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Tag: 2016 News

L.A. Jury Convicts Physician for Illegal Drug Prescritions

The Los Angeles County District Attorney’s Office announced. that a Rancho Palos Verdes physician charged with illegally prescribing drugs to undercover operatives was convicted,

The downtown Los Angeles jury deliberated about two hours before finding Dr. Richard Seongjun Kim, 44, guilty of 17 felony counts of unlawfully prescribing controlled substances without a legitimate medical need to undercover operatives working with the Drug Enforcement Administration. Kim was a 1998 graduate of the University of Alabama School of Medicine. His prescription rights have been suspended by court order since July 15, 2015.

Deputy District Attorney Emily Street of the Major Narcotics Division, who prosecuted the case, said Kim would ask the operatives to bring in prior medical charts and X-rays to justify the prescribing.

On one occasion, an operative brought in a chest X-ray of a dog, including its tail, that was used to justify his prescriptions, prosecutors said.

Over the course of three months in 2014, Kim wrote prescriptions for Norco, Xanax, Soma and Adderall without ever conducting a physical exam, taking any vital signs or completing any medical charts at his clinic on Western Avenue in Rancho Palos Verdes, prosecutors said.

Defense attorney Steve Meister said he was disappointed by the verdict and planned to argue to keep Kim out of jail. “My client has always been a caring and competent physician,” Meister said. “While the jury may have concluded that he unlawfully prescribed, custody in this case would be wholly unreasonable.”

The case against the general practitioner was investigated by the Drug Enforcement Administration, whose operatives posed as patients at Kim’s Western Avenue clinic over the course of three months in 2014. Deputy Dist. Atty. Emily Street, the prosecutor who handled the case, said that Kim asked patients to bring in previous charts and X-rays to the sham medical exams. “He wanted a lot of records – not because he was interested in patients’ ailments, but he wanted to cover himself,” Street said.

His office had no staff and he typically exchanged text messages with patients to arrange appointments. He didn’t accept insurance – only cash or credit cards, the prosecutor said. “He would open up his office and lock the door behind him, and meet with the patient in his office,” Street said.

Without examining patients or writing out medical charts, he issued prescriptions for Norco, Xanax, Adderall and Soma, prosecutors said. During appointments, Kim sat behind a desk and engaged in mostly small talk, Deputy Dist. Atty. John Niedermann said in an earlier interview with The Times.

The undercover appointments were recorded by hidden cameras, and the video footage was shown to jurors. “It was all on video, which was really the crux of the case,” Street said. “There was no exam whatsoever – no vitals, very little history, if any, taken. It was not much of anything resembling the practice of medicine.”

He faces up to 13 years, four months in local custody when he returns on Sept. 30 for sentencing in Department 71 at the Foltz Criminal Justice Center. He had been free on $100,000 bail during his trial, but was immediately remanded after the verdict was read.

Congressional Committee Blasts Drugmaker CEO

Members on both sides of the aisle were not buying Mylan Pharmaceuticals CEO Heather Bresch’s defense during a House Committee on Oversight and Government Reform hearing Wednesday according to the story published in the Daily Caller.

Her company’s move to increase the cost of EpiPens by more than 400 percent since 2007 has raised the ire of the entire country.

“I know there is considerable concern and skepticism about the pricing,” she told the panel. “I think many people incorrectly assume we make $600 off each EpiPen. This is simply not true.”

Bresch, the daughter of Democratic West Virginia Sen. Joe Manchin, said the company makes roughly $50 off each of the life-saving allergy shots and adamantly denied her mother, Gayle Manchin’s position on the National Association of State Boards of Education was used to boost sales.

Ranking Member Elijah Cumming, a Maryland Democrat, blasted Bresch’s prepared testimony, saying he was “not impressed” and believes it’s wrong to get “filthy rich” by exploiting the company’s monopoly on the market.

