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Summer 2018   Volume 28, Number 3        


How Drug Formularies Are Reducing Costs and Mitigating the Opioid Crisis

Texas was the first state to experience a decrease in opioid prescriptions and significant savings in overall drug costs.

One result of the opioid crisis is the growing popularity of workers’ compensation drug formularies. Workers’ compensation drug formularies are already in place in Arizona, Ohio, Oklahoma, Tennessee, Texas, and Washington. And they are currently working their way toward approval in the legislatures of Indiana, Kentucky, New York, California and Montana.

Drug formularies are commonly used in Medicare and health insurance to regulate dosage, cost and types of drugs covered by an insurance plan. Just because a drug isn’t on the formulary doesn’t mean it won’t be covered; approval just requires taking additional steps.

Big Impact on Opioid Use in Texas

Texas was the first state to adopt a workers’ compensation drug formulary in 2011. Since then, employers and insurers in Texas have experienced significant savings in prescription drug costs and a decrease in opioid prescriptions.

“The number of open claims in Texas where nonpreferred strong opioids were being received and utilized by injured workers decreased from almost 15,000 injured workers in 2009 to less than 500 injured workers in 2015,” according to Trey Gillespie, Austin, Texas-based assistant vice president of workers’ compensation with the Property Casualty Insurers Association of America, in an interview with Business Insurance magazine.

Each state puts together its own workers’ compensation drug formulary, which has some flexibility. “It evolves over time either based upon guidelines or pharmacy and therapy committees or whatever mechanism each state chooses that dictates ‘here are the medications that are acceptable for treatment of injured worker conditions.’ If you need something that is not within that drug list or formulary, it requires preauthorization, depending on which state, or requires another form of heightened review,” said Don Lipsy, Memphis, Tennessee-based managed care specialty products manager with Sedgwick Claims Management Services Inc., in an interview with Business Insurance magazine.

Though the number of states with formularies is increasing, not all states are on board. In Pennsylvania, the state Senate passed a drug formulary bill, but in March it failed in the House. Similar legislation also failed in Georgia and Louisiana in 2017.

Opposition and Misinformation

“I think there has been a significant amount of misinformation about drug formularies,” said Joe Paduda on his blog, Managed Care Matters. “There has been a lack of understanding that formularies enhance patient safety and promote return-to-work and healing… Instead, some people in the industry purport that formularies are a way to prevent patients from getting the treatment they need. I think there has also been fear on the parts of some people in the community who are injured-worker advocates that this would somehow be harmful to patients.”

In Pennsylvania, the drug formulary bill was opposed by trial lawyers, who said it is an attempt to curb utilization review organizations.

For more information on workers’ compensation drug formularies and how they affect your workers’ compensation claims, please contact us.

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In this issue:

Risk Tip

Are You Ignoring Your Cyber Liability?

Litigating the Opioid Epidemic

How Drug Formularies Are Reducing Costs and Mitigating the Opioid Crisis

Hurricane Preparation Tips



The information presented and conclusions within are based upon our best judgment and analysis. It is not guaranteed information and does not necessarily reflect all available data. Web addresses are current at time of publication but subject to change. SmartsPro Marketing and The Insurance 411 do not engage in the solicitation, sale or management of securities or investments, nor does it make any recommendations on securities or investments. This material may not be quoted or reproduced in any form without publisher’s permission. All rights reserved. ©2017 The Insurance 411. Tel. 877-762-7877.