This document summarizes a presentation on legislative and medication trends impacting third-party payers. It discusses several topics: physician dispensing and repackaged medications, opioid utilization, treatment guidelines and closed formularies, and compounded medications. For each topic, it outlines related legislative strategies and regulatory approaches taken by different states to influence costs and utilization for third-party payers. The presentation aims to identify issues relevant to third-party payers and explain how they can shape legislative and regulatory outcomes.

1. Third-Party Payer Track:
Legislative and Medication Trends
Impacting Third-Party Payers
Presenters:
• Brian Allen, Vice President of Government Affairs, Helios
• Tron Emptage, RPh, Chief Clinical Officer, Helios
Moderator: Michelle C. Landers, JD, Executive Vice President
and General Counsel, Kentucky Employers’ Mutual
Insurance, and Member, Rx Summit National Advisory Board

2. Disclosures
• Brian Allen, Employment: Helios
• Tron Emptage, RPh, Employment/Stockholder: Helios
• Michelle C. Landers, JD, has disclosed no relevant, real or
apparent personal or professional financial relationships with
proprietary entities that produce health care goods and
services.

3. Disclosures
• All planners/managers hereby state that they or their
spouse/life partner do not have any financial
relationships or relationships to products or devices
with any commercial interest related to the content of
this activity of any amount during the past 12 months.
• The following planners/managers have the following to
disclose:
– Kelly Clark – Employment: Publicis Touchpoint Solutions;
Consultant: Grunenthal US
– Robert DuPont – Employment: Bensinger, DuPont &
Associates-Prescription Drug Research Center
– Carla Saunders – Speaker’s bureau: Abbott Nutrition

4. Learning Objectives
1. Identify legislative and regulatory issues relevant
to third-party payers.
2. Explain strategies for third-party payers to
influence legislative and regulatory outcomes.
3. Outline medication cost and utilization trends
relevant to third-party payers so that the injured
worker receives the right medication at the right
time in a cost-effective manner.

5. Legislative and Medication Trends
Impacting Third-Party Payers
Brian Allen, CIC
Vice President of Government Affairs
Tron Emptage, M.A., R.Ph.
Chief Clinical Officer
April 7, 2015 12:30 - 1:45 P.M.

6. Disclosure Statement
• Brian Allen, Employment: Helios
• Tron Emptage, RPh, Employment/Stockholder: Helios

7. Legislative and Medication Trends
Impacting Third-Party Payers
• Physician Dispensing and Repackaged Medications
• Opioid Utilization
• Guidelines and Closed Formularies
• Compounded Medications
• Medical Marijuana

8. PHYSICIAN DISPENSING AND
REPACKAGED MEDICATIONS

9. Source: Journal of Occupational and Environmental Medicine, Volume 56, Number 5, May 2014, Effect of Physician-Dispensed Medication on
Workers’ Compensation Claim Outcomes in the State of Illinois, White, et al.
Illinois Study
Claims with at least one
physician-dispensed medication
Claims with a physician-dispensed
opioid within 90 days
Physician Dispensed vs.
Pharmacy Dispensed

10. WA
OR
CA
NV
ID
MT
WY
CO
UT
NMAZ
TX
OK
KS
NE
SD
ND MN
WI
IL
IA
MO
AR
LA
AL
TN
MI
PA
NY
VT
GA
FL
MS
KY
SC
NC
MDOH DE
IN
WV
NJ
CT
MA
ME
RI
VA
NH
AK
DC
HI
Workers' compensation statutes/regulations
limit physician dispensing and/or repackaging
(Restrictions on dispensing, billing and/or
reimbursement)
No clear legal or workers' compensation limits
on physician dispensing and/or repackaging
Legal restrictions (Practice Act) in
addition to workers’ compensation
controls
Legal restrictions on physician dispensing
(Medical/Pharmacy Practice Act
restrictions)
Note – States such as AR, DE, FL, KY, NY and TN have overlapping
workers’ compensation and state Practice Act controls
Data – Reflects published state statutes/regulations/case law on
Physician Dispensing/Repackaging
Current as of Jan 2015
Twenty-two States have taken
Policy Action since 2011