“They use the simple, but corrupt business model that other drug companies have repeatedly used: find an older, cheap drug that has virtually no competition, and then raise the price over and over and over again,” he said.

The embattled CEO argued she didn’t anticipate the financial burdens patients would face due the the sharp rise in costs, adding the company plans to put out a generic version at half the cost.

“You never anticipated this? You raised the price, what did you think was going to happen?” Questioned Chairman Jason Chaffetz, a Utah Republican.

While Bresch maintained the drug is not as profitable as members might believe, she increased her salary by a whopping 671 percent over the course of eight years – racking in a whopping $18,931,068 in 2015.

“I’m a very conservative pro-business Republican, but I am sickened by what I have heard today,” Tennessee Republican Rep. John Duncan said, adding he is disgusted she was profiting “on the backs of sick children.”

Democratic Rep. Bonnie Coleman of New Jersey slammed Bresch for flying to the hearing on a private jet and the company’s decision to move its headquarters overseas to lower its tax rates. “This is a sham and a shell, and it’s really sad to hear this,” Coleman told the CEO.

The EpiPen, an auto-injector used to reverse life-threatening allergic reactions, is inextricably tied to Bresch, whose ascension at the company tracks with the product’s rapid growth. Bresch first adopted EpiPen in 2007, when Mylan purchased the generic drugs division of Germany’s Merck KGaA for $6.7 billion. It was a milestone for the growing company, and then-CEO Robert Coury appointed Bresch to sort out the integration.

It was unremarkable in business terms: a plastic device that, with the push of a button, injected what Bloomberg has estimated to be about a dollar’s worth of the generic hormone epinephrine to treat deadly anaphylactic shock.

It sold for about $57 back then and made just $200 million a year for Merck KGaA, accounting for less than 5 percent of the company’s generics revenue at the time. The price was increased about 400% to about $600 after the acquisition.

Big Pharma Growth Slows in Foreign Markets

Emerging markets have lost their luster for Big Pharma making drug firms ever more dependent on the United States for growth just as American anger over high medicine prices is building.

A few years ago, the developing world was seen as a savior as patent after patent expired across the United States and Europe, but a report in Reuters Health says that emerging market sales growth at the top drug firms slowed to less than two percent in the latest quarter.

Forecasts from independent experts IMS Health now suggest the United States will account for 55 percent of sales growth between 2016 and 2020, with emerging markets only contributing 30 percent.

The slowdown in China and other top emerging markets is being driven by a number of factors: government pressure on drug prices, slowing economies and in some cases significant currency devaluations.

But the end result is that prescriptions for Americans will fund an even greater slice of the $1 trillion-a-year pharmaceuticals industry.

Company executives insist markets from China to Colombia to Mexico to Myanmar are an important engine of long-term growth, given rising populations, increasing wealth, and the global march of diabetes, heart disease and cancer.

But the short-term picture is not pretty. Emerging market growth is the slowest since drug companies started breaking out such regional sales numbers about seven years ago, with GSK languishing at the bottom of the class.

GSK’s drug sales in China fell 14 percent in the three months to the end of June as the company continued to reshape its business following a damaging corruption scandal in 2013, leaving a question mark over whether it can return to growth this year as hoped.

Others are doing better in China, which is now the world’s second biggest drugs market behind the United States, but all are struggling with slowing sales growth, which slipped to its lowest rate since 2008 in July.

“Across the board, we are seeing emerging markets register lower growth in local currency and in many cases there have also been big currency devaluations,” said Murray Aitken, IMS Health senior vice president and executive director.

By comparison, the United States offers rich pickings at the moment thanks to hugely profitable new drugs for diseases such as cancer and hepatitis C.

Many companies’ sales in developing economies come from so-called branded generics, or off-patent medicines that command a premium to those made by local suppliers because the Western drugmaker’s name is a proxy for quality.

That business is now under threat as governments promote cheaper unbranded products as a route to universal healthcare.

