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Rx Rundown

Employers face numerous challenges in managing pharmacy care in workers’ compensation. The opioid epidemic, emerging drug classes and dispensing channels, and numerous regulatory changes all require new levels of data analysis. To better understand the trends behind this data we've provided some insightful perspectives.

Brand and Generic Trends in Managed and Unmanaged Populations

By Dannielle Foroozandeh, Director, Pharmacy Product Development
July 16, 2018

Regulars at Costco know the Kirkland name well. The in-house brand offers a generic equivalent for a range of products the warehouse chain’s deal-seeking customers are after. Kirkland is such a force, in fact, that it brings in about a quarter of Costco’s sales. That’s well above the industry average for private-label revenue.

So why do Kirkland products sell so well? Forbes puts it this way: “Costco shoppers are not only drawn to Kirkland brands because they are cheaper than the name-brand offerings, but Kirkland products have a quality they have come to rely on.”

Luckily, we can see that same quality-value balance play out with an increasing number of the prescription medications clinicians are using to treat injured workers. Our latest Drug Trends Report reveals generic medication usage, as a percentage of all managed prescriptions, increased for the seventh straight year. There was also an increase in generics among unmanaged prescriptions, which fall outside the contracted networks of a traditional pharmacy benefit manager. These developments are welcome news because using more generics — when safe and effective — dampens the impact of relentless increases in the average wholesale price of prescription medications. In short, generics offer injured workers medicines with equivalent efficacy and safety and, at the same time, offer payers much-needed savings.

Managed Prescriptions

Generics accounted for 86.8% of all prescribed medications for the managed population compared with 85.7% in the prior year. Some of the gains in generic use were notable. For example, the generic efficiency rate for topicals rose 5.5% points to 92.6%. This was the biggest increase among the top 10 drug classes.

Beyond an increase in the use of generic medications, there were other signs of improvement in the managed group. Managed prescriptions per claim dropped 5.9%. There were notable decreases among opioids, muscle relaxants, and topical medications. Some of the drops were in the double digits:

  • Opioid usage declined 9.8% with reductions occurring for generics (9.6%), brand (10.3%), and brand with generic available (13.6%).
  • Muscle relaxant usage dropped 4.9% and decreased for generics (4.5%), brand (20.3%), and brand with generic available (19.5%). Usage of topical medications fell 6.5% as the decline in brand (35.5%), as well as in brand with generic available (39.8%), more than offset the increase in generics (11.1%).


Unmanaged Prescriptions

As with managed prescriptions, generic use grew among unmanaged prescriptions. Generics as a percentage of all prescriptions rose 2.6% points to account for 81.8% of all unmanaged utilization. A decline in compounds per claim led to a 2.5% point drop in brand usage and a corresponding increase for generics.

Signs of further progress emerged in a range of other numbers. For example, the generic efficiency rate for topicals rose 3.6% points to 95.4%. Here are a few other highlights:

  • Unmanaged prescriptions per claim decreased 7.4%.
  • First Script’s clinical oversight made a significant impact on brand drug usage. A 70.9% decrease in compound prescriptions per claim led to a declining trend for brand drugs.
  • Unmanaged opioid prescriptions declined substantially across all categories for a combined average of 20.7%.


The improvements detailed in our Drug Trends Report underscore what is possible when we work with our partners on the common goal of balancing quality and value. Providing injured workers access to safe and effective generic equivalents is an important way to achieve outcomes that are good for people and for payers.

We hope you’ve enjoyed this Rx Rundown post and we look forward to hearing your thoughts. For more information on brand and generic trends, please contact us at info@cvty.us.com.

Top Therapeutic Classes by Cost and Utilization

By Nikki Wilson, Pharm.D., Director Pharmacy Product Development
July 9, 2018

Therapeutic classes falling within the top 10 most utilized and costly categories had some interesting, although not altogether unsurprising, movement. Check out our latest video which addresses some of the changes and trends seen for the top ten drug classes both in- and out-of-network.

