Rx for Peril - The Health Insurance Impact and Risks of Epidemic ...

Rx for Peril
The Health Insurance Impact and Risks
of
Epidemic-Level Prescription-Drug Diversion
William J. Mahon
The MAHON Consulting Group LLC
PDMP Center of Excellence Conference
Washington, DC
December 3, 2012
1

Promethazine with Codeine
• DEA Schedule V narcotic—i.e.,
lowest relative potential for
abuse
• Retail price: $3 - $4 per ounce
• Number 108 in 2010 script
volume among US’ Top 200
drugs
• Number-9 in one client plan’s
Top 10 scripts by total drug units
2

Promethazine with Codeine—The Alter Ego
• “Syrup. . . Sizerp. . .
Purple Drank. . .
Drank. . . Lean”
• Street value: $7.50 -
$10 per ounce
• Abuse celebrated in
rap/hip-hop music
culture
3

Three-Six Mafia: “Sippin’ on some siz-erp. . .”
4

The Inevitable Knockoff. . .
7

Houston: “City of Lean”
8

Callie Hall-Herpin, MD
9

Callie Hall-Herpin, MD
• Fabricated and sold thousands of prescriptions to street
dealers in exchange for cash
• 1,700,000 hydrocodone tablets
• 2,500 gallons of promethazine with codeine
• Proceeds: $1.7 million
• Sentence:
• 10 years federal prison + 3 years supervised release
• $12.9 million restitution to Medicare program
• Judge’s special order: May never again call herself “Doctor” & must
immediately correct anyone who does so—OR be sent back to prison
10

Alonzo Peters, MD
• Allegedly taught Callie Hall-
Herpin the prescription-mill
business
• Money-laundering (involving
purchase of 33-carat
diamond ring) + aiding and
abetting same
• Sentence:
• 5 years federal prison + 3 years
supervised release
• $10,000 assessment
11

Florida: “The Colombia of Prescription Drugs”
• DEA “Operation Pill Nation”:
Two-year enforcement action
• August, 2012 “pain clinic”
arrests in Pompano Beach,
Florida
• 7 physicians, 3 clinic owners,
one relative
• Racketeering, drug trafficking,
money laundering
• Estimated physician Rx
revenue: $10,000 per week
• 7 vehicles & 11 weapons
seized
12

“Drug Diversion” Defined. . .
• U.S. Government Accountability Office:
“Channeling of licit pharmaceuticals for illegal purposes or
abuse”
• UN Office on Drugs and Crime:
“Non-Medical Use = Use by the person the drug was
prescribed for, but not in the prescribed manner or dosage, as
well as use by another person”
13

Potential Diversion Perpetrators. . .
• Patients—i.e., drug-seekers/“doctor shoppers”
• Bogus patients—i.e., prescription buyers
• Prescribers (MD/DOs, dentists, nurse practitioners,
veterinarians) and prescriber employees
• Dispensers and dispenser employees (pharmacists, pharmacy
technicians)
• Street dealers/patient recruiters
• Pharmaceutical wholesalers
• Large-scale pharmaceutical thieves
• Various combinations of the above
14

US: “A Perfect Storm of Abuse. . .”
• 9% of US population age 12 or older—22.6 million persons—
acknowledge illicit drug use in 2010
• Rx abuse is second only to cannabis—exceeds cocaine, heroin
& hallucinogen abuse combined
• High incidence among teenagers (Vicodin, OxyContin,
stimulants, sedatives)
• 1/3 of all new abusers typically are 12 to 17-year-olds
15

A Global Phenomenon
• UN Office on Drugs and Crime: “Growing non-medical use
of prescription drugs is a global health concern.”
– Opioids, CNS depressants, CNS stimulants
– “Drug traffickers responding to demand”
• Canada: 0.6% past-year non-medical use—opioid use
exceeds heroin
• Australia: Past-year non-medical opioid use by 2.5% of adult
population—exceeds heroin & cocaine
• South America: “Non-medical use of Rx opioids accounts for
most of the use of opioids”—Costa Rica annual prevalence =
2.8% of population
• Europe, Northern Ireland: “Highest annual prevalence of
Rx opioids anywhere in world” at 8.9% 17

