More States Look to Workers’ Comp Drug Formularies

California is the latest state to pass a workers’ compensation drug formulary and other states are expected to follow suit.

In a webinar presentation on State-Based Formularies earlier this month, Don Lipsy, manager of First Script PBM Regulatory Communications, said that more states are considering formularies in 2015 than in the past four years combined.

“State-mandated formularies are here. They’re gaining more momentum as a way to manage pharmacy in the comp space,” said Lipsy.

Joseph Paduda, principal with Health Strategy Associates, said drug formularies have been successful in Texas, Oklahoma, Washington and Ohio.

“I expect it will gain momentum, particularly as these other states that have already been the early adopters are getting some positive results,” said Michael Stack, principal COMPClub and Amaxx Work Comp Solutions.

Formularies are under consideration in other states, include North Carolina, South Carolina, Nebraska, Tennessee, Maine, Montana and Louisiana. We’re going from four that have formularies, to probably 10 plus within a year and a half,” Paduda said.

According to the California Workers’ Compensation Institute, drug formularies are “lists of approved drugs that define the scope, and in some cases, limit the variability in prices for certain types of drugs. States such as Texas, Washington and Ohio have mandatory formularies that apply uniform standards and drug lists for all injured workers in those jurisdictions.”

Medication on the list can be dispensed without prior authorization, Paduda said. In addition, there is a ‘restricted’ list of medications that require pre-authorization, he said.

“Drugs on the restricted list are not considered first-line treatment and often carry significant patient risks,” said Paduda.

Formulary Benefits

The benefits of drug formularies have been outlined by states that have implemented them.

Texas and Oklahoma models are most commonly referenced because they’ve been around the longest and they have a significant sample size of injured workers and pharmacy transactions, said Lipsey.

“Texas saw a 10 percent reduction in opioid prescriptions during the first year of implementation,” Paduda said, noting that while state drug formularies are primarily designed to protect patient safety, they also typically reduce pharmacy costs in workers’ compensation systems.

A CWIC study last year revealed that adopting a state-mandated workers’ compensation prescription drug formulary such as those used in Texas and Washington State could reduce California workers’ compensation pharmacy payments by an estimated $124 million to $420 million a year while simultaneously raising the quality of care and reducing frictional costs in the system.

The same study found that pharmacy benefits were the most frequently disputed medical treatment in workers’ compensation and made up 43 percent of all Utilization Reviews (UR), as well as 34 percent of all Independent Medical Reviews (IMR).

The recent passing of the California workers’ compensation formulary bill requires the adoption of a workers’ compensation drug formulary by July 1, 2017.

“California’s upcoming drug formulary should result in prescribing behavior changes away from dangerous prescription drugs and combinations of drugs to more clinically appropriate means of managing chronic pain. If the injured worker wins by getting better care faster, then all other stakeholders also win,” said Mark Pew, senior vice president, PRIUM.

The point of a formulary, according to Stack, is to ensure better outcomes for patients and that they are prescribed appropriate drugs. Formularies also provide education to doctors on appropriate prescriptions for certain medical conditions.

The benefits of formularies include a reduction in cost which benefits taxpayers and employers, said Paduda. He explained there is a reduced risk of inappropriate drug utilization too. Multiple national studies have highlighted the potential opioid and compound use and reduction in wasteful or unnecessary medication spend.

“For example, claimants getting benzodiazepine, sedatives…and opioids at the same time. These formularies can reduce that risk, which is an important plus on the patient safety side,” Paduda added.

He said that a broader benefit is that formularies help stakeholders in a workers’ compensation claim realize that while some drugs are appropriate, others are not.

Utilization Review

In order for the process – drug formularies and binding utilization reviews – to work Paduda explained that a formulary needs to be disease, state or injury specific. If that is the case, there may not be a need for utilization review.

“An effective utilization review system works in conjunction with the formulary, so that a formulary that’s disease specific would actually reduce the number of requests for utilization review,” Paduda explained.

Though several states have either adopted or are considering adopting a drug formulary, Paduda doesn’t expect every state to do so.

“I expect most will. The important thing about formularies is that they are one half of the solution. The other half is that you have to have…binding utilization review, to make a formulary effective. Otherwise, what you have is…speed limits with no police, no penalties, no courts,” said Paduda.

The workers’ comp expert said that one shouldn’t exist without the other. If there is binding utilization review but no formulary, then there is enforcement with no speed limit. Paduda said it is necessary to have both a formulary and a mechanism to enforce it.

He emphasized that non-medical personnel should not be making medical decisions.

“Those decisions as to whether a medication is appropriate or not should not be the purview of non medical people,” said Paduda. “I think medical people are the ones who need to make medical decisions. If there is utilization review around pharmacy that should be done by medical people and not by medical administrative law judges, who quite frankly don’t have the training or expertise for that.”

Stacks said it’s important to remember that drug formularies are not a quick process, it takes involvement from multiple stakeholders.

“It’s about creating a more positive outcome,” Stack said.