Paduda: What is the Finish Recreation for Injured Employees Pharmacy?| Employees Compensation Information

By Joe Paduda

Tuesday, July 20, 2021 | 0

The Injured Worker Pharmacy has been a pain in the ass for labor cost payers for years. The company’s business model is based on getting prescribers and claimant lawyers to have their patients / clients receive their medication from IWP.

Joe Paduda

There are a number of potential problems with this, including:

• There is no way for the payer to prevent an inappropriate or even dangerous script.
• Clinical management can be severely affected.
• Prices can be much higher than a similar drug in a drug store.
• IWP billing is a major headache for reviewers, clinical managers and invoice processors.

While IWP claimed it administered the clinical aspects of drugs, it also paid $ 11 million to settle charges filed in Massachusetts. Attorney General Maura Healey said:

“You [IWP] Thousands of prescriptions issued for dangerous drugs, including opioids like fentanyl, with a shocking lack of consideration as to whether those prescriptions were legitimate. “

WorkCompCentral’s William Rabb wrote an excellent summary of the case here. Rabb noted that IWP allegedly “paid referral fees to doctors, applicants’ lawyers, and others in exchange for the names of injured workers who were candidates for pain medication.” (I mentioned that here too.)

Just last month, Business Insurance reported that Keches Law Group PC in Bridgewater, Massachusetts:

“[A]A consent judgment filed with the Suffolk Superior Court found that approximately 800 of its clients and prospects were referred to Injured Workers Pharmacy LLC to fill out prescriptions in exchange for approximately $ 90,000.

“Keches reportedly made two agreements with IWP in which the pharmacy paid the company to attend an X1 racing event and yacht excursion and, according to court documents, collected the $ 24,000 bill for a holiday dinner in exchange for referrals.”

A Louisiana case with a $ 13,111 bill submitted by IWP provided further insight into the company. According to the article in WorkCompCentral, an advocate for IWP’s opponent said, “Plaintiffs’ lawyers are happy to use IWP because they know it will drive up drug prices, reducing the value of medical services and, as a result, their own fees, which are $ 20 % increase. of the services awarded. “

While some payers in some states have successfully challenged IWP’s claims for payment, the company as a whole has been paid more than often for scripts it claims were issued to plaintiffs – and in some cases won judgments for that purpose.

At some point the owner will want to sell and move on. The question is who is buying it?

• It’s in declining business; The cost of labor for drugs continues to decline.
• Most payers don’t really like the company and its business practices.
• It’s the archenemy of pharmacy benefit administrators.

I don’t see a PBM buying IWP; PBM’s customers probably wouldn’t be happy if they didn’t promise to reform things.

But – and it is a really big BUT – if PBM or any other buyer fundamentally changes IWP’s business model to make it more “payor-friendly”, it can definitely reduce IWP’s cash flow and profits. Owners’ expectations of a sale price would be based on IWP’s revenues – revenues that can suffer if the business model changes.

Then there is the company’s legal history. Investors hate potential future legal issues almost as much as they hate a business model that is unsustainable (not to say IWP isn’t, but not when a PBM buys it). Since the last legal situation was only last month, every buyer will be very, very careful.

Most private equity firms want to get out and make three times their initial investment. That seems like very hard work. Of course, IWP could change its business model to be more paying-friendly and a little less … enthusiastic about paying documents and attorneys. But such a move would take a long time, extremely careful planning and execution, and is not guaranteed to keep profits.

The strange thing is that CEO Michael Gavin was a good friend, someone I liked, admired and respect. I haven’t spoken to Michael in years. It would be awkward at best.

What does that mean for you?

Be wary of business models that work until they stop working.

Joseph Paduda is a co-owner of CompPharma, a consulting firm focused on improving pharmacy employee compensation programs. This column is republished on his Managed Care Matters blog with his permission.