Specialty Pharma

Cancer Drugs a Growing Cost Driver in Workers’ Comp

Presumption laws combined with newer, more expensive cancer drugs are a one-two punch municipalities can ill afford.
By: | November 1, 2017 • 4 min read

In recent years, opioids grabbed a prominent role as one of  the biggest pharmaceutical costs in workers’ comp, but with the proliferation of state presumption laws and a rash of chemotherapeutic specialty drugs either hitting the market or in the works, cancer drugs could be poised to become the next pharmaceutical cost driver.

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Over the course of the last decade, at least 36 states passed presumption of compensability laws, which makes some first responders diagnosed with certain types of cancer eligible for workers’ compensation on the presumption that the individual obtained the disease on the job.

While these bills vary widely, the majority of presumption bills cover firefighters for cancers and other conditions presumed to be caused by their exposure to a known carcinogen. Some of the cancers typically outlined as covered include lung, brain, kidney, bladder, rectal and skin cancer, and often also include non-Hodgkin’s lymphoma, leukemia and multiple myeloma.

Phil Walls, the chief clinical officer of myMatrixx, a pharmacy benefit management company owned by Express Scripts and based in Tampa, Fla., said he’s heard payers comment that presumption laws and the specialty drug market keep them up at night.

“Cancer [in workers’ comp] prior to presumption laws was a relatively rare event,” he noted. “For those insurers that cover [these first-responder] populations, I think this is going to have a big impact. Chemotherapy is very expensive. We continue to see escalating drug prices, with most of these within the specialty drug market.”

A recent Express Scripts study noted that more than 830 oncology drugs are in the pipeline.  The company projects that the health care industry can expect to see an increase of more than 20 percent in cancer drug spending each year through 2019, mainly due to patients using these expensive drugs as maintenance therapy.

Elam Herr, assistant executive director, Pennsylvania State Association of Township Supervisors

Firefighters and other first responders who may be covered by presumption of compensability laws make up a statistically insignificant portion of the overall workers’ compensation market.

However, a major cancer claim expense could be fiscally damaging for a small municipality, said Brian Allen, vice president of governmental affairs for San Diego, Calif.-based Mitchell Pharmacy Solutions and a board officer for the American Association of Payers, Administrators and Networks.

Public safety employees represent less than 3 percent of the general working population, but if a firefighter or two goes out on disability because of a cancer presumption, it could increase a small city’s claim costs by 20 to 25 percent, he said.

Premiums Impacted

Allen also noted that most of the expensive oncology drugs new to the market weren’t factored into the fiscal analysis conducted by states that have passed these presumption bills, further impacting the bottom line of smaller municipalities.

Elam Herr, assistant executive director of the Pennsylvania State Association of Township Supervisors, said that when Pennsylvania passed its presumption of compensability bill in 2011, the response by insurers was to drop them. The bill enabled firefighters to report retroactive claims going back 10 years.

“Starting out with claims for 10 years and no reserves as of day one, all the insurance companies and trust bailed on the municipal governments,” Herr recalled, referring to the township members of the association.

Those small municipalities were forced to seek coverage for their predominantly volunteer fire departments through the State Workers’ Insurance Fund, which led to premium jumps ranging from 20 to 40 percent for townships, he said.

“If there’s one thing American people want, it’s the biggest and best of everything. If there’s a miracle drug out there, they’re going to want it.” — Elam Herr, assistant executive director, Pennsylvania State Association of Township Supervisors

Since Pennsylvania’s bill took effect, 261 firefighters petitioned for coverage under the cancer presumption, but only 19 are volunteer firefighters — a smaller figure than Herr and others anticipated.

However, he is still wary about the impact of the law and increasingly expensive oncology drugs.

“I think any type of drug today will drive up cost,” he said. “If there’s one thing American people want, it’s the biggest and best of everything. If there’s a miracle drug out there, they’re going to want it.”

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Representatives of the Arizona League of Cities and Towns are similarly concerned about the impact of presumption bills on comp coverage. In 2016, the Arizona legislature added 12 new cancers to the presumption statute, including skin and prostate cancers, which are common in Arizona.

Arizona’s law allows workers who served as firefighters and peace officers for at least five years to file claims within 15 years of their last date of employment.

“We’re in a new era for workers’ comp for all employers … we’ve got a mix of factors that create the potential for quite a lot of cost,” said Alex Vidal, a legislative associate at the Arizona League of Cities and Towns.

“In terms of drug costs, when you’re treating something as complicated of cancer, the health insurance system is best set up to handle that type of treatment. In workers’ comp, because of their fee schedule system and restrictions, [the system] isn’t able to get the kind of savings that health insurers get, and medical costs can be more expensive.” &

Angela Childers is a Chicago-based writer specializing in health care and business management. She can be reached at [email protected]

More from Risk & Insurance

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R&I Profile

Achieving Balance

XL Catlin’s Denise Balan stays calm and focused when faced with crisis.
By: | January 10, 2018 • 6 min read

In the high-stress scenario of kidnap or ransom, the first image that comes to mind isn’t necessarily a yoga mat — at least, not for most.

But Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin, who practices yoga every day, would swear by it.

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“I looked at these opposing aspects of my life,” she said. “Yoga is about focus, balance, clarity of intent. In a moment of stress, how do you respond? The more clarity and calmness you maintain, the better positioned you are to provide assistance in moments of crisis.

“Nobody wants to be speaking to a frenetic person when either dealing with a dangerous situation or planning for prevention of a situation,” she added.

“There’s a poem by [Rudyard] Kipling on that,” added Balan’s colleague Ben Tucker. “What it boils down to is: If you can remain calm, you can manage through a crisis a lot better.”