A Global Phenomenon
• Europe, France: “Buprenorphine diverted to illicit market and
often winds up in Finland”
• Europe, UK: 2011 GP survey indicates nearly 80% “routinely
prescribe drugs to which they believe the patient may be
addicted” (BBC)
• Asia: Benzodiazepines predominate
• India, Bangladesh, Nepal: “Illicit use of injected
buprenorphine is common”
• Gulf States, Dubai: 2010 overdose deaths spark new
government warnings/enforcement initiatives
• Singapore: Subutex/buprenorphine re-classified as illegal
drug following surges in abuse
18

http://www.guardian.co.uk/news/datablog/interactive/2012/jul/02/drug-use-map-world
19

US: Not A New Phenomenon . . .
• First observed in Civil War re: Morphine theft
• 1987: Establishment of National Association of Drug Diversion
Investigators (NADDI)
• 1990: Cincinnati, Ohio Police Department establishes Drug Diversion
Squad—500 Cases/Yr by 1993
• 1992: GAO study cites diversion as “prevalent type of Medicaid
fraud”
• 1992: FBI “Operation Goldpill”—3 years, 50 cities, 200 pharmacists &
other perpetrators
20

US: However. . . A New Drug-Funding Equation
• Rx Costs, 1990: " "$40.3 Billion!
– Government: " "18%"
– Private Insurance:" "26%"
– Consumers: ! !56% !
"
• Rx Costs, 2005: " "$200.7 Billion!
– Consumers: " "25%"
– Government: " "28%"
– Private Insurance: !47%!
21

US Controlled-Substance Consumption
1992 - 2002
• U.S. Population: " " "+ 13%"
" " ""
• Non-Controlled Drugs:" " "+ 57%"
"
• Controlled Drugs: " " "+ 154%"
"
– Opioids: " " "+ 222%"
"
• Hydrocodone: " "+ 376%"
• Oxycodone: " "+ 380%"
– Benzodiazepines: " "+ 49%"
– Stimulants: " " "+ 369% ""
22

Drugs in Demand. . .
• Schedule II ! ! !Retail $! !Street $!
!
– Opana ER 40mg " "$7.75/tablet "$90/tablet"
– Oxycontin 40mg " "$5.66/tablet "$20–$40/tablet"
– oxycodone 40mg " "$4.54/tablet "$6–$8/tablet"
– morphine 100mg " "$4.16/tablet "$60/tablet"
– Actiq 400mg " "$26/lozenge "$30–$40/lozenge"
– fentanyl 50mcg " $24/patch "$25–$40/patch"
– methadone " " "$0.21/tablet "$10–$20/tablet"
– Ritalin " " "$1.11/tablet $8–$15/tablet"
– Adderal " " "$4.23/tablet "$5-$7/tablet"
"
• Schedule III!
!
– Vicodin* " " "$1.47/tablet "$6–$10/tablet"
– hydrocodone/APAP " " $0.43/tablet " $6–$10/tablet"
* Could become Schedule II following October, 2012 review"
23

Drugs in Demand. . .
• Schedule IV ! ! !Retail $! !Street $!
!
– Valium " " "$3.30/tablet "$4/tablet"
– diazepam " " "$0.39/tablet $4/tablet"
– Adipex (phentermine) "$2.13/tablet $3–$6/tablet"
– Xanax 2mg" " "$3.28/tablet "$4/tablet"
– alprazolam " " "$0.42/tablet "$4/tablet"
– carisoprodol/Soma* " "$0.20/tablet "$1 - $5/tablet*"
• Schedule V!
!
– promethazine with codeine "$3.35/fl.oz. "$7.50–$10/fl.oz.
* Became federal (DEA) controlled substance 1/12"
24

Drugs to Watch. . .
• Buprenorphine (Subutex/Suboxone)"
"
– May be prescribed by physicians for opioid dependency"
– Enlarged patient base authorized 12/06"
– DEA: Becoming a “primary drug of abuse”"
"
• Methadone (Dolophine/Methadose)"
"
– #1 fatal narcotic in 2004—and more so every year"
– Bifurcated prescribing/dispensing scheme—heroin addiction/pain"
– 2006 FDA Public Health Advisory: “Methadone Use for Pain Control"
May Result in Death” (especially if combined with Xanax)"
– Least expensive/most deadly"
– Low cost appeals to public-assistance programs"
• Newer narcotics"
• Opana ER (“O-Bomb”)—abuse & overdose deaths surging in 2012"
• Norco—”Vicodin on steroids”"
25

