Pharmacy Cost Control

State Drug Monitoring Programs Not Fully Utilized

With access to PDMP data, pharmacy benefit managers could be an important ally in the fight against opioid addiction.
By: | May 2, 2017 • 4 min read

Among the most powerful tools in America’s fight against opioid abuse are state-run Prescription Drug Monitoring Programs (PDMPs). In 49 out of 50 states, PDMPs mandate reporting of the prescription and dispensation of opioids and other controlled medications by physicians and pharmacists, who are then able to consult that data.

G. Caleb Alexander, MD, FACP, oo-director, Center for Drug Safety and Effectiveness, Johns Hopkins Bloomberg School of Public Health

Unfortunately, PDMP data is largely inaccessible to Pharmacy Benefit Managers (PBMs), who should be well-positioned to detect, prevent, and intervene in high-risk opioid prescription situations.

This centralized, comprehensive data can be enormously valuable in detecting patterns that could indicate actual or potential addiction issues, including polypharmacy (multiple opioid prescriptions); multiple prescribers or payers; excessive dosages and dangerous interactions.

Having multiple prescriptions or failing to take a prescribed mediation may be an innocent mistake. But those instances can also indicate efforts to game the system, such as “doctor shopping.” Either way, detecting high-risk patterns and responding quickly is essential to patient outcomes and to reducing excess drug costs and addiction treatment costs.

A 2015 study released by Johns Hopkins University’s Bloomberg School of Public Health, “The Prescription Opioid Epidemic: An Evidence-Based Approach,” advocates granting PBMs access to PDMP data — with proper patient privacy protections —citing PBM’s prescription claims surveillance, prescriber intervention programs, and claims review software algorithms.

Describing the proven effectiveness of prescriber letters from PBMs, as well as prior authorization, precertification, and maximum quantity limits per prescription, the report says, “These programs could be enhanced if the PBM has complete controlled substance claims history, including cash claims, through access to states’ PDMPs.”

“PBMs are uniquely able to help shape patient care in many ways that no other stakeholder has the capacity to do,” said G. Caleb Alexander, MD, FACP, Co-Director, Center for Drug Safety and Effectiveness at Johns Hopkins Bloomberg School of Public Health, the report’s co-editor.

“PBMs are uniquely able to help shape patient care in many ways that no other stakeholder has the capacity to do.” — G. Caleb Alexander, MD, FACP, Co-Director, Center for Drug Safety and Effectiveness at Johns Hopkins Bloomberg School of Public Health

“Our health care system is incredibly fragmented,” said Alexander. “[PDMPs] allow for comprehensive collection and organization of the totality of a patient’s controlled substance use … [enabling PBMs] to better design and deploy and evaluate a variety of different mechanisms or interventions.”

PBMs could also aggregate data across state lines, revealing patterns not apparent from individual state PDMP data. PBMs are not only equipped to monitor such data in real time, they are financially incentivized to do so.

“Our role is to ensure the safe use of medication and that they are being used effectively and cost-effectively,” said Patrick Gleason, Pharm.D, a signatory of the Johns Hopkins report and Senior Director of Health Outcomes at Prime Therapeutics, a PBM owned by 14 not-for-profit Blue Cross and Blue Shield health plans, subsidiaries or affiliates.

“If the unsafe use of medication is leading to health care costs and harm for our members, we want to do everything we can to ensure that doesn’t happen. … First and foremost it’s about safety, and unsafe use of medications leads to higher cost.”

Debate Over Access

Some have voiced concerns about PBM access to PDMP data, even among those who advocate for it. In addition to patient privacy concerns, there are questions about PBM financial incentives, which Alexander calls, “horribly opaque.”

Patrick Gleason, senior director of health outcomes, Prime Therapeutics

In lieu of access to PDMP data, some PBMs have established structural relationships with dispensing pharmacists.

“We partnered with a workers’ comp dedicated pharmacy for those high-risk patients … where there’s a lot of opioid exposure,” explained Mike Cirillo, Managing Director at Specialty Solutions Rx, a PBM specializing in workers’ comp.

“We actually route the patient into that pharmacy, [who then does] the PDMP look up. They can do an outreach to the patient and to the physician to talk about medications.”

According to Cirillo, “three to five percent of the opioid prescriptions that come in get a polypharmacy hit on the PDMP.”

Prime Therapeutics is pursuing a similar strategy.

“We have a validated, controlled substance scoring system and we’re developing a process to send the individuals that are scoring the highest to Walgreens, to have Walgreens’ pharmacists look those people up in the PDMP and provide more consultative services at the point of care,” said Gleason, emphasizing that the PBM itself will not be looking into the PDMP.

While there is currently no concerted effort to gain PBM access to PDMP data, according to Corey Davis, Deputy Director, Southeastern Region Network for Public Health Law, there are some encouraging trends among PDMPs.

“It’s becoming more standardized, so states are kind of all moving in the same direction of collecting more data, more drug schedules, and requiring that the data be uploaded more often.” &

Jon McGoran is a novelist and magazine editor based outside of Philadelphia. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Cyber Liability

Fresh Worries for Boards of Directors

New cyber security regulations increase exposure for directors and officers at financial institutions.
By: | June 1, 2017 • 6 min read

Boards of directors could face a fresh wave of directors and officers (D&O) claims following the introduction of tough new cybersecurity rules for financial institutions by The New York State Department of Financial Services (DFS).