One sign of the tougher times is the relative dearth of acquisitions in emerging markets by international players after a slew of multibillion-dollar deals between 2008 and 2011.

FDA Agents Claim Mismanagement Supports High Drug Prices

A U.S. congressional committee has launched an examination of the Food and Drug Administration’s criminal office, raising questions about the unit’s management and handling of cases involving food, drugs and devices.

According to the story reported by Reuters Health, the House Energy and Commerce Committee told FDA Commissioner Robert Califf it is “examining management concerns” and “possible morale concerns with the field offices” of the Office of Criminal Investigations. The September 20 letter, signed by committee chairman Fred Upton and Tim Murphy, chairman of the Subcommittee on Oversight and Investigations, seeks answers to a detailed list of questions by October 12.

An FDA spokeswoman said the agency received the letter and will respond to the committee directly.

The House questions come two weeks after Reuters reported how some FDA agents complain criminal office managers have forced them to pursue cases involving mislabeled foreign-imported injectable drugs, at the expense of cases with more potential to protect the public health.

Current and former agents complain they have turned into the “Botox Police,” spending thousands of hours chasing doctors who purchased authentic versions of Allergan’s anti-wrinkle drug that were labeled for use in other countries.

Some agents say their efforts have done little more than protect the pharmaceutical industry’s high drug prices in the United States.

Those concerns come as the criminal office has had mixed success in bringing cases. From fiscal year 2008-2015, Reuters found, more than half of all opened OCI cases were closed without action.

The House committee asked Califf to explain the process for how criminal cases get opened, and to provide statistics on OCI’s arrests, convictions, case initiations and amount of money recovered.

The House committee letter also questions how the FDA responded to two prior reports, from the Government Accountability Office and the Health and Human Services Office of the Inspector General, that were critical of the criminal office.

The 2012 OIG report cited problems with how the Rockville-based office is run and concluded that field offices “lack the discretion” to open cases to address “food and drug concerns prevalent in their locales.”

The report cited a lack of independence within the FDA’s criminal office. OCI is housed within the Office of Regulatory Affairs, which is responsible for compliance inspections and helps determine the criminal office’s budget. The inspector general recommended structural changes to “ensure the independence of investigations.”

FDA leadership at that time rejected those suggestions.

The criminal office headquarters controls the opening of investigations. Some agents have questioned the office’s priorities and say they have, on occasion, been told not to open cases involving other federal agencies.

A September 2015 email from Robert West, the recently retired Special Agent in Charge of the Miami field office, is one example. West, in the email, contended agencies including the FBI, the HHS OIG and Homeland Security investigators “were riding our coattails and were not bringing anything to the table.” Involving those agencies in an investigation from day one, he wrote, “is unacceptable.”

Final L.A. Health Care Multi-Million Dollar Fraud Defendant Sentenced

With the final defendant receiving a prison term this week, six defendants who participated in a multi-million dollar health care fraud scheme or helped launder the illicit proceeds have now been sentenced to federal prison.

Edgar Pogosian, also known as “Edgar Hakobyan,” 32, of Glendale, was sentenced to 18 months in prison. Pogosian was found guilty earlier this year of conspiring to commit money laundering and one count of money laundering.

“Over the course of nearly seven years, this defendant engaged in a wide-ranging money laundering conspiracy in which he received 150 checks and personally laundered over $700,000 in health care fraud proceeds,” said United States Attorney Eileen M. Decker. “All of the defendants in this case played a vital role in a scheme that bilked the taxpayers who finance Medicare and utilized sophisticated money laundering techniques to hide their crimes.”

Over the past month, United States District Judge Philip S. Gutierrez sentenced two other defendants involved in the scheme:

Karen “Gary” Sarkissian, 44, also of Glendale was sentenced on September 12 to 57 months in federal prison after the same jury that convicted Pogosian found him guilty of conspiring to commit money laundering, six counts of money laundering and five counts of health care fraud; and

L’Tanya Smith, 58, of Ladera Heights, was sentenced on August 22 to 57 months imprisonment after she pleaded guilty to five counts of health care fraud.

