National Council of Self-Insurers 2011 Annual Meeting Dennis M. Sponer, Esq., CEO ScripNet, Inc. www.scripnet.com

1. National Council of Self-Insurers 2011 Annual Meeting Dennis M. Sponer, Esq., CEO ScripNet, Inc. www.scripnet.com

2. Overview • Introduction • Narcotics • Abuse • Diversion • Solutions • State Solutions • Federal Solutions • Industry Solutions • Payer Solutions • Conclusion

3. Narcotics – CWCI Study • Top 10% of docs that prescribe C-2s in California account for 80% of all workers’ compensation prescriptions for these narcotic drugs • Nearly HALF of the prescriptions were for minor back injury claims  • 20% of C-2 prescriptions are for Fentanyl • usually DURAGESIC® Patches Source: www.insurancejournal.com/news/west/2011/04/29/196666.htm

4. Narcotics – NCCI Study • Narcotics’ share of medication expenses increases as claims age – from 15% in year 1 to as much as 35% in year 5 • The Longer the I/W is on Narcotics – the Longer they are off WORK • Increased likelihood of ADDICTION rehabilitation Source: “Narcotics in Workers Compensation,” NCCI Research Brief, December 2009

5. Injured Workers - Diversion Diversion is the use of prescription drugs for recreational purposes. The term comes from "diverting" of the drugs from their original purposes. Prescription drugs are second only to marijuana in illicit drug use.

6. Diversion – Scope of the Problem Drug diversion costs $72.5 billion a year. Individual plans each lose $8.6 million to $857 million a year. Large diversion losses affect both traditional health insurers and workers’ compensation insurers. Source: Coalition Against Insurance Fraud Publication, Prescription for Peril, 2007

7. Diversion – Commonly Diverted Drugs Hydrocodone (Vicodin®, Lortab®, and Lorcet®) Oxycodone (OxyContin®) Fentanyl (Duragesic®) ACTIQ® Hydromorphone (Dilaudid®) Meperidine (Demerol®) Morphine (MS Contin®) Pentazocine (Talwin®) Dextropropoxyphene (Darvon®) Methadone (Dolophine®)

8. Diversion – ACTIQ® ACTIQ®is used to treat breakthrough pain in adult patients with cancer (16 years and older) who are already taking other opioid pain medicines for their constant (around-the-clock) cancer pain. . . . 90% of ACTIQ® prescriptions are off label. Sources: http://www.actiq.com/patients/aboutbtcp/default.aspand http://www.primetherapeutics.com/pdf/Actiq.pdf

9. Diversion – Commonly Diverted Drugs Prescription tranquilizers and sedatives are also commonly abused. HyAlprazolam (Xanax®) Diazepam (Valium®) CODEINE Lorazepam (Ativan®) Pentobarbital (Nembutal®) Phenobarbital (Luminal®) Secobarbital (Seconal®) Zolpidem (Ambien®) Source: DEA Publication, National Prescription Drug Threat Assessment 2009

10. Diversion – What do Payers Pay? • ACTIQ® 800 mcg • AWP $82.68 • OxyContin® 80 mg • AWP $20.30 • Fentanyl 75 mcg • AWP $72.40 • Prices are average for a 30 day supply.

11. Commonly Diverted Drugs – Street Prices Codeine Syrup - $200 - $400 per pint!

12. Commonly Diverted Drugs – Street Prices OxyContin® - $25 -$50 per pill!

13. Diversion- Popular Culture “Sippin’ on Some Syrup”

14. Diversion - Popular Culture Pimp C – Codeine Syrup Overdose December 4, 2008 Pimp C was found dead December 4 in a Los Angeles hotel after headlining a few spot tour dates in California with Too Short. He was 33. Pimp C was instrumental in shaping the sound and influence of Southern rap, which dominates hip-hop today. On "Sippin' on Some Syrup," a track for which UGK collaborated with Three 6 Mafia, Pimp C boasted of his affinity for codeine. Cough medicine combined with a number of mixers is a popular beverage in some Southern regions Source: MTV.com, December 4, 2008

15. Solutions? • State Rules • Federal Rules • Criminal Investigation & Prosecution • Industry Solutions • Your Own Private Army?

16. State Solutions • Texas Closed Formulary Rules • 40%of the top 25 Comp Drugs will Require Preauth • “N” Drugs are over 25% of Total Comp Drug Spend • Insurance Fraud Bureau of Massachusetts • Mission: to eliminate fraud from the insurance scene in Massachusetts • Direction of Care Rules - Nevada • Non Network Prescriptions Just Don’t Get Paid!

17. April 19, 2011, “Epidemic: Responding to America’s Prescription Drug Abuse Crisis” • Framework for reducing prescription drug diversion and abuse • Expands state-based prescription drug monitoring programs • Enhances disposal methods • Supports education for patients and healthcare providers • Reduces the prevalence of pill mills and doctor shopping Federal Solutions Source:http://www.justice.gov/dea/pubs/pressrel/pr041911.html

18. Criminal Investigation and Prosecution - Florida • Leads the nation in diverted prescription drugs - Attorney General’s top priority • $10,000 fine for doctors • Third-degree felony for those who fraudulently register a pain clinic • Criminal penalty for doctors who fail to perform a physical examination • Must report theft of controlled substances to local law enforcement in 48 hours

19. Industry Solutions • Nalaxone included – prevent abuse • Can’t be Crushed or Dissolved in Alcohol • Cost is HIGHER • Examples • Exalgo™ (hydromorphone extended-release), • Abuse-deterrent Oxycontin® (oxycodone extended-release) • Embeda™

20. Your Private Army - Payer Directed Solutions • The Role of the PBM • Prevention • Formularies • Point of Sale • Drug Utilization Reviews & Physician Intervention

21. PBM

22. Summary

23. Questions?