Big Pharma is having a Big Tobacco moment.
Since 1999, the number of prescription opioids sold in America has almost quadrupled. Over the same period, prescription opioid deaths have more than quadrupled and millions have become addicted to legally prescribed painkillers that are 50 times more powerful than heroin.
Nearly 2 million Americans met criteria for prescription opioid abuse and dependence in 2013. In the same year, there were more than 16,000 deaths from prescription opioid overdose. Dozens of lawsuits and class actions have been filed against physicians, pharmacies, and the pharmaceutical companies manufacturing and distributing painkillers such as fentanyl, hydrocodone and oxycodone (under the brand names OxyContin, Roxicodone and Oxecta).
U.S. Senator Joe Manchin, D-West Virginia, has endorsed the lawsuits and claims that prescription painkillers are handed out in his home state “like M&M’s.” Even President Trump and First Lady Melania Trump spoke out publicly last month about fighting opioid addiction.
Much like the tobacco litigation over the past 50 years, there is no precedent for these opioid lawsuits. The complaints allege that by prescribing and supplying these powerfully addictive drugs, despite knowing their highly addictive characteristics, the physicians and pharmacies in question caused the plaintiffs to abuse the opioids and even engage in criminal activity to obtain them.
The plaintiffs in these lawsuits aren’t just the families of those who died from overdose, incurred the cost of rehabilitation treatment or suffered lost wages and jobs. Like the tobacco litigation, suits are now being filed by municipalities, counties and states, claiming that the dangerous products have cost the government substantial sums of public funds to deal with the consequences of an opioid epidemic that was fueled by the defendants’ acts of placing these highly addictive prescription medications into the stream of commerce, and “fraudulent” marketing regarding the safety of these analgesics.
Even insurance companies are waking up to the fact that they have had to pay billions in claim dollars as a direct result of this preventable epidemic. They, too, are lining up to seek compensation and reimbursement for increased workers’ compensation and health insurance claims costs that could amount to more than $25 billion.
Opioid addiction starts with a legitimate doctor’s short-term pain relief prescription and a trip to the pharmacy, rather than a dark alley rendezvous with a drug dealer. Opioids are narcotic painkillers that work by preventing pain signals from reaching the brain. They are synthetic drugs that resemble the effects of natural opium, derived from the opium poppy.
A 2016 survey reveals that 99% of doctors are prescribing opioids for longer than the three-day period recommended by the Centers for Disease Control and Prevention. Studies show that prescribing opioids isn’t the best treatment for chronic pain and can actually increase a patient’s sensitivity to pain, requiring higher doses and leading to addiction.
Employees taking opioids (even if not addicted) pose a safety risk to themselves and others. In that way, opioid pain treatment in one employee can lead to the injury of a second employee, and so on. The behavior of someone on opioids can be similar to that of someone who has been drinking. Jobs that involve working from heights, being on construction sites and driving are among those that cannot be safely performed while on opioids.
Last months’ issue of the Medical Care magazine estimated that the societal cost of the U.S. prescription opioid epidemic tops $80 billion and is growing. Health insurers and workers’ compensation carriers shoulder about one-third of this cost, while only one-fourth of it is borne by the public sector.
For employers and workers’ compensation carriers, this means that even employees who don’t fit the stereotype of drug users will struggle with this potentially deadly addiction.
The crisis has led directly to increased workers’ compensation costs. A 2012 report by Lockton Cos. concluded that ”prescription opioids are presently the number one workers’ compensation problem in terms of controlling the ultimate cost of indemnity losses.”
The report says that there has never been a more damaging impact on the cost of workers’ compensation claims from a single issue than the abuse of opioid prescriptions for the management of chronic pain. It says that an estimated 55% to 86% of all claimants are receiving opioids for chronic pain relief.
The perceived insurance cost of the opioid prescription crisis can easily be underestimated. Ask most claims professionals, chief financial officers or corporate risk managers how much influence prescription drugs have on their cost of claims, and the answer will typically be “a small percentage.” They reference discount pricing, as communicated by their third-party administrator, but are missing the bigger and more expensive picture not revealed in pharmacy stewardship reports.
Not only is there a crisis in opioid prescription proliferation and the subsequent misuse of these prescription drugs, but the total effect is unseen and unknown. Half of prescription drugs are dispensed and billed by the physicians, unseen in most reports and costing up to 300% more than when run through a pharmacy benefits manager.
A 2012 Hopkins-Accident Research Fund Study determined that employees prescribed even one opioid had average total claims costs four to eight times greater than employees with similar claims who didn’t take opioids. The reasons include increased emergency room visits from overdose, death, addiction treatment, related illness, and abuse and misuse of prescribed drugs.
It is estimated that 35% of employees receiving long-term opioid pain treatment are addicted. In Illinois, physicians are engaging in a process called “physician dispensing,” in which they not only prescribe opioids, but also sell them to injured workers. Research shows that when physician dispensing takes place, doctors prescribe 3.2 times the quantity they should, at a 60% to 300% markup. This partially explains why a recent study found that workers in Illinois spend twice as long away from work after an injury as workers in Iowa, Wisconsin and Indiana.