11. WA*
OR*
CA
NV
ID
MT
WY
CO*
UT
NM*AZ
TX
OK*
KS
NE
SD
ND MN
WI
IL*
IA
MO
AR*
LA
AL
TN*
MI*
PA*
NY*
VT
GA
FL*
MS
KY*
SC
NC*
MDOH* DE*
IN*
WV
NJ
CT*
MA
ME
RI*
VA
NH
AK*
DC
HI
Mandates use of original NDC for
billing and/or reimbursement
No mandate for use of original
NDC for billing/reimbursement
* Additional regulatory/statutory factors and qualifications may apply
Data – Reflects published statutes/regulations/case law on usage of
Underlying NDC for repackaged drugs
Current as of Jan 2015
Use of Original NDC for Repackaged Drugs

12. Outcomes
• Cost of repackaged medications
– Generally see an immediate decrease in cost following implementation of controls
– WCRI reports in Tennessee that prices dropped 21-49% in the first quarter
post-reform*
– Data indicates impact erodes over time as market adjusts
– Costs still higher than pharmacy - lack of network pricing
– Physicians are adopting new drug formulations as soon as they are available to take
advantage of higher prices
• Volume of physician-dispensed medications
– In price-control-only states volume remains relatively flat
– States limiting physician dispensing time frames initially see a decrease in volume, but
then volume grows in time
*Early Impact of Tennessee Reforms on Physician Dispensing, December 2014

13. What is the right strategy for rationalizing
physician dispensing and cost?
• Outright ban on physician dispensing?
– Fighting scope of practice issues
– Would solve problem
• Strict limits on time-frames physicians can dispense?
– Fighting scope of practice issues
– Would reduce problem
• Regulating reimbursement by average cost per gram of all strengths?
– Difficult to obtain data and reprogram bill review and reimbursement system
– Would rationalize cost
• Only allow physician dispensing within a pharmacy network?
– Difficult to contract with physicians
– Could contract reimbursement at levels similar to pharmacies

14. OPIOID UTILIZATION

15. Opioid Analgesics Continue to Plague the U.S.
• Centers for Disease Control reports
16,235 deaths from opioid analgesics in
2013
• This is up slightly from 2012, but still less
than the high of 16,917 in 2011
• Still considered epidemic levels
• Heroin use is on a steady rise

16. Multiple Controls Impact Opioid Utilization
• Results suggest that multiple controls need to work in concert to have an impact in reducing use of opioid
analgesics
• Pharmacy Benefit Managers are realizing success reducing the use of opioid analgesics
Network Enforcement Clinical Tools Predictive Analytics Models Drug Testing

17. Legislative and Regulatory Strategies for
Controlling the use of Opioid Analgesics
• Medication Rescheduling
– Designed to slow/inhibit prescribing
– Effective October 6,2014, all hydrocodone combination products (HCPs) have been reclassified from CIII
medications to CII medications. At a Federal level, this will
• prohibit oral prescriptions (unless reduced immediately to writing)
• prohibit refills
• limit the quantity (days’ supply) to 90 days (some states will restrict to 30 days), and
• require new Rx for each treatment

18. • Prescribing guidelines/restrictions
– Targets physician behavior
– Time-based restriction
– Monthly MED limits
Legislative and Regulatory Strategies for
Controlling the use of Opioid Analgesics

