Percocet® Exalgo® Fentora® Amrix® 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 6% hydrocodone/APAP 7% metaxalone 9 Mail Order Effective mail order programs favorably impact cost containment • For every 10% shift in days’ supply from retail to mail order, our clients experienced a 1.2% reduction in spend • Average days’ supply for mail order is 53.5 days compared to 24.6 days for retail • The average cost per days’ supply of mail order prescriptions was 17.3% less than its retail equivalent 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 10 Compounded Medications 0.62% • We typically see topical formulations • On average, compounded medications include 4-5 ingredients • Represented 0.69% of total number of prescriptions, up slightly from 0.62% 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 11 Specialty Medications • Used to treat complex medical conditions including rheumatoid arthritis, Hepatitis C, HIV and some cancers • Encountered in workers’ compensation claims for occupations such as emergency responders and health care professionals • Specialty medications did not represent significance to our book of business from the standpoint of either cost or utilization 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 12 Network Enforcement A key to successful cost containment is a PBM’s ability to drive transactions “in network” • Network discounts are applied to more prescriptions for greater cost savings • Formulary controls, utilization edits and business rules are consistently applied • Collection, eligibility and verification calls are virtually eliminated; paper bills virtually cease • More data is captured allowing payers to proactively manage their claims • Payers are better equipped to spot the warning signs of misuse and abuse, which triggers an intervention earlier in the claim • Therapeutic concerns are identified sooner allowing for more informed and empowered medication management 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 13 Through our efforts we achieve retail network penetration rates up to 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 98% 14 Network Enforcement Our specialty network continues to expand to help optimize cost control • Spend related to physician-dispensed medications decreased 14% • Cost of physician dispensed medication was flat • Top six states California, Florida, Illinois, Louisiana, Maryland and Pennsylvania 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 15 UTILIZATION MANAGEMENT Claim Age We realized a decrease in both utilization and prescription cost per claim in all claims, even with a slight increase in claims aged ten years or older 0.62% 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 17 Opioid Analgesics • Our efforts, in collaboration with our clients and industry stakeholders is starting to bend the curve • Metrics associated with utilization and cost are all trending downward 0.62% 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 18 Morphine Equivalent Dose (MED) • Our programs are driven by evidence-based medicine, national and regional approved guidelines and experienced clinicians • Collaborative approach involving education, effective screening and careful monitoring • American College of Occupational and Environmental Medicine (ACOEM) released an updated treatment guidelines limiting MED doses to 50 mg per day 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 19 Generic Utilization and Generic Efficiency • Generic utilization went up 1.9 points in 2013, moving from 74.1% to 76.0% ANALYTICS, INTERVENTIONS, AND CLINICAL INTERACTIONS Analytics Predictive analytics combines our expertise with industry and claim data to identify which claims will result in long-term pharmacy costs • Multi-variate, log-linear regression models predict pharmacy costs • Data includes age, geography, prescriber, medications filled, and local demographics to identify high-cost claims 0.62% • Predictions allow for smarter clinical triage and drive better decision-making • Protects clients’ financial interests • Optimizes therapy 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 22 Interventions – A Couple Examples of our Program in Practice Our models accurately identify the claims that require attention Early Intervention Timing Begins after 120 days Find the 10% of claims that make Goal up 90% of long-term pharmacy costs. Our models identify 67% of the Outcome claims that will be long-term pharmacy cost claims Long-term Intervention Begins after 180 days Target changes in behavior to any chronic issues that have started to develop 62% success rate in eliciting a change to an injured worker’s therapeutic regimen 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 23 Clinical Interactions – A Couple Examples of our Program in Practice Our highly-trained team of clinicians is well versed in workers’ compensation and medication therapy management Multiple Prescriber Service Urine Drug Testing and Monitoring Identify injured workers 0.62%receiving Designed medications from multiple to prescribers Help payers and physicians confirm the injured worker is adhering to their medication therapy regimen • 94% conversion to a single prescriber Results • 9.6% decrease in total spend for the study group • 32% decrease in utilization of opioid analgesics • 26% reduction in total