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Prompted by recent high profile cyber attacks on JPMorgan Chase, Sony, Target, and others, the state regulations are the first of their kind and went into effect on March 1.

The new rules require banks, insurers and other financial institutions to establish an enterprise-wide cybersecurity program and adopt a written policy that must be reviewed by the board and approved by a senior officer annually.

The regulation also requires the more than 3,000 financial services firms operating in the state to appoint a chief information security officer to oversee the program, to report possible breaches within 72 hours, and to ensure that third-party vendors meet the new standards.

Companies will have until September 1 to comply with most of the new requirements, and beginning February 15, 2018, they will have to submit an annual certification of compliance.

The responsibility for cybersecurity will now fall squarely on the board and senior management actively overseeing the entity’s overall program. Some experts fear that the D&O insurance market is far from prepared to absorb this risk.

“The new rules could raise compliance risks for financial institutions and, in turn, premiums and loss potential for D&O insurance underwriters,” warned Fitch Ratings in a statement. “If management and directors of financial institutions that experience future cyber incidents are subsequently found to be noncompliant with the New York regulations, then they will be more exposed to litigation that would be covered under professional liability policies.”

D&O Challenge

Judy Selby, managing director in BDO Consulting’s technology advisory services practice, said that while many directors and officers rely on a CISO to deal with cybersecurity, under the new rules the buck stops with the board.

“The common refrain I hear from directors and officers is ‘we have a great IT guy or CIO,’ and while it’s important to have them in place, as the board, they are ultimately responsible for cybersecurity oversight,” she said.

William Kelly, senior vice president, underwriting, Argo Pro

William Kelly, senior vice president, underwriting at Argo Pro, said that unknown cyber threats, untested policy language and developing case laws would all make it more difficult for the D&O market to respond accurately to any such new claims.

“Insurers will need to account for the increased exposures presented by these new regulations and charge appropriately for such added exposure,” he said.

Going forward, said Larry Hamilton, partner at Mayer Brown, D&O underwriters also need to scrutinize a company’s compliance with the regulations.

“To the extent that this risk was not adequately taken into account in the first place in the underwriting of in-force D&O policies, there could be unanticipated additional exposure for the D&O insurers,” he said.

Michelle Lopilato, Hub International’s director of cyber and technology solutions, added that some carriers may offer more coverage, while others may pull back.

“How the markets react will evolve as we see how involved the department becomes in investigating and fining financial institutions for noncompliance and its result on the balance sheet and dividends,” she said.

Christopher Keegan, senior managing director at Beecher Carlson, said that by setting a benchmark, the new rules would make it easier for claimants to make a case that the company had been negligent.

“If stock prices drop, then this makes it easier for class action lawyers to make their cases in D&O situations,” he said. “As a result, D&O carriers may see an uptick in cases against their insureds and an easier path for plaintiffs to show that the company did not meet its duty of care.”

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One area that regulators and plaintiffs might seize upon is the certification compliance requirement, according to Rob Yellen, executive vice president, D&O and fiduciary liability product leader, FINEX at Willis Towers Watson.

“A mere inaccuracy in a certification could result in criminal enforcement, in which case it would then become a boardroom issue,” he said.

A big grey area, however, said Shiraz Saeed, national practice leader for cyber risk at Starr Companies, is determining if a violation is a cyber or management liability issue in the first place.

“The complication arises when a company only has D&O coverage, but it doesn’t have a cyber policy and then they have to try and push all the claims down the D&O route, irrespective of their nature,” he said.

“Insurers, on their part, will need to account for the increased exposures presented by these new regulations and charge appropriately for such added exposure.” — William Kelly, senior vice president, underwriting, Argo Pro

Jim McCue, managing director at Aon’s financial services group, said many small and mid-size businesses may struggle to comply with the new rules in time.

“It’s going to be a steep learning curve and a lot of work in terms of preparedness and the implementation of a highly detailed cyber security program, risk assessment and response plan, all by September 2017,” he said.

The new regulation also has the potential to impact third parties including accounting, law, IT and even maintenance and repair firms who have access to a company’s information systems and personal data, said Keegan.

“That can include everyone from IT vendors to the people who maintain the building’s air conditioning,” he said.

New Models

Others have followed New York’s lead, with similar regulations being considered across federal, state and non-governmental regulators.

The National Association of Insurance Commissioners’ Cyber-security Taskforce has proposed an insurance data security model law that establishes exclusive standards for data security and investigation, and notification of a breach of data security for insurance providers.

Once enacted, each state would be free to adopt the new law, however, “our main concern is if regulators in different states start to adopt different standards from each other,” said Alex Hageli, director, personal lines policy at the Property Casualty Insurers Association of America.

“It would only serve to make compliance harder, increase the cost of burden on companies, and at the end of the day it doesn’t really help anybody.”

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Richard Morris, partner at law firm Herrick, Feinstein LLP, said companies need to review their current cybersecurity program with their chief technology officer or IT provider.

“Companies should assess whether their current technology budget is adequate and consider what investments will be required in 2017 to keep up with regulatory and market expectations,” he said. “They should also review and assess the adequacy of insurance policies with respect to coverages, deductibles and other limitations.”

Adam Hamm, former NAIC chair and MD of Protiviti’s risk and compliance practice, added: “With New York’s new cyber regulation, this is a sea change from where we were a couple of years ago and it’s soon going to become the new norm for regulating cyber security.” &

Alex Wright is a U.K.-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at [email protected]