Diversion’s Dire Consequences. . .
• 2002: Fatal pain-med poisonings surpass cocaine & heroin deaths"
"
• 2009: At 37,485 fatalities, accidental drug overdose surpass traffic fatalities to"
become #1 cause of unintentional-injury death in U.S."
– Prescription-narcotic deaths exceed 15,500"
– Up 78% between 1999 and 2004: Sedatives, Vicodin, Oxycontin cited as"
principal factors"
– Up more than 100% in 23 US states (e.g., 550% in West Virginia)"
"
2005: 43% of drug-abuse E.R. visits—600,000—involve pharmaceuticals"
"
• 2003: Acetaminophen poisoning becomes #1 cause of acute liver failure"
in U.S."
• 2005: Annual U.S. liver transplants up 20% since 2001. First-year costs:"
$393,000"
26

Key Observations. . .
• Question not so much “What are payers finding when they"
look” as it is “To what extent are payers looking”"
• Most outsource Rx benefit/processing to pharmacy-benefit"
management companies (PBMs)"
• Widespread perception that few PBMs engage in true fraud-detection"
and investigation activity (e.g., vs. routine pharmacy audits)"
• Issue not addressed in many insurer - PBM relationships"
"
• Even some health insurers with captive PBMs don’t focus on Rx "
27

Three-Dimensional Cost Impact. . .
• Unnecessary, excessive or fraudulent prescriptions"
• Related medical claims—legitimate or falsified"
– Physician office visits & other treatments"
– Diagnostic tests (imaging, nerve conduction)"
– Emergency room/urgent care clinic exams/treatments"
– Conditions caused by Rx abuse—e.g., liver damage/failure"
– Treatment of affected family members"
• Incalculable potential-liability cost"
– Dangerous prescribers/prescription sellers"
– Insured’s injury or death"
– Insured’s injury of others"
28

Key Observations. . .
• Experts’ consensus: High-cost provider cases abound, but doctor"
shopping is most common—and costly—form of diversion "
– Aetna: 48% of member-fraud investigations involve Rx "
• Low-cost cases "
– Natl. Assn. of Drug Diversion Investigators: Typical doctorshopper
sees 5 - 10 prescribers, costs payer $10,000 -
$15,000/yr Rx + medical"
– MEDCO, 2005: “High-utilization” members’ Rx costs 7x norm"
"
• Sole focus on Rx costs overlooks the far-greater impact!
29

WellPoint/Anthem BCBS of Virginia
100 members with multiple narcotic Rx scripts from 5 or "more
sources in 90-day period:"
• Prescribers: " " "689"
• Pharmacies: " " "608"
• Narcotic Scripts:" " "1,217"
• Paid Narcotic Rx claims: " "$20,233"
• Medical claims for same 100 members, same 90-day"
period:"
• Office visits: " " "4,131"
• Outpatient Facility Visits: " "958"
• Total Medical Claim $: " "$832,172"
• Average medical-to-Rx cost ratio: "$41 to $1"
"
• Full-year 100-member savings following intervention &"
pharmacy restriction: $333,418 "
30

The Analysis Group, Inc.
“Direct Costs of Opioid Abuse In An Insured Population”"
"—J Managed Care Pharmacy, July/August 2005"
"—1998 - 2002 claim data from 2-million member database"
—Aged 12 - 64, continuous enrollment 12 months of study"
—”Abuser” = at least 1 non-heroin opioid abuse/dependence/poisoning ICD-9"
code in claim history in or within 12 months pre- or post-study period "
• Diagnosed opioid abusers’ “total health costs 8 times those of non-"
abusers’”"
" " "Non-Abusers " "Abusers"
—Drug " "$386 " " "$2,034"
—Inpatient " "$318 " " "$7,659"
—Physician/OP "$928 " " "$5,398"
—Other (E.R. +) "$198 " " "$793"
"
TOTAL " "$1,830 " " "$15,884"
"
Excess Annual Cost "(2003 $) " " " $14,054 " ""
" " "(2012 $) " " " $17,499*"
31