Pogosian and Sarkissian were found guilty in February by a federal jury following a four-week trial before Judge Gutierrez. Smith pleaded guilty on the eve of trial.

Sarkissian operated a clinic on Sunset Boulevard in Echo Park and worked there with Smith, a physician’s assistant. Between July 2009 and March 2010, Smith prescribed or ordered medically unnecessary tests and services, some of which were never provided to the patients. Those prescriptions and orders led to more than $1.2 million in fraudulent claims to Medicare from the Sunset clinic. Other providers that received referrals from the Sunset clinic submitted another $10 million in fraudulent claims to Medicare.

Sarkissian also participated in a scheme that laundered the fraudulent proceeds generated through the Sunset Clinic through five bogus corporations set up by two other men, Khachatour Hakobyan (Pogosian’s uncle) and Aram Aramyan, who were previously convicted and sentenced in this case.

Hakobyan, 48, of Glendale, who prosecutors argued was the overall leader of the scheme, was sentenced in January 2016 to 57 months in prison and was ordered to pay $606,681 in restitution after he pleaded guilty to conspiring to launder health care fraud proceeds through the five sham corporations and underreporting his income from the conspiracy on his federal income tax returns. Aramyan, 60, of Glendale, was sentenced in November 2015 to 51 months in prison on similar charges and was ordered to pay $353,669 in restitution.

Hakobyan and Aramyan deposited millions of dollars in fraudulent proceeds into bank accounts for the five sham companies and then wrote checks from these corporations to themselves and their relatives, including Pogosian, who was found guilty based on evidence that he received more than $700,000 in checks from the sham corporations that he either cashed or deposited in his own bank accounts.

With these most recent sentences, six defendants have now been sentenced in relation to a health care fraud scheme related to multiple medical clinics, a durable medical equipment supplier and an independent diagnostic testing facility.

The sixth defendant, a doctor associated with one of those clinics – Claude R. Cahen, 74, of Santa Monica – pleaded guilty to conspiring to commit health care fraud and was sentenced to 12 months and one day of imprisonment in March 2016.

Applicant Attorney Faces State Bar Suspension

Former San Diego Chargers great Ron Mix, a member of the Pro Football Hall of Fame, pleaded guilty in federal court in Missouri to a tax fraud charge stemming from his post-football career as a California workers compensation lawyer.

Mix has been a successful workers compensation lawyers since his retirement from the game. Many of his clients are former professional athletes who made claims for injuries suffered during their playing days, usually years after their careers ended. Mix filed about 300 such cases in the final month before the law changed in late 2013, according to news reports at the time. But this federal criminal case was prosecuted in Kansas City because some of the clients referred to Mix lived in the Western District of Missouri. None of their names was released.

According to the plea agreement filed in federal court attorney Mix admitted the following, “Between October 18, 2010 and December 16, 2013 in the Western District of Missouri and elsewhere, the defendant, RONALD JACK MIX (“MIX”), doing business as the LAW OFFICES OF RON MIX, entered into an arrangement whereby INDIVIDUAL F, who is not an attorney, would refer professional athletes to MIX and the LAW OFFICES OF RON MIX, so that defendant, MIX, could file workers’ compensation claims in the state of California on behalf of these former professional athletes. MIX then agreed to make donations to a charity as directed by INDIVIDUAL F. The charity was THE SIXTH MAN FOUNDATION d/b/a PROJECT CONTACT AFRICA (“PCA”), a federally-registered tax exempt 501(c)(3) charity. The individuals referred were in need of the services provided by MIX, he was well-qualified to perform these services, and he properly performed the services to the individuals who were referred.”