Watch the video

To consider all of the pharmacy transactions we can see and touch at First Script, we rely on what we call our “managed view,” which represents all prescriptions governed through our retail and mail-order program as well as our extended-network contracts. Extended (or specialty) networks have been emerging within the workers’ compensation pharmacy market for some time. As they’ve grown, so has the attention they’ve drawn from leading workers’ compensation pharmacy benefit managers. That’s because extended networks are designed to reach beyond the traditional retail space into alternative billing and dispensing channels. These channels include third-party billers, physicians, and clinics where dispensing occurs, as well as independent mail-order pharmacies. By contracting with these dispensing and billing channels, a PBM is able to expand its management reach to influence price controls and apply a larger clinical tool set to a larger percentage of a client’s pharmacy experiences. (Think of it like a more powerful telescope that lets us peer deeper and take action.) We compile our managed view to provide pharmacy data that encapsulates all transactions subject to clinical and pricing controls by contract. This managed view accounted for 72.6% of all pharmacy transactions and 77.9% of all pharmacy spend in 2017.

The scope of the managed view is substantial yet it’s clear there are still a number of pharmacy transactions that take place beyond a network. That means these transactions don’t enjoy the benefit of clinical edits and cost-saving tools. Unmanaged transactions are collected through direct connections with medical bill review systems or clients. They consist of bills from physicians and clinics, smaller non-network pharmacies and specialty pharmacies, as well as non-contracted third-party billers. These unmanaged scripts are eventually accounted for through retrospective clinical utilization management. Additionally, both managed and unmanaged script data can be integrated within a risk model to sharpen the focus on emerging clinical risks. This holistic view facilitates intervening before adverse claim development occurs.

The dispensing channels for out-of-network prescriptions are fragmented. Yet, taken together, they accounted for 27.4% of total prescription utilization and 22.1% of total pharmacy spend in 2017. First Script continuously analyzes the unmanaged population of prescriptions to identify opportunities for increased penetration and total pharmacy management. The intent of sharing this unmanaged view is to provide transparency and to foster awareness about the cost and utilization trends associated with out-of-network prescriptions.

Our analysis reveals that injured workers who fill out-of-network (unmanaged) prescriptions are different from those who fill exclusively within the retail, mail-order, or extended-network (managed view) channels. Contrasting claim demographics, such as claim age and injury type, drive differential market trends for the managed and unmanaged groups. Here are some key differences between the two populations that comprise the managed and unmanaged views:

Claim age: At 5.4 years, the average claim age for the managed population was far older than the unmanaged population average of 1.6 years. 

Severity of injury: Unmanaged prescriptions appear to cover less serious injuries, whereas managed claims typically have more severe injuries.

First and only fills
: The trend continues to show that those filling prescriptions via unmanaged sources tend to fill fewer prescriptions; this likely can be attributed to the lower acuity level of their injuries.

These factors illustrate a few of the differences between the two groups. These differences make clear that care should be taken when making comparisons and generalizations across an entire book of business. Just think of that next time you look at the night sky: What isn’t always readily visible can still matter.

We hope you’ve enjoyed this Rx Rundown post and we look forward to hearing your thoughts. For more information on the managed and unmanaged view, please contact us at info@cvty.us.com.

Managed vs. Unmanaged — A View Into All Pharmacy Transactions and the Differences Between Their Claim Populations

By Dannielle Foroozandeh, Director, Pharmacy Product Development
July 3, 2018

The next time you look up at the night sky and marvel at the countless stars consider this: For all the things you can see, there is far more you cannot. Most of our universe is filled with dark matter and dark energy. The stars, planets, and moons make up less than 5 percent of what’s out there. It’s a reminder that what isn’t evident can still be important. The same dichotomous view exists within the pharmacy space. There are many transactions we can see at a glance yet a still sizable number that are meaningful even though they’re not always readily apparent.

To consider all of the pharmacy transactions we can see and touch at First Script, we rely on what we call our “managed view,” which represents all prescriptions governed through our retail and mail-order program as well as our extended-network contracts. Extended (or specialty) networks have been emerging within the workers’ compensation pharmacy market for some time. As they’ve grown, so has the attention they’ve drawn from leading workers’ compensation pharmacy benefit managers. That’s because extended networks are designed to reach beyond the traditional retail space into alternative billing and dispensing channels. These channels include third-party billers, physicians, and clinics where dispensing occurs, as well as independent mail-order pharmacies. By contracting with these dispensing and billing channels, a PBM is able to expand its management reach to influence price controls and apply a larger clinical tool set to a larger percentage of a client’s pharmacy experiences. (Think of it like a more powerful telescope that lets us peer deeper and take action.) We compile our managed view to provide pharmacy data that encapsulates all transactions subject to clinical and pricing controls by contract. This managed view accounted for 72.6% of all pharmacy transactions and 77.9% of all pharmacy spend in 2017.

