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Council on Workers' Compensation
March 10 , 2015
Mr. Beiriger, Ms.
Bloomingdale, Mr. Buchen, Mr. Ginsburg, Ms. Johnson, Mr. Kent, Mr. Metcalf,
Mr. Redman, Mr. Schwanda, Ms. Seiler, and Ms. Thomas
Staff present: Mr. Aiello, Ms. Arnold, Mr. Ezalarab, Mr. Krueger, Mr. Moreth and Mr. O'Malley
Mr. Brand and Ms. Nugent
- Call to Order/Introductions:
Mr. Metcalf convened the
Worker's Compensation Advisory Council (WCAC) meeting at approximately 10:00
a.m. in accordance with Wisconsin's open meetings law.
WCAC members, staff and members of the audience introduced
- Approval of minutes: Mr. Kent moved to approve the minutes
of the February 10. 2015 meeting. Mr Berriger seconded the motion. The
minutes were unanimously approved without correction.
- David Anderson, DWD Assistant Deputy Secretary:
Mr. Anderson has served as the
Department of Workforce Development (DWD) Assistant Deputy Secretary for
over one (1) year. He appeared at the meeting to respond to questions
concerning the resolution approved by the Council at the last meeting.
stated that DWD has been in preliminary meetings with the Office of the
Commissioner of Insurance (OCI) and the Division of Hearings and Appeals
(DHA), about the proposed transfer of the Worker's Compensation Division
(WCD) with a focus on the budget language. He stressed that DWD Secretary
Newson has been given assurances by OCI that the quality and effectiveness
of the WC program will be maintained with the transfer of the program, if
the budget bill is passed and signed into law. In addition, Mr. Anderson
said it was premature to discuss what the transfer will involve since the
legislation has not yet been passed.
Ms. Bloomingdale inquired about whether there will be careful
planning for the proposed transition. Mr. Anderson stated a good foundation
has been laid for the transition, and that it will be robust, and as smooth
and effective as possible.
The members asked Mr. Anderson about the language used in the
Budget Bill related to the proposed transfer and the need for the current
high level of services to be maintained for stakeholders, including business
and workers. Mr. Anderson agreed and stated this is why the transition
process is important.
There was also a discussion about the effect on the hearing process
when the administrative law judges are transferred to DHA. The DHA tends to
separate its ALJs into different units, based on an area of specialty. BJ
Dernbach, DWD Legislative Liasion, will look into other states where the
administration of the worker's compensation program is located in more than
one (1) agency, and study the effectiveness of these states.
Mr. Anderson emphasized that DWD
Secretary Newson gives his assurance that the quality and effectiveness of
the Wisconsin worker's compensation program will not change with the
proposed transfer. Mr Kent commented on drafting issues in the Budget Bill.
Mr. Buchen stated there was no intention to make substantial changes to the
statute in the Budget Bill. Mr. Kent stated that it is important to make
sure that the employer, employee and insurer sides will be protected.
Mr. O'Malley reviewed a February 10, 2015, letter from Tracey Schwalbe,
General Counsel, Labor and Industry Review Commission, concerning the
following proposed statutory changes: 1. Amend s.102.23 (1), Wis. Stats., to
require the "adverse parties" to a court appeal be correctly named so that
all necessary parties are included in the appeal; 2. Amend s. 102.18 (3),
Wis. Stats., to clearly define the standard of review "reason beyond
control" for late appeals of ALJ orders to LIRC; and 3, Amend s. 102.18 (4),
Wis. Stats., to clarify that appeals to circuit court from LIRC orders run
from the date of LIRC's decision. A fourth proposal to require appeals from
ALJ orders to only be filed with LIRC has been withdrawn.
- Drug Pricing: Mr. Trygve Anderson, R. Ph., Clinical Executive, Elsevier, gave a
presentation about drug pricing accompanied by a PowerPoint entitled
Taking the Mystery Out of Drug Pricing.
Drug pricing is a complex and dynamic issue. Elsevier is a compendia with
commercial workers' compensation experience in Florida.
Wholesale acquisition cost (WAC) is the cost of the sale from the
drug manufacturing company to the wholesaler. Drug manufacturers do not do much
distribution. The cost of the sale of drugs from wholesalers to the pharmacies
is the average wholesale price (AWP). The AWP is similar to the MSRP for
automobile sales. AWP was the staple in drug reimbursement agreements for over
40 years, except for multi-source drugs. In 2009 there were lawsuits that
resulted in using other means to determine drug prices other than AWP and Hearst
ceasing to publish the Blue Book. This has resulted in development of the
acquisition model and use of the acquisition cost. Dispensing fees are for the
professional judgment of pharmacists in dispensing drugs. Dispensing fees are
usually in the $1.00 to $3.00 range.