“MIX admits that he wrote checks out of his personal bank account and his law firm’s bank account to the charity as directed by INDIVIDUAL F while the latter made referrals of potential workman’s compensation cases. These donative payments ranged anywhere from $5,000 to $25,000. Mix admits that some of the professional athletes referred to him by INDIVIDUAL F, resided in the Western District of Missouri, so that he could file workers’ compensation claims in the state of California on their behalf, which was a proper venue under California law.”

“MIX admits that from 2010 through 2013, he made approximately $155,000 in donations for client referrals.”

“MIX also admits that the payments to PCA were listed as “charitable contributions” on his Form 1040s, U.S. Individual Income Tax Returns, for calendar years 2010, 2011, 2012, and 2013.” However you cannot make a charitable contribution that is deductible when you get something back in return.

Jean Paul Bradshaw, Mix’s lawyer in Kansas City said Mix was told that the referrals would stop unless he donated more and more money to the charity. Prosecutors said that Mix’s donations ranged between $5,000 and $25,000.

The practice of paying a non-lawyer a fee for a referral is known as “capping,” and is illegal in California.

Mix’s guilty plea was reported to the State Bar Court on August 3, 2016.

This September the State Bar Court issued an interim suspension order that reads “Since respondent Ronald Jack Mix, State Bar Number 49663, has been convicted of violating title 26 United States Code section 7206(1) (filing a false income tax return), a felony that involves moral turpitude, it is ordered pursuant to Business and Professions Code section 6102 that respondent be suspended from the practice of law effective September 26, 2016, pending final disposition of this proceeding.”

He has not yet been sentenced in his federal criminal case.

United Nations Acts to Combat Antibiotic Overuse

The United Nations scheduled a pivotal meeting to combat antibacterial resistance during its General Assembly session, in a move that some are calling a “wakeup call” in the war against deadly infections that kill thousands of people a year.

The meeting in New York, is part of the week-long General Assembly, which convenes leaders from around the globe. It is the first high-level global meeting on antibiotic resistance and only the fourth time that the General Assembly has taken up a healthcare issue, with other meetings focusing on outbreaks such as Ebola.

“The disturbing truth is that the end of the antibiotic era is upon us in many parts of the world. But we are not too late,” said Michael Craig, senior adviser for antibiotic resistance coordination and strategy for the Centers for Disease Control and Prevention. “We need to continue to build on the momentum of our global commitment.”

Ahead of the United Nations General Assembly (UNGA) High-Level Meeting on Antimicrobial Resistance (AMR), 13 leading pharmaceutical companies today presented a new roadmap that lays out four key commitments they will deliver by 2020 to reduce AMR. The commitments follow the principles identified and agreed upon in the Industry Declaration made at the 2016 World Economic Forum in Davos earlier this year, and reflect the companies’ intent to continue to proactively contribute to the global efforts to address AMR. This unprecedented collaboration between the pharmaceutical companies marks a major milestone in the fight against AMR.

In presenting this roadmap, the signatory companies claim to demonstrate their shared ambition to overcome the staggering threat AMR represents for our society, economies, and citizens. The companies say they are committed to working to reduce the development of antimicrobial resistance, improve access to high-quality antibiotics, vaccines, and diagnostics, invest in R&D, and collaborate with governments and stakeholders to sustain those investments.

They hope to ensure antibiotics are used only by patients who need them, recognizing this requires concerted efforts from many stakeholders, through continued provider and patient education, an examination of the companies’ promotional activities, sharing of surveillance data with public health bodies and healthcare professionals, and collaboration with stakeholders to reduce uncontrolled antibiotic purchase;

Companies that have signed up to the scheme include leaders in both branded and generic drug production, including Pfizer, Merck, Novartis, GlaxoSmithKline and Allergan, as well as Indian drugmakers Cipla and Wockhardt.

Johan S. Bakken MD, PhD, FIDSA, President, Infectious Diseases Society of America, said: “Infectious diseases (ID) physicians see firsthand the devastating impact of antimicrobial resistance on our patients and public health. We are out of treatment options for increasing numbers of patients. IDSA welcomes the commitment of industry to address AMR and invest in the research and development of urgently needed new antimicrobial drugs, diagnostics and vaccines. Robust public private collaboration is essential for effective solutions to AMR.”