19. • Mandatory Urine Drug Monitoring
– As many as 75% of claimants with chronic pain may not be taking their medications as prescribed
– According to the American Pain Society and the American Academy of Pain Medicine, claimants receiving
chronic opioid therapy should be monitored periodically for prescription compliance through routine
assessment including urine drug testing
– Another important factor is the differentiation between office based immunoassay dip stick tests, and
laboratory driven liquid or gas chromatography. There are thousands of web sites, blogs, and advice on
“how to beat a urine drug test” for those immunoassay based tests.
Legislative and Regulatory Strategies for
Controlling the use of Opioid Analgesics

20. • Prescription Drug Monitoring Programs (PDMPs) intended to:
– Support access to legitimate medical use of controlled substances
– Identify, deter or prevent drug abuse and diversion
– Facilitate and encourage the identification, intervention with, and treatment of, persons addicted to
prescription medications
– Inform public health initiatives through outlining of use and abuse trends
– Often understaffed and underfunded in state budgets – California and Florida
– Needs better interaction across borders and include PBMs
– Delaware and New Jersey just implemented a sharing pact
Legislative and Regulatory Strategies for
Controlling the use of Opioid Analgesics

21. Prescription Drug Monitoring Programs (PDMPs)
State by State
WA
OR
CA
NV
ID
MT
WY
CO
UT
NMAZ
TX
OK
KS
NE
SD
ND MN
WI
IL
IA
MO
AR
LA
AL
TN
MI
PA
NY
VT
GA
FL
MS
KY
SC
NC
MDOH D
EIN
WV
NJ
CT
MA
ME
RI
VA
NH
AK
DC
HI
Operational PDMP (Prescription Drug Monitoring Program)
Enacted Legislation, but PDMP not yet operational
No PDMP
Data – Reflects published state statutes/regulations on PDMP Operations
Current as of Sept 2014

22. PDMP: Access to Information
WA
OR
CA
NV
ID
MT
WY
CO
UT
NMAZ
TX
OK
KS
NE
SD
ND MN
WI
IL
IA
AR
LA
AL
TN
MI2
PA
NY
VT
GA
FL
MS
KY
SC
NC1
MDOH DE
IN
WV
NJ
CT
ME
RI
VA
NH
AK
DC
HI
MO
To prescribers, pharmacists, law enforcement
and licensing entities (19)
To prescribers, pharmacists and law
enforcement only (4)
To prescribers, pharmacists and licensing
entities only (2) 1 North Carolina provides unsolicited reports to the
Attorney General who has the discretion to forward
the information to law enforcement.
2 Michigan sends alerts to physicians when a patient
surpasses the threshold but does not send the actual
report.
To prescribers and pharmacists only
(5)
To law enforcement and licensing
entities only (3)
To prescribers only (3)
To prescribers and law enforcement
only (1)
Law enforcement only (2)
Licensing entities only (2)
Practitioners and licensing entities only
(1)
MA

23. • Closed Formularies
– Seem to be having a real impact
Legislative and Regulatory Strategies for
Controlling the use of Opioid Analgesics

24. TREATMENT GUIDELINES AND
CLOSED FORMULARIES

25. The Texas Experience
• Adopted Official Disability Guidelines (ODG) Appendix A as the basis of formulary
• Formulary includes all Food and Drug Administration (FDA) approved medications except “N”
drugs on Appendix A
– “N” drugs require preauthorization
– All other drugs can only be reviewed retrospectively
• Latest results from Texas show a reduction of “N” drugs in cost and quantity
– 65% reduction in claims receiving an “N” drugs
– 82% reduction in cost

26. Positive Results: Texas Closed Formulary
$164
$355
$409
$457
$152
$235
$318
$421
2909
442
302 241
3687
479
281 250
0
500
1000
1500
2000
2500
3000
3500
4000
$-
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
0-90 91-180 181-270 271-360
CountofClaimantsReceivingPrescriptionsper
Quarter
AverageSpendperClaimantperQuarter
Days Post Injury