The scope of the managed view is substantial yet it’s clear there are still a number of pharmacy transactions that take place beyond a network. That means these transactions don’t enjoy the benefit of clinical edits and cost-saving tools. Unmanaged transactions are collected through direct connections with medical bill review systems or clients. They consist of bills from physicians and clinics, smaller non-network pharmacies and specialty pharmacies, as well as non-contracted third-party billers. These unmanaged scripts are eventually accounted for through retrospective clinical utilization management. Additionally, both managed and unmanaged script data can be integrated within a risk model to sharpen the focus on emerging clinical risks. This holistic view facilitates intervening before adverse claim development occurs.

The dispensing channels for out-of-network prescriptions are fragmented. Yet, taken together, they accounted for 27.4% of total prescription utilization and 22.1% of total pharmacy spend in 2017. First Script continuously analyzes the unmanaged population of prescriptions to identify opportunities for increased penetration and total pharmacy management. The intent of sharing this unmanaged view is to provide transparency and to foster awareness about the cost and utilization trends associated with out-of-network prescriptions.

Our analysis reveals that injured workers who fill out-of-network (unmanaged) prescriptions are different from those who fill exclusively within the retail, mail-order, or extended-network (managed view) channels. Contrasting claim demographics, such as claim age and injury type, drive differential market trends for the managed and unmanaged groups. Here are some key differences between the two populations that comprise the managed and unmanaged views:

Claim age: At 5.4 years, the average claim age for the managed population was far older than the unmanaged population average of 1.6 years. 

Severity of injury: Unmanaged prescriptions appear to cover less serious injuries, whereas managed claims typically have more severe injuries.

First and only fills
: The trend continues to show that those filling prescriptions via unmanaged sources tend to fill fewer prescriptions; this likely can be attributed to the lower acuity level of their injuries.

These factors illustrate a few of the differences between the two groups. These differences make clear that care should be taken when making comparisons and generalizations across an entire book of business. Just think of that next time you look at the night sky: What isn’t always readily visible can still matter.

We hope you’ve enjoyed this Rx Rundown post and we look forward to hearing your thoughts. For more information on the managed and unmanaged view, please contact us at info@cvty.us.com.

Topical Treatments - Their Impact on Drug Spend and Utilization

By Nikki Wilson, Director, Pharmacy Product Development
May 14, 2018

Topicals place fourth in overall cost among the 10 most expensive drug classes in workers’ comp. These include prescription nonsteroidal anti-inflammatory drugs (NSAIDs) and other formulations, such as creams and patches designed to treat pain. We’ve outlined this class and its impact on drug spend and utilization in part one of our drug trends. To learn more about Topicals watch this short video.

Watch the video

AWP Trends — Understanding the Forces That Drive Drug Prices

By Dannielle Foroozandeh, Director, Pharmacy Product Development
May 7, 2018

A drug’s Average Wholesale Price (AWP) is a simple benchmark for distinguishing the cost of one medication from that of another. Policymakers and insurers use this important figure in determining fee schedules and reimbursement rates. The effect of AWP on a client depends on the mix of drugs prescribed and the utilization controls that are in place. Regardless, by examining the forces that conspire to push AWP higher or lower, we can gain a deeper understanding of the pharmacy landscape.

The AWP trends revealed in our 2017 Drug Trends report offer a helpful look at what’s driving drug costs. Last year, First Script's overall AWP increased 4.4%. This was less than the previous year’s AWP growth of 5.9%. An increase of 10.9% in the cost of brand drugs accounted for nearly all of the increase in overall AWP. The AWP increase for generic drugs was negligible and therefore helped mitigate the overall AWP impact on the prescription cost per claim.