Though the problem of drug-resistant bacteria has been a feature of medicine since the discovery of penicillin in 1928, it has grown in recent years with the emergence of infections resistant to multiple drugs, such as MRSA.

So. Cal. Pain Medicine QME Arrested in Fraud Case

Detectives from the California Department of Insurance arrested Dr. Edward Albert G. Balbas, M.D., Chiropractor Jon Brunelle, D.C., and Alejandra Brunelle on felony insurance fraud charges for allegedly conspiring to submit more than 165 fraudulent bills to several health insurers totaling at least $380,000 over a three-year period.

According to department detectives, the three co-conspirators and owners of Corona Physical Medicine allegedly developed a scheme to mark up insurance reimbursement claims for laboratory tests in order to generate greater profits for themselves.

Evidence revealed the suspects paid Cell Science Systems, an out-of-state lab between $312 and $625 for the lab tests, but billed insurers $4,256 for the tests. The suspects were able to hide their alleged crime by claiming they processed and analyzed the blood tests through an in-house lab, so the insurers were unaware that the actual cost to process the lab tests was substantially lower.

Edward Albert G. Balbas is listed by the DWC as a QME in two specialities, Pain Medicine, and Physical Medicine and Rehabilitation. He is listed to perform QME evaluations in Corona, Irvine, Rancho Cucamonga, Colton and Indio. Board of Medicine records say he is a graduate of the University of Santo Tomas Faculty of Medicine in Sampaloc, Manila, Philippines. He has no prior disciplinary record on file with that agency.

“Patients should be able to trust that medical professionals are making medical decisions based on patient needs and conducting their practice ethically,” said Insurance Commissioner Dave Jones. “These defendants took extraordinary steps to hide their alleged crime and violate the trust of their patients and the medical profession.”

The suspects self-surrendered at the Riverside County Court and arranged for bail, which was set at $382,000 for each suspect. The department filed a 1275 PC bail hold, which places conditions on bail by requiring the defendants to prove funds used to secure bail does not come from their alleged illegal activity. The defendants were able to demonstrate bail funds were not from illegal activity. The defendants are scheduled to appear in court again on October 24, 2016.

Hospitals Continue Overuse of Antibiotics

Between 2006 and 2012, antibiotic use in hospitals in general did not change, and the use of a class of drugs tied most closely to antibiotic resistance actually increased, according to a new study published in the JAMA Internal Medicine and reported in Reuters Health.

“We believe the increases in the use of more powerful and ‘last resort’ antibiotics should prompt further exploration and, where indicated, actions to improve the use of these antibiotics,” said lead author James Baggs, of the U.S. Centers for Disease Control and Prevention in Atlanta.

“While the optimal level of antibiotic use or distribution of classes is not really known for every hospital, we know from other studies that inpatient prescribing of antibiotics for some infections is often inappropriate,” Baggs told Reuters Health by email.

The researchers reviewed adult and pediatric antibiotic use from 2006 to 2012 in 300 participating acute care hospitals. More than 34 million patients were discharged from these hospitals over the six-year period.

Over the whole period, 55 percent of patients left the hospital having taken at least one dose of an antibiotic. Overall, for every 1,000 days of hospitalization, 775 days included antibiotic therapy.

“In some cases, providers might be unaware of treatment guidelines,” Baggs said. “In others, infections are misdiagnosed, for example, a provider thinks a patient has an infection when they do not. We also know that in many cases for hospitalized patients, antibiotics are started before all of the clinical information is available.”

Although overall antibiotic use stayed level over time, use of third- and fourth-generation cephalosporins, macrolides, glycopeptides, carbapenems and tetracyclines increased significantly, as reported September 19 in JAMA Internal Medicine.

