Formulary Coming To You

A panel presentation at the the upcoming Workers' Compensation Research Institute's 31st Annual Issues & Research Conference (March 5–6, 2015) to be held in Boston, MA will review physician dispensing of pharmaceuticals and the impact on costs (of course) and health outcomes for patients.

This is a timely topic as the trend of prescription drug formularies is spreading across the nation, and part of the debate is whether or not doctors should be fulfilling prescriptions from their offices.

Regulators in Tennessee, Arkansas and Oklahoma are writing proposals to establish a formulary based on the Official Disability Guidelines. The Maine Workers’ Compensation Board is forming a task force to consider creating a formulary, while California regulators have wrestled with the idea for years.

Formularies are already in place in Texas, Washington and Ohio. Oklahoma is operating a formulary under emergency rules that expire in September.

Formularies' primary purpose is to restrict the prescription of opioids and compounded drugs and that should lead to reductions in the number of injured workers receiving those drugs. Texas' experience seems to support that goal.

Texas adopted a closed formulary in 2011. Since then, the number of opioid prescriptions for injured workers in the state has dropped 10%, according to the Workers’ Compensation Research Institute. Prescriptions for opioids not on the formulary list have dropped 60%, while scripts for all drugs not in the formulary have fallen 70%. Overall prescription drug costs for injured workers have declined 15%.

A study by WCRI published last year postulated that a Texas-like formulary would likely result in savings for other states. The institute’s researchers found that if physicians in other states behaved the same as Texas doctors, a Texas-like formulary would cut prescription drug costs 29% in New York, 25% in New Jersey, 18% in Florida, 16% in Illinois and 14% in California.

The California Workers’ Compensation Institute in its own study last year found that a Texas-like formulary would cut prescription drug costs by $102 million to $541 million annually in California.

Alex Swedlow, president of the California Workers' Compensation Institute, will be part of a panel on physician dispensing at the conference.

Certainly the insurance community likes the idea of "closed formularies."

This chart has nothing to do with formularies - I just thought it was a neat infographic...

The American Insurance Association supports formularies, and is lobbying legislatures to adopt Texas' process, which is based on The Official Disability Guidelines published by the Work Loss Data Institute.

Still, the handful of states that are considering formularies doesn't mean that this is a sweeping trend.

As Maine Workers’ Compensation Board Executive Director Paul Sighinolfi told WorkCompCentral, “The real focus is to minimize pain as much as possible and ... bring [injured workers] back to a functioning level, and I think that's what our focus is really going to be,” citing concerns that insurance companies and other claims payers will use formularies solely as a means to cut expenses.

The WCRI study found that claimants in Texas increased the use of alternative options such as non-steroidal anti-inflammatory drugs and physical therapy since the state’s formulary went into effect in 2011, effectively shifting medical spending away from opioids and toward those treatments.

Regulators in California have the same concern.

California Department of Industrial Relations Director Christine Baker told state legislators in 2013 that the department was considering a formulary as part of a package meant to fight the over-prescription of opioids. The department is still looking at the issue.

"We are doing due diligence in terms of researching the benefits both from an appropriate medical care standpoint, because that's really important that injured workers get appropriate medical care and there are formularies that can do that, (and) we are also looking at it from a (cost-benefit analysis) standpoint," she told WorkCompCentral Wednesday.

States in general like to watch what happens with an innovator for a couple of years before considering adoption of something new. Then there seems to be a tidal wave that sweeps across jurisdictions in an exponential way.

My best guess is that formularies are more likely than not to be a part of your workers' compensation system within 10 years - particularly if California adopts one because state legislators and regulators like to see how a very large system adapts so anticipated issues can be planned.

The WCRI conference will also include presentations on the Affordable Care Act, fee schedules, and lessons from a couple of decades of "reforms" reflecting the last couple of trends across the nation.