27. Lessons Learned from Texas
Lessons Learned from Texas
• A state-mandated list of drugs requiring preauthorization did change prescribing behavior
• Allowing only retrospective review on all other drugs had some unintended consequences
– Increase in medications being processed that were not related to the workplace injury
– Increase in medications being prescribed outside of treatment guidelines and not
indicated for injury
– Significant increase in compounds with all “Y” ingredients

28. Closed Formulary
• Pharmacy benefit managers (PBMs) can play a valuable role
– Ensuring compliance with “N” drug lists,
– Encouraging the use of generics,
– Blocking high-cost compounded medications, and in
– Making sure that all of the other medications prescribed are appropriate for the injured
worker based on their injury and their point of recovery
• States adopting a closed formulary approach can maximize their results by maintaining a
strong role for PBMs in managing medication utilization in their workers’ compensation
systems

29. PDL List
► “Preferred” and “non-
preferred” medications
► Proof of non-preferred
medication usage and
written justification (state
format) for all preferred
medications
Prior written authorization
OxyContin®, Oxycodone ER,
Actiq® and transmucosal
Fentanyl
New Guidelines/Formulary Activity
Non-Acute Pain Treatment
Guidelines
► Assist doctors in treating
non-acute pain with both
opioids and non-opioids
► Requires greater
communication between
provider and patient
► Includes treatment
agreements and
documentation
Closed Formulary
►Implemented a Closed
Formulary
►Requires prior-authorization
on all medications indicated
as “N” by ODG
►Requires prior-authorization
for all compounds
►Implemented in 2014 –
Eventual data and results
will be telling
Delaware New York Oklahoma

30. States Considering Treatment Guidelines
and/or Closed Formularies
• Treatment Guidelines
− Arizona Moving slowly with pain treatment guidelines
− Arkansas Rule change underway to adopt ODG; Proposed rule being reviewed by Governor’s Office
− California Opioid Treatment Guidelines
− Michigan Released proposed rule on compounded medications and opioid utilization; impose limits on
prescribing opioids unless physician meets strict criteria
− New York Continuing to refine their treatment guidelines
− Tennessee Medical Advisory Committee studying options
• Closed Formularies
− Arkansas Closed Formulary Rule based on ODG “N” drug list currently being reviewed by Governor’s office
− California California Workers’ Compensation Institute (CWCI) study showed savings of up to $450 million a
year. DWC has been talking to stakeholders. Legislation has been introduced in the CA Assembly
− Louisiana Legislation introduced but not passed in 2014; likely rulemaking in 2015
− Oklahoma Working to finalize and adopt permanent rules solidifying their closed formulary
− Tennessee Medical Advisory Committee discussed closed formulary during Dec 10th meeting
− Michigan Administrator has been doing fact-finding on the closed formulary concept

31. COMPOUNDED MEDICATIONS

32. Compounded Medications
• It is the art and science of preparing personalized medications for patients where
individual ingredients are mixed together in the exact strength and dosage form to meet
the patient’s specific needs
• A prescription is required for these medications. The active ingredients in compounded
medications are usually prescription medications combined together
• The compound products themselves are not FDA approved; however, the individual
ingredients typically are
• Largely experimental in use with few randomized controlled trials to determine efficacy or
safety
• Not commercially available and typically much more expensive than their oral formulation
counterparts

33. Topical Compounded Medications
• Considered second or third line treatments; primarily recommended for neuropathic pain
when trials of antidepressants and anticonvulsants have failed or when an injured worker is
allergic to certain inactive ingredients
• Outside of workers’ compensation, compounded medications are most often used for
hormone replacement, dermatology, children’s formulations, and anti-cancer treatment
• Recommendations Prior to Approving
− Confirm medical necessity
− Consider comorbid conditions that might prevent oral therapy
− Determine if first line oral agents are unavailable
− Does the claimant have documented allergy to commercially available product
− Compare individual compound ingredients to current oral medications to prevent duplicate therapy
− Consider escalating to internal resources (field case manager)
− Consult a pharmacist