“In the hospital, where the sickest patients are, there’s been an increase in broad-spectrum antibiotics,” said Dr. Ateev Mehrotra of Harvard Medical School, who coauthored a commentary in the journal.

Broad-spectrum antibiotics act against a wide variety of bacteria. “Those are the big guns, and with increased use of them the worry is that that’s leading to the bacteria that’s broadly resistant,” Mehrotra said.

Antibiotic overuse has been a problem for decades, Mehrotra told Reuters Health by phone.

“We don’t believe the reason broad spectrum antibiotics are overused is that physicians aren’t educated,” he said. “Doctors are human, they’re worried, they’re behind, they’re concerned about what the patient wants.”

“What we’re proposing is that the strategies to address this should come from a psychological perspective,” and should target doctors who give out the most antibiotics, he said. If social pressure leads to overprescribing, maybe it can also curb prescribing rates.

“Send them an email or letter saying, you’re not a top performer, why is that,” Mehrotra said.

Antibiotic use guidelines are already in place and don’t need to be changed, he said.

WCIRB Study Shows Decline in Drug Spending

Despite a decline since 2013, pharmaceutical costs for California workers’ compensation indemnity claims at six months post injury increased by 217% over a ten-year period from 2005 through 2014. For claims lasting ten years or more, drugs account for 37% of all medical costs, contributing to California’s rank as the state with the longest durations for workers’ compensation claims in the nation.2

Although many factors have contributed to the long-term escalation of workers’ compensation drug costs, there are concerns in California as well as in other states about the possible impact of physician drug dispensing. This concern stems from a potential incentive for physicians, some of whom have purchased drugs wholesale, to dispense drugs to injured workers and then charge for those drugs on a retail basis.

A 2006 study by the Commission on Health and Safety and Workers’ Compensation revealed that 50% of all drug payments were made to physicians dispensing repackaged drugs resulting in $223 million in additional costs to workers’ compensation payers. This practice involved prescribing repackaged drugs at higher costs than the same drugs available at pharmacies.

Given that a 2002 Appellate Court Case in San Diego upheld physicians’ right to dispense drugs, the California Division of Workers’ Compensation addressed this issue in March 2007 through an administrative regulation which equalized payment levels for repackaged physician-dispensed drugs and drugs dispensed by pharmacies. This change appeared to reduce physician dispensing for some drugs while opening the door for dispensing of compounds not covered by the California Medi-Cal-based pharmacy fee schedule applicable to pharmaceuticals in the California system.

To update the situation, the WCIRB has released a new report entitled Patterns of Drug Dispensing in California Workers Compensation, which analyzed $500 million in workers’ compensation pharmaceutical payments from July 2012 through December 2015. WCIRB researchers used reported medical payment data representing more than 90% of the California workers’ compensation insurance market.

This study shows that the share of pharmacy payments directly to dispensing physicians dropped by 20% over the 42-month period. Given that the unit amounts paid to physicians remained at consistent levels during this period, the reduction in providers’ share of overall drug payments was driven by a lower number of prescriptions or utilization.

This decline in payments made to dispensing physicians occurred across all major types of drugs and was especially apparent for opiate analgesics, the most prominent type of workers’ compensation drug. For base substances used for compound drugs, the share paid directly to physician dispensers decreased by approximately 50%.

Despite the overall drop in payment shares, physicians received higher per transaction reimbursements for specific drugs, including some opiate analgesics and stomach discomfort medications. In addition, provider physicians generally dispensed the most expensive drugs within these categories, although lower cost therapeutic equivalents were often available in pharmacies.

These results help explain WCIRB findings showing a 28% reduction in drug spending per claim from the second half of 2012 through the second half of 2015. This trend may be attributed to many factors, including the introduction of Independent Medical Review and the greater attention across the country as to the potential overuse of opiates. This study suggests that the reduction in drug payments to physician dispensers may be another underlying factor in the overall decline in drug costs per claim over the last several years.