utilization of all medications 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 24 Claim Duration of Pharmacy Use Shorter claim duration means fewer claims use prescription medications years after the injury Fewer active claims may influence: • Loss ratios • Combined operating ratios 0.62% • Adjustor case loads • Claim closure ratios • Productivity • Experience modifications • Premium reductions 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 25 INDUSTRY INFLUENCES Aging Population Typical Characteristics • Body functions begin to decrease as early as the third decade of life • Higher incidence of pain • Prolonged recovery • More prevalent psychiatric factors What to Manage and Monitor • Drug-to-drug interactions • Intensified side effects • Comorbid conditions • Use of certain antidepressants as an adjunctive medication 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 27 Comorbid Conditions The presence of a comorbid condition may extend the duration of treatment of the primary injury or become a compensable condition 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved • Depression • Insomnia • Obesity 28 Prescribing Practices There are an increasing number of prescriptions for opioid analgesics being written by nurse practitioners and physician assistants 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 29 GOVERNMENT AFFAIRS Closed Formularies • Texas closed formulary became fully operational for all claims and has achieved significant results by reducing “N” drugs by over 70% and trimming reimbursement for these drugs by over 80% • Oklahoma adopted a closed formulary that took effect February 1, 2014 • Louisiana and California are looking at adopting a closed formulary 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 31 Compounded Medications The FDA has called for stricter controls and many states are questioning the efficacy and cost of compounded medications • Oklahoma enacted guidelines requiring pre-authorization for all compounded medications as part of their closed formulary • Mississippi adopted a rule addressing how compounded medications can be billed and when they should be pre-authorized 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 32 Medication Rescheduling The rescheduling of certain medications is a growing trend • Hydrocodone products most commonly addressed • Rescheduling impacts an injured worker’s ability to obtain a refill • States with activity – West Virginia passed legislation to move hydrocodone products to Schedule II – Louisiana just passed SB 618 – Consideration also at the Federal level 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 33 Opioid Analgesics Finding an effective way to curb the misuse and abuse of opioids continues to be a key focus for stakeholders throughout the system • The Ohio Bureau of Workers’ Compensation adopted standard dose weaning schedules for opiates and a set of benzodiazepines • Arizona passed legislation requiring pre-authorization, a medication agreement and random drug testing for all Schedule II medications • Florida and Alaska introduced legislation that requires drug testing • West Virginia introduced legislation to ban non-abuse-deterrent hydrocodone products • Virginia and New Jersey imposed stricter requirements to verify a patient’s drug use history prior to prescribing or dispensing opioid • Delaware enacted legislation to control the number and the cost of drug tests 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 34 Pharmacy Choice One of the best tools for controlling pharmacy costs is the use of a managed care network • New legislation could undermine the positive results that managed pharmacy care has delivered to the various states’ workers’ compensation systems • Alabama, Arizona, Iowa, Maryland, Mississippi, Missouri, New York, and West Virginia have introduced legislation on this issue 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 35 Physician Dispensing and Repackaged Medications • A challenge throughout the country • Inroads are being made – Florida – Delaware – Indiana – Hawaii – Pennsylvania – Utah Prescription Drug Monitoring Programs • States are re-tooling or otherwise enhancing their programs – Enforcement – Educational efforts – Availability beyond state borders • Activities also occurring at the Federal level • We anticipate this will continue Medical Marijuana • Legalization in growing number of states is generating conversation • Schedule I classification at the Federal level • Does not have an assigned NDC, so may not be adjudicated • Excluded from our medication plans and formularies Looking Ahead In 2014 and beyond we do not foresee any of today's challenges going away; rather we will become even more adept at mitigating their influence • Through product innovation and service enhancements we will work with our clients to make our industry better, together • We will use our balanced and unbiased perspective, veteran clinical expertise, keen analytic insight, and strong moral compass to guide us 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 39 QUESTIONS? Email to marketing@progressive-medical.com 2014 Workers’ Compensation Drug Trend Report l Progressive Medical, Inc. and PMSI - Copyright 2014 - All Rights Reserved 40 THANK YOU View or request a copy of the complete report: www.firstfilltosettlement.com