Many work-related injuries occur to the back, for which doctors are increasingly prescribing opioids both short-term and long-term to address pain despite broad medical recommendations against long-term use of such painkillers in back cases.
Washington’s Department of Labor & Industries has revealed that 42% of employees with back injuries received an opioid prescription in the first year after an injury. However, after one year, 16% of those employees were still taking opioids.
According to the Property Casualty Insurers Association of America and the Workers Compensation Research Institute, all 50 states are experiencing a similar problem, but long-term use of opioids was most prevalent in New York and Louisiana, with significant long-term opioid usage found in Texas, Pennsylvania, South Carolina, California and North Carolina. This translates to billions in additional costs for workers’ compensation carriers, since the medical benefits portion of a claim may be open for years or even for the lifetime of an injured worker.
The increased claims costs of prescription opioids are astronomical. An annual workers’ compensation report from pharmacy benefit managing giant Express Scripts recently noted:
“The issue of opioid prescribing becomes even more important in workers’ compensation settings, as prolonged opioid use has been shown to be associated with poorer outcomes, longer disability and higher medical costs for injured workers.”
In 2002, less than 1% of injured California employees were prescribed opioids. By 2011, it was 5% and payments rose an astonishing 321%.
The politics of pain management is about to get very ugly. Many states have either put parameters on opioid prescribing in place or are in the process of doing so. For example, both New Jersey and Pennsylvania now limit first-fill prescriptions for opioids.
As of April, Delaware and Ohio were well on their way to doing the same. California is proposing that its closed drug formulary, which will go into effect Jan. 1, keep opioids off the preferred list for pain medications. New York’s budget for 2018 includes the creation of a formulary. Other states such as Florida and Louisiana were considering similar moves.
The full scope of the opioid crises includes an investigation by Congress, lawsuits by individual states, counties and cities around the country (and in Canada), collaboration among attorneys general, and class action lawsuits. Workers’ compensation carriers and government agencies on whose shoulders these huge additional payments have fallen want their money back, and they are taking action to make that happen.
The growing opioid litigation is following in the footsteps of the infamous tobacco litigation. In the 1950s, individual plaintiffs sued tobacco companies, alleging negligence in the manufacture of and advertising for cigarettes. Tobacco fought back and prevailed in all of those early lawsuits.
A second wave of lawsuits emerged in the 1980s, and plaintiffs found their first victory in the landmark case of Cipollone v. Liggett, although the $400,000 verdict was reversed on appeal. Tobacco successfully argued that smokers knew and knowingly assumed the risks, and that federal law governing advertising pre-empted state laws.
A third wave of litigation occurred in the 1990s, and the first big win for plaintiffs occurred in 2000, when a California jury ordered Philip Morris to pay $51.5 million to a California smoker with inoperable lung cancer.
At the same time, much like the current opioid litigation, more than 40 states sued the tobacco companies under state consumer protection and antitrust laws. These states argued that cigarettes contributed to health problems that triggered significant costs for public health systems.
In 1998, four of the largest tobacco companies and the attorneys general of 46 states agreed to settle the cases for $368 billion. In 2014, a wrongful death lawsuit against R.J. Reynolds in Florida resulted in a verdict of $23 billion in punitive damages.
Opioid class action suits being filed against doctors, pharmacies and the opioid manufacturers are eerily similar to the tobacco litigation, and could be just as successful. More than two dozen states, cities and counties have filed similar lawsuits accusing pharmaceutical companies of making false claims about the dangers of their drugs to make a profit.
West Virginia has been the loss leader on these class action suits. However, recent lawsuits have been filed by Illinois, California, Ohio, Mississippi, New York, Kentucky, the Cherokee Nation in Oklahoma, and in Washington state.
With the hindsight of the tobacco litigation behind them, some of these cases are already settling. In December 2015, a suit in Kentucky against manufacturer Purdue Pharma settled for $24 million. More recently, suits against opioid distributors in West Virginia have reaped more than $40 million in settlements.
On Nov. 7, 2017, nearly two dozen Wisconsin counties filed a federal lawsuit, alleging that “nefarious and deceptive” marketing campaigns from pharmaceutical companies are responsible for the nation’s opioid overdose epidemic. The lawsuit claims that local governments’ health and law enforcement services “have been strained to the breaking point” because of widespread opioid abuse, and seeks unspecified monetary damages from Purdue Pharma, Johnson & Johnson, Endo Health Solutions Inc. and subsidiaries of the companies.
In Wisconsin, 1,824 people died from opioid overdoses from 2013 to 2015, according to the lawsuit. Matthiesen, Wickert & Lehrer's home county of Washington County, Wisconsin, is aggressively seeking to recover costs associated with the opioid epidemic. With a population of about 131,900, the county had 542 hospitalizations involving opioids last year, according to the lawsuit, and 70 opioid overdose deaths from 2013 to 2016.
Lawyers working the litigation against those responsible for the prescription opioid crisis recognize that billions have been spent unnecessarily by the insurance industry and are looking for insurance companies to join the litigation. MWL is part of a nationwide litigation team putting together a coalition of insurers to join in litigation to recoup these costs.
Gary L. Wickert is a partner with the Matthiesen, Wickert & Lehrer law firm in Hartford, Wisconsin. This blog post is reprinted with permission.
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