By Jim Thompson
Sarasota, FL (WorkersCompensation.com) - Prescription drug formularies, which have a long history in health insurance but are relatively new in workers’ comp, are seeing a surge of interest among state governments seeking to control workers’ comp costs.
One reason for the lag in workers’ comp programs developing formularies is that special-interest groups — most notably physicians and employers — routinely have had significant influence over state legislatures, according to Dr. Robert Goldberg, a past president of the American College of Occupational and Environmental Medicine (ACOEM).
Going forward, though, interest in formularies is a trend that’s likely to continue, Goldberg said, as smaller states take a closer look at what the country’s largest states — Texas, California and New York, in particular — are doing.
Formularies — lists of drugs preferred by providers for their overall value in terms of cost and effectiveness — can take three forms:
- An open formulary comprises all prescription drugs approved by the federal Food and Drug Administration.
- A closed formulary comprises of the prescription medications identified as allowable for use; other medications must go through a pre-authorization process.
- A Preferred Drug List (PDL) is a list of prescription drugs preferred in workers’ comp cases. In those cases, drugs on the PDL must be used before a non-PDL drug can be prescribed.
In a 2016 position paper, the ACOEM sets the beginning of the use of formularies in workers’ comp at 2006, when North Dakota adopted an open formulary. More routinely, the history of formularies in workers’ comp is traced to 2011, when the state of Texas established a closed formulary.
According to the ACOEM paper, interest in formularies is based “in part on studies demonstrating that formularies can dramatically decrease the direct cost of medications, the costs of utilization review (UR), and the inappropriate use of certain medications including opioids, non-generics, and compounded topical medications. Other studies have demonstrated that non-formulary drugs account for a disproportionate share — as much as 40% — of total drug costs, while comprising a relatively small proportion of total prescriptions.”
Goldberg, who’s also Chief Medical Officer at Healthesystems, a medical cost management company for workers’ comp cases, said interest in formularies has grown as pharmaceutical spending has increased in tandem with “a greater reliance on pharmaceuticals to treat whatever the injury is.”
Part of the reason for that, Goldberg told WorkersCompensation.com, is that pharmaceutical approaches to injury treatment and pain management have been seen as more cost-effective than other approaches. A downside of that dynamic been a reliance on opioids for pain management that has helped fuel a crisis in overuse of those drugs, including painkillers like OxyContin and Percocet.
“If doctors really knew best, we wouldn’t have an opioid epidemic,” Goldberg said.
Goldberg stressed that the primary aim of formularies is to enhance patient care. Limiting drugs readily available for addressing injuries and pain management will prompt physicians to think more deeply about approaches to treatment, Goldberg said.
According to a recent report by Cordant Health Solutions, whose services include a pharmacy specializing in management and dispensing of controlled substances, since the Texas system was implemented in 2011, a number of other states — Arizona, Delaware, Ohio, Oklahoma, Tennessee, Washington and Wyoming — have established formularies.
California and New York, which are likely, along with Texas, to drive the trend toward states establishing workers’ comp formularies, are relatively new arrivals to the issue. In California, a formulary mandated in state legislation two years ago is scheduled for implementation on Jan. 1, 2018. In New York, legislators approved a budget in April directing the New York State Workers’ Compensation Board to create a formulary by the end of this year.
Also according to the Cordant report, North Carolina and Louisiana have been looking into formularies, and other sources indicate that Illinois, Kentucky, Nebraska and Pennsylvania are also considering formularies.
In 2015, the North Carolina legislature directed the state’s Industrial Commission to study the implementation of a drug formulary for workers’ comp claims. In a 2016 report, the commission noted “encouraging results, which suggest that a drug formulary could be beneficial for State employee claims as well as the entire North Carolina workers’ compensation system.”
In Louisiana, however, an attempt in this year’s legislative session to establish a formulary failed as two pieces of legislation got locked up in committees.
House Bill 592 would have mandated the use of a formulary included in the Official Disability Guidelines of the Work Loss Data Institute. House Bill 529 would have established a formulary created with input from employers, insurers, treating physicians, injured workers, attorneys and other stakeholders.
In other legislative action across the country this year:
- Illinois lawmakers balked at proposed changes to workers’ comp in House Bill 4068, including “the creation of an evidence-based drug formulary.”
- In Pennsylvania, a bill to empower the state’s Department of Labor & Industry to hire a company specializing in workers’ comp to help develop a formulary was returned to the House Labor & Industry Committee.
- Legislative Bill 408, now under consideration in Nebraska, would empower the state’s Workers’ Compensation Court to develop a formulary.
For now, the state of Colorado is bucking the trend toward formularies for workers’ comp, instead choosing to rely on Utilization Review (UR) — the process of reviewing treatment plans for medical necessity — and other strategies to address workers’ comp prescription practices.
Paul Tauriello, director of the Colorado Division of Workers’ Compensation, said pharmaceutical considerations are embedded within his state’s UR protocols.
“It’s not that we won’t do a formulary,” Tauriello said, noting that his division “is always open to what’s new.” But, he added, “We don’t feel like we’re behind the times.”
A particular concern for his state, Tauriello told WorkersCompensation.com, is the “one size fits all” nature of formularies, which means that they may not adequately address “outlier” cases with special circumstances.
“I think that’s everybody’s concern with a formulary,” Tauriello said.