In the past pharmaceutical manufacturing companies send out
information on wholesale prices one-two times per year and usually in early
July. Now new drug pricing information is sent out throughout the year including
Elsevier is a drug pricing leader where the public can view prices.
Pricing benchmarks include AWP, state MAC pricing, federal upper limit (FUL),
PAC, WAC and National Available Prescription Drug Program (NADAC) that is used
by CMS. Elsevier's competitors are Medispan and First Data Bank. Drug prices go
out by e-mail and are available the same day the drug companies release the
information. Prices are reported from all manufacturers and the receipt of price
data simultaneous with other drug compendia for each capsule, per pill or
billing unit. Updates can occur during weekends and holidays. There are rebates
and negotiated payments in the pharmacy distribution system.
Elsevier developed predictive acquisition cost (PAC) for
determining the costs of drugs. The analytics model reviews industry MAC
benchmarks, published price lists, existing pricing benchmarks, behavioral
metrics, supply/demand measures and survey-based acquisition costs. PAC
estimates the drug acquisition cost for a typical independent pharmacy in a
transparent and defensible way. PAC is more closely aligned with true drug
acquisition cost than any other available drug price benchmark.
The challenges associated with setting appropriate drug
reimbursement pricing include lack of transparency into acquisition cost,
movement of price in generics, many drugs to monitor and difficult to contain
outliers. About 84% of all drugs that are used are generic while accounting for
about 20% of the total cost for drugs. There is a generic drug "cliff" coming
because most products have already come to market and there will be fewer
generic drugs entering the generic status in the future.
Mr. Anderson stated that the PAC is better to use for determining
drug costs because an elevated drug price benchmark increases reimbursement
rates and costs for payers. A reduced drug price benchmark decreases profits for
PBMs and retail pharmacies. The only way to accurately monitor and equitably set
drug reimbursements and prices is with insight to true acquisition costs.
Increasing demand for transparency requires a better solution. Some companies do
not provide prices on some types of drugs. Although AWP continues to be commonly
used, it is not a true representation of market prices for either generic or
name brand drugs. Survey based pricing can only determine acquisition cost for
the drugs that appear on the invoices surveyed. Elsevier does not use data from
other countries in its analytics model. He noted that Walgreens, CVS, and Rite
Aid are the three largest retail pharmacy companies in the country.
Initial pricing adjustments create a better balance for
reimbursements for drugs. As an example, Mr. Anderson cited a worker's
compensation provider in Tampa, Florida raised the price of 148 drugs, reduced
the price for 482 and 272 remained unchanged. The number of network complaints
decreased for 120 to 25, 75% reduction.
Mr. O'Malley inquired about whether Elsevier can establish accurate
pricing for repackaged and compounded drugs. Mr. Anderson stated that prices for
repackaged drugs are available but not for compounded drugs.
Mr. Kent inquired about pricing for experimental drugs. Mr.
Anderson responded there are three (3) types of experimental drugs.
Investigational new drugs are specialty drugs for rare conditions, have not gone
through trials and are not approved by the FDA. Bio-similar drugs are new drugs
that will be allowed by the FDA with an Orange Book rating. Orphan drugs are
required to be made by law for one in 10,000 or one in 100,000 who get certain
- Administrative Rules:
Mr. O'Malley advised the members that the proposed
amendments to DWD 80 of the Wisconsin Administrative Code covering the
audio recording of hearings, and other housekeeping/ procedural changes,
are now going forward. A public hearing on the proposed rules is
tentatively scheduled on April 28, 2015.
- Other Council Business: . There was no other council business.
Mr. Beiriger moved to go into closed caucus, and to
subsequently adjourn from caucus. Ms. Bloomingdale seconded the motion. The
motion was approved unanimously and the members of the Council went to their
separate caucuses at 11:15 a.m.
All members of the Council will not be available on
April 14, 2015, the date of the next scheduled meeting. April 27, 2015 and
May 28, 2015 were set as future meeting dates, when the members would be
available. These two meeting
dates are in lieu of the previously scheduled meeting dates of April 14th
and May 12th. At approximately 1:45
p.m., the meeting was adjourned.