Tucker, who works side by side with Balan as head of U.S. terrorism and political violence, XL Catlin, has seen how yoga influences his colleague.

“The way Denise interacts with stakeholders in this process — she is very professional and calm in the approach she takes.”

Yin and Yang

Sometimes seemingly opposite or contrary forces may actually be complementary and interconnected. In Balan’s life, yoga and K&R have become her yin and yang.

She entered the insurance world after earning a juris doctor degree and practicing law for a few years. The switch came, she said, when Balan realized she wasn’t enjoying her time as a commercial litigator.

Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin

In her new role, she was able to use her legal background to manage litigation at AIG, where her transition from law to insurance took place. She started her insurance career in the environmental sector.

In a chance meeting in 2007, Balan met with crisis management underwriters who told her about kidnap and ransom products.

She was hooked.

Because of her background in yoga, Balan liked the crisis management side of the job. Being able to bring the calmness and clearness of intent she practiced during yoga into assisting clients in planning for crisis management piqued her interest.

She then joined XL Catlin in July 2013, where she built the K&R team.

As she became more immersed in her field, Balan began to notice something: The principles she learned in yoga were the same principles ex-military and ex-law enforcement practiced when called to a K&R-related crisis.

She said, “They have a warrior mentality — focus, purpose, strength and logic — and I would say yoga is quite similar in discipline.”

“K&R responders have a warrior mentality — focus, purpose, strength and logic — and I would say yoga is quite similar in discipline.” — Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin

Many understand yoga to be, in itself, one type of meditation, but yoga actually encompasses a group of physical, mental and spiritual practices. Each is a discipline. Some forms of yoga focus on movement and breathing, others focus on posture and technique. Some yoga is meant to relax the mind and create a sense of calmness; other yoga types make participants sweat.

After having her second child and working full-time, Balan wanted to find something physical and relaxing for herself; a friend suggested yoga. During her first lesson, Balan said she was enamored with it.

“I felt like I’d done it all my life.”

She dove into the philosophy of yoga, adopting the practice into her daily routine. Every morning, whether Balan is in her Long Island home or on a business trip, she pulls out her yoga mat to practice.

“I always travel with my mat,” she said. “Daily practice is the simplest form of connection to routine to maintain my balance — physically and mentally.”

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She said the strangest place she has ever practiced was in Lisbon. She was on a very narrow balcony with a bird feeder swarming with sparrows overhead.

After years of studying and practicing, Balan is considered a yogi — someone who is highly proficient in yoga. She attends annual retreats with her yoga group, where she is able to rejuvenate, ready to tackle any K&R event when she returns.

In 2016, Balan visited Tuscany, Italy, where she learned the practice of yoga nidra, a very deep form of meditation. It’s described as the “going-to-sleep stage” — a type of yoga that brings participants to a state of consciousness between waking and sleeping.

“It awakens a different part of your brain,” Balan commented. “Orally describing it doesn’t quite do it justice. One has to practice Nidra to fully understand the effect it has on your being.”

Keeping a level head during a crisis is key in their line of business, Tucker said. He can attest to the benefit of having a yogi on board.

“I’ve seen her run table-top exercises where there is this group of people in a room and they run an exercise, a simulation of a kidnap incident. Denise is very committed to what we’re doing,” said Tucker.

“She brings that energy. She doesn’t get flustered by much.”

Building a K&R Program

When Balan joined XL Catlin, she was tasked with creating the K&R team.

Balan during a retreat in Sicily, Italy, 2017

She spent time researching and analyzing what clients would want in their K&R coverage. What stuck out most to Balan was the fact that, in these situations, the decision to purchase kidnap and ransom cover is rarely made because of desire for reimbursement of money.

“I asked why people buy this type of coverage. The answer was for the security responders,” she said.

“These are the people who sit with the family. They’re similar to psychologists or priests,” Balan further explained. “Corporations can afford to pay ransom. They buy [K&R] because it gives them access to these trained and dedicated professionals who not only provide negotiation advice, but actually sit with a victim’s family, engaging deep levels of emotional investment.”

“I’ve learned to appreciate all moments in life — one at a time. The ability to think clearly and calmly guides my work, my practice and my personal life.” — Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin

Balan described these responders as people having total clarity of purpose, setting their intentions to resolve a crisis — a practice at the very heart of yoga. She knew XL Catlin’s new kidnap program would put stock in their responders.

“I’ve worked closely with the responders to better understand what they can do for our clientele. These are the people who run into danger — warrior hearts married to dedication to our clients’ best interests.”

But K&R is more than fast-paced crisis and quick thinking; Balan also spent a good deal of time writing the K&R form and getting the company’s resources in order. This was a huge task to tackle when creating the program from the ground up.

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“A lot of my day-to-day is speaking with brokers and finding ways to enhance our product,” she said.

After a few months, she was able to hire the company’s first K&R underwriter. From there, the program has grown. It’s left her feeling professionally rewarded.

“People don’t often get that opportunity to build something up from scratch,” she said. “It’s been an amazing experience — rewarding and fun.”

“She brings groups of people together,” said Tucker. “She’s created a positive environment.”

Balan’s yogi nature extends beyond the office walls, too. Her pride and joy, she said, are her kids. And while it may seem like two large parts of her life are opposite in nature, Balan’s achieved balance through her passions.

“[Yoga] has given me the ability to see beyond only one aspect of any situation” she said. “I’ve learned to appreciate all moments in life — one at a time. The ability to think clearly and calmly guides my work, my practice and my personal life.” &

Autumn Heisler is a staff writer at Risk & Insurance. She can be reached at [email protected]