Sobering Scenarios: Insured Population. . .
• “Fully Loaded”—1.9% insured opioid abusers @ avg. excess cost:"
– 4.85 million x $16,485 = $79.9 billion/yr"
• “More Conservative”—1.9% insured opioid abusers @ avg. excess cost,"
less in-patient $:"
– 4.85 million x $8,572 = $41.6 billion/yr"
• Most Conservative—1% insured opioid abusers at reduced avg. excess"
cost:"
– 2.6 million x $8,572 = $22.3 billion/yr"
32

Sobering Scenarios: Individual Plan-Level
• “Most Conservative” excess-cost math applied to plan sizes:"
– 10 million lives @ 1% abusers"
• 100,000 members x $8,572 =
"$857,000,000/yr"
– 1 million lives @ 1% abusers:"
• 10,000 members x $8,572 =
"$85,700,000/yr"
– 500,000 lives @ 1% abusers:"
• 5,000 members x $8,572 =
"$42,900,000/yr"
– 250,000 lives @ 1% abusers:"
• 2,500 members x $8,572 =
"$21,400,000/yr!
33

The Incalculable Payer Liability Risk. . .
• Payers that fail to take an active approach to doctor-shopping and other"
aspects of diversion face significant potential liability related to prescription-"
drug addiction and overdose deaths: "
!“The data was right under the prescription payer’s nose; had it only
taken the trouble to look at what it was paying for, it could have prevented
this addiction . . . liver failure . . . overdose death . . . fatal accident”!
"
• Precedent for “should have known” suit against pharmacy"
– Florida court decision affirms pharmacy’s “duty to warn” and to be more than"
“a passive dispenser”"
"
• Credentialing & network-admission/retention issues also come into play"
• Awareness of risk is integral aspect of some companies’ active approaches"
• “Passive-payer” approach is inadequate and very risky in face of “national"
epidemic” & widespread mortality"
34

Key Observations. . .
• Matching Rx claim data to medical claim data is essential but is the"
industry exception, not the rule"
"
– Many payers don’t do it at all"
– Some do it only with difficulty—technical and procedural"
– A few have exemplary capability"
• Many payers face obstacles—real or perceived—to implementing"
effective intervention/pharmacy restriction programs"
• Insurers have opportunities to curtail payment for off-label uses of"
specific drugs—e.g., Actiq, Gabapentin/Neurontin"
• Opportunities abound for stronger point-of-sale controls"
35

Broad Best Practices for Rx Payers. . .
• Pay more attention!!
"
– Increase awareness of true impact and potential exposure, including at
senior management levels"
– Avail selves of PBM tools/intervention programs (best case)"
– Force the issue in PBM relationship (worst case)"
– Educate and enlist support of self-insured group customers"
!
!
– Enlist expert pain-management counsel to assist in striking and"
maintaining appropriate balance"
"
–Establish and maintain relationships with law enforcement diversion"
specialists—be equipped to address the hard-core criminal component"
"
– Better understand options for appropriate action—addiction assistance vs."
law enforcement referral"
36

Broad Best Practices for Rx Payers. . .
"
• Support effective Prescription Drug Monitoring Programs (PDMPs)"
"
• Address obstacles—real or perceived—to implementing effective intervention"
measures—e.g., pharmacy restriction"
"
– Policy/contract/program terms"
– Communication with prescribers"
• Review and consider narrowing coverage policies re: Prescriptions for off-label"
uses!
!
!
37

Operational Best Practices for Rx Payers. . .
• Address IT and/or other obstacles to matching medical and Rx claim data"
• Review drug formularies and improve up-front controls"
– Prior Authorizations"
– Quantity Limits"
– Encourage—if not require—network prescribers to query PMP databases"
• Review and improve point-of-sale controls"
– Date of Birth queries"
– Photo Identification"
• Don’t overlook lower-profile drugs"
– Promethazine w/Codeine"
– Methadone"
– Buprenorphine (Subutex/Suboxone)"
• Develop and implement patient-pharmacy restriction programs!
38

www.insurancefraud.org
–”Tools”
–“Publications”
39

https://www.unodc.org/
documents/data-andanalysis/WDR2012/
WDR_2012_web_small
.pdf
40

UN ODC Discussion Paper, 2011:
“The Non-Medical Use of Prescription Drugs—Policy
Direction Issues”
http://www.unodc.org/docs/youthnet/
Final_Prescription_Drugs_Paper.pdf
41