WCRI: Formulary May Cut Prescription Drug Costs for Louisiana State Employees

A new FlashReport from the Workers Compensation Research Institute (WCRI) finds that a Texas-like formulary for Louisiana state employees may reduce prescription drug costs by 4 to 28 percent depending on prescribers’ response to the formulary. This would have resulted in a savings of $322 thousand to $2.3 million over the 18-month study period, January 2016 through June 2017.

The report, Texas-Like Formulary for Louisiana State Employees, does not study the impact of a drug formulary on patient outcomes and overall medical costs or estimate the potential cost savings for all workers’ compensation claims in the state. It provides a broad range of estimates that depend on different assumptions regarding provider behavior in adopting a Texas-like formulary.

The Texas formulary includes all drugs approved by the Food and Drug Administration (FDA) except drugs with “N” drug status in the current edition of the Official Disability Guidelines (ODG), compound drugs that contain “N” drugs, and investigational or experimental drugs. If a drug is included in the formulary, physicians may prescribe it without obtaining preauthorization. If the drug is excluded from the formulary, physicians may only prescribe it if they obtain preauthorization from the payor.

The following are among the study’s other findings:

• One in five prescriptions were written for non-formulary drugs across the study period and accounted for a higher proportion of total prescription costs. For instance, in the first half of 2017, non-formulary drug prescriptions accounted for 21 percent of all prescriptions filled and 36 percent of total prescription costs. This occurred because several of the drugs listed as non-formulary drugs under the Texas formulary are expensive brand name medications such as OxyContin and Flector Patch.
• Long-acting opioids, which include drugs like OxyContin, MS Contin, and Opana ER, accounted for about 1 in 5 non-formulary prescriptions filled by Louisiana state employees over the 18-month study period.
  Brand name medications accounted for nearly one-third of non-formulary drug prescriptions and 57 to 60 percent of non-formulary drug prescription payments.
• Detailed prescription transaction data for all Louisiana state employee claims managed by the Office of Risk Management (ORM) were collected for this study. The data used in this analysis include approximately 45,000 prescriptions filled between January 1, 2016, and June 30, 2017, by Louisiana state employees who received at least one prescription paid under the state workers’ compensation program.

To purchase a copy of this report, visit https://www.wcrinet.org/reports/wcri-flashreport-texas-like-formulary-for-louisiana-state-employees.

Source: WCRI