34. States Addressing Compounded Medications
• Delaware
– Compounded medications must be billed listing each ingredient and its corresponding NDC
– Reimbursement based on each NDC using the standard pharmacy fee schedule
– A single $10 compounding fee per prescription is allowed for physician dispensers
• Ohio
– Regulations establish reimbursement for non-sterile compounded medications to be limited
to the lesser of the usual and customary price or the AWP of the commonly stocked
package size minus 9% for each ingredient
– Maximum reimbursement for any one compound prescription is $600

35. States Addressing Compounded Medications
• Oklahoma
– New formulary excludes compounded medications
• Mississippi
– Limited maximum total reimbursement for each compounded cream medications to $300
for no more than 120 grams per month
– Any additional quantity requires further documentation and prior authorization

36. States Addressing Compounded Medications
• Wyoming
– Amended treatment guidelines stating that there is no evidence that compounds are more
effective than individual ingredients administered separately
– Provider must document medical necessity and that traditional therapy was tried but failed
– Compound will be denied absent documentation
• Michigan
– Must demonstrate medical necessity
– No readily available commercial alternative
– Ingredient reimbursement based AWP of original product used
– Total reimbursement for topicals capped at $600

37. MEDICAL MARIJUANA

38. Legal in 23 states and Washington D.C.
WA
OR
CA
NV
ID
MT
WY
CO
UT
NM
AZ
TX
OK
KS
NE
SD
ND MN
WI
IL
IA
MO
AR
LA
AL
TN
MI
PA
NY
VT
GA
FL
MS
KY
SC
NC
MD
OH
DE
IN
WV
NJ
CT
MA
ME
RI
VA
NH
AK
DC
HI
Legalized Medical Marijuana
Current as of January 2015 Source: ProCon.org
Considered legislation to legalize medical marijuana in 2014
Pro-medical use legislation, short of legalization
Medical use of marijuana is prohibited; no pending legislation

39. Medical Uses and Dosage Forms
• HIV induced cachexia
• Cancer related nausea/vomiting
• Glaucoma
• Severe chronic pain
• Epilepsy
• Multiple Sclerosis
• Inflammatory bowel disease
Medical Uses Dosage Forms
• Smoking
• Vaporization
• Sublingual
• Liquid
• Spray

40. Employer Considerations
• Employer challenges include
– A heightened level of concern when an injured worker returns to a safety-sensitive
occupation, such as driving or construction, while subject to the potential adverse cognitive
and psychological effects of marijuana
– Quantification of the amount of marijuana consumed by the injured worker is not available
through urine drug testing, thereby limiting the ability to determine if he or she has
consumed the prescribed dose, or is in fact acutely intoxicated
– Understanding the potential impact to Drug Free Workplace policies as well as other safety
and risk management protocols and programs
• Based on the best available scientific evidence and recommendations at this time, its
classification as a Class I substance and the lack of an assigned NDC, medical marijuana
remains excluded from our Medication Plans/formularies

41. Legislative Update
• Utah heard legislation that would allow medical marijuana in pill form
• New Mexico courts have ruled that workers’ compensation carriers must pay for medical
marijuana if the treating physician deems it medically necessary.
• At the federal level, the DEA has formally requested the FDA to study whether or not
marijuana should be changed from a Schedule I to a Schedule II drug
– This would open the way for broader/more accepted use in medical treatment
– Comes on the heels of Congress voting to de-fund DEA marijuana enforcement

42. THANK YOU
Questions?

43. Third-Party Payer Track:
Legislative and Medication Trends
Impacting Third-Party Payers
Presenters:
• Brian Allen, Vice President of Government Affairs, Helios
• Tron Emptage, RPh, Chief Clinical Officer, Helios
Moderator: Michelle C. Landers, JD, Executive Vice President
and General Counsel, Kentucky Employers’ Mutual
Insurance, and Member, Rx Summit National Advisory Board