Among brand drugs, OxyContin® and Lyrica® stood out for their role in propelling AWP. OxyContin® was the most expensive and most utilized sustained-release opioid brand medication in our book of business. OxyContin® experienced a 10.5% increase in AWP. Lyrica®, an anticonvulsant used to treat neuropathic pain, was the most costly and utilized brand medication overall in our book of business. It saw an AWP increase of 15.2% in 2017.

There were also noteworthy AWP increases for the short-acting opioid, topical, and nonsteroidal anti-inflammatory drug (NSAID) classes. Short-acting opioids increased 9.9% overall. Increases in Percocet® (8.8%) and Nucynta® (14.0%) drove the higher costs. Topicals, meanwhile, increased 12.8%. The overall increase followed jumps in the price of Flector® (13.1%) and Pennsaid® (22.7%). NSAIDs increased 20.2%. Sizable increases in Duexis® (24.5%) and Vimovo® (26.8%) pushed overall prices higher.

So what causes these changes in AWP each year? Unfortunately, there isn’t a single driver. Many factors can have an impact. The following are some of the most common elements that typically drive changes in AWP:

Price hikes ahead of a patent expiration

  • When a brand drug nears the end of its patent protection we typically see the price of that drug increase as the manufacturer attempts to recoup the research and development costs it put into developing the drug.


Consolidation among drug manufacturers

  • Over the last decade, drug makers began to consolidate to achieve the scale needed to maintain profitability. Typically, when a branded drug loses patent protection, multiple generic manufacturers produce the drug and compete on price. However, following a wave of industry consolidation, fewer manufacturers are applying to the U.S. Food and Drug Administration (FDA) for permission to produce drugs that have come off patent. With substantially fewer manufacturers churning out a particular generic drug—in some cases only two or three producers—generic prices have crept up with time.


Stricter regulations

  • The FDA has tightened quality control, which has forced manufacturers to invest more in their quality systems.


Drug shortages due to manufacturing issues

  • When one or more manufacturers producing a drug runs short of inventory, demand overtakes supply and prices rise. According to the FDA, quality issues and manufacturing challenges are major causes of drug shortages.


A focus on new and more profitable drugs

  • A manufacturer might cease production of a drug simply to reallocate resources to another product or to invest in more profitable initiatives (e.g., biosimilars).


The continued growth in AWP emphasizes the importance of working with a Pharmacy Benefit Manager (PBM) to manage both cost and utilization. First Script offers many tools and strategies to help mitigate the impact of AWP inflation. These include:

  • Increasing network penetration — for the greatest control over both cost and utilization, the script must be captured in-network
  • Generic enforcement — requiring the substitution of a brand medication for a generic equivalent when available
  • Evidenced-based clinical programs — various provider-outreach programs, therapeutic-alternative education, and advanced analytics


In addition, open communication and collaboration among pharmacies, payers, injured workers and treating physicians remain critical to confirming a medication is appropriate in terms of how it is used and its cost. The result of such a synchronized effort is a decrease in overall medication costs while maintaining high standards of care. That’s a win for everyone.

Drops in MED Indicate We’re Making Important Progress

By Nikki Wilson, Director, Pharmacy Product Development
April 30, 2018

Part One of Coventry’s Drug Trends Series reported the largest drop in Morphine Equivalent Dose (MED) in the last three years. As an indicator of increased chances for adverse outcomes, including death from overdose, these and other inroads are essential in the effort to curtail opioid misuse. To learn more about MED and its impact watch our short video.

Watch the video

A Look at the Foundation of Work Comp Pharmacy Trends

By Dannielle Foroozandeh, Director, Pharmacy Product Development
April 23, 2018

Hello and welcome to Rx Rundown! We are excited to kick off this effort by discussing the workers’ compensation trends we have identified in our annual Drug Trends Series and to dig into some of the key drivers behind these trends. The first drug trends installment reviews key trends and highlights from the traditional retail and mail-order pharmacy view.

Over the years, PBMs have exclusively focused on this subset of prescriptions for reporting their impact on the client experience through discounts in pricing per script as well as point-of-sale edits for utilization management prior to the prescription being dispensed. That’s critical information to have but it doesn’t reveal the complete picture. We’ve seen a shift in medication-dispensing patterns over the last few years in workers’ comp, and it has become clear that solely analyzing and reporting on medications dispensed through traditional means is no longer sufficient. A comprehensive view remains the most effective way to understand the full pharmacy landscape.

Taking a more comprehensive approach doesn’t diminish the importance of including key trends from the traditional view. We still need the traditional view to compare 2017 results to those in prior years, and to provide a valid market benchmark for the pharmacy experience where the most mature clinical- and cost-management tools are applied.

2017 Traditional View—Key Trends & Highlights

In 2017, First Script’s “traditional view” accounted for 69.6% of all pharmacy transactions and 71.2% of all pharmacy spend. Accordingly, the remaining prescriptions that were not accounted for in the traditional view represented 30.4% of all pharmacy transactions and 28.8% of all pharmacy spend. We will be discussing the trends associated with these non-traditional prescriptions in part two of our Drug Trends Series.

Within the traditional view there are three key metrics that the industry commonly reports:

• Cost per script
• Prescriptions per claim
• Total prescription cost per claim

Last year, we experienced a decrease of 0.2% in the overall cost per prescription, which was driven mostly by the drop in average wholesale price (AWP) for brand drugs, and an increased focus on drug-mix management by our clinical team. Double-digit declines in utilization of key drug classes such as opioids and compounds contributed to a 6.7% drop in overall utilization, or the number of scripts per claim. The decreases in cost per script and utilization resulted in a 6.8% decrease in overall prescription cost per claim for the traditional view.

A 1.6% points decline in opioid prescriptions with Morphine Equivalent Dose (MED) over 100, in addition to a 6.6% decline in overall MED per prescription, represented the largest drop in the last three years; this is great news for clients and patients alike. This significant decline in opioid utilization relates to a variety of factors. Most important are the strong partnerships being formed between First Script and our clients. First Script has worked diligently to build robust clinical programs to continuously reduce MED over the last seven years through:

• Early-intervention and outreach programs for prescribers and patients
• Education initiatives for physicians, injured workers, and adjusters
• Targeted focus groups to analyze and design strategies that reduce narcotic utilization
• State-based closed formularies, medical guidelines and other recently adopted regulatory measures
•  National emphasis on increasing physician use of Prescription Drug Monitoring Programs (PDMPs)

Compounds were another key drug class that experienced compelling trend changes in the traditional view. We saw a 60% plunge in cost per claim and a 52.7% drop in utilization. In the last few years, the number of compound medications prescribed for injured workers had overshadowed the growth of nearly every drug class with the exception of opioids. There was no single catalyst that touched off this welcome change. Instead, many factors helped restrict the use of compound medications to instances in which injured workers would likely realize medical improvement. These factors included:

•  Evaluation of compounds for clinical necessity at the drug-ingredient level
• Network oversight, scrutiny of compound providers and, in some cases, removal of providers from the network where necessary
• Advocacy for continued state-reform measures that require a compound’s medical necessity be demonstrated prior to dispensing
• Education efforts that empower claim evaluators to better make critical decisions around the approval of compound medications

The reversal of cost and utilization trends within the traditional space, are only possible through continued understanding of what occurs in both the managed and unmanaged space and with persistent advocacy by all stakeholders to drive change. That same determination also drives the welcome decreases we’ve seen in the opioid data. In all cases, the health and safety of injured workers should always come before profitability for prescribers and dispensers. We’re eager to report more successes in the coming years.

We hope you’ve enjoyed our inaugural Rx Rundown and we look forward to hearing your thoughts.

Meet some of our authors

Dannielle Foroozandeh, Director Pharmacy Product Development
Dannielle received her MBA from Pepperdine University, Graziadio School of Business and Management, and has been focused on developing innovative solutions in the managed care industry for the last eight years. She plays a key role in identifying unique opportunities and developing our products and solutions for managing complex workers’ compensation claims.
Nikki Wilson, Pharm.D., Director of Pharmacy Product Development
Wilson is a Pharm.D. who graduated with her Doctor of Pharmacy and MBA from Creighton University. Prior to joining First Script Nikki served as the Clinical Department Manager for Applied Underwriters for 5 years where she oversaw their Pharmacy Benefit Management (PBM) and home delivery programs and managed all clinical pharmacy operations.
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