December 22, 2015

Why State-Mandated Drug Formularies in Work Comp Are Needed

, Cost Containment


The U.S. Centers for Disease Control and Prevention (CDC) estimates that over 37,500 U.S. patients die annually from prescription medications. Forty percent of these deaths, are attributed to narcotic pain medications. Anecdotal evidence suggests that a meaningful percentage of the fatalities from pain medications are related to workers’ compensation claims.

Here are some facts relevant to the use of narcotic pain medications in workers’ compensation:

  • 25-35% of the medications dispensed for patients covered by workers’ compensation are narcotic pain medications
  • With such a high volume, industry stakeholders acknowledge that injured workers face a higher degree of risk of death from narcotic pain medications than the general public
  • In addition to fatality risks, narcotics are also associated with medical complications and psychosocial issues, and their use – or misuse – drives higher medical and indemnity costs

States nationwide are grappling with the growing epidemic of pain medications and their corresponding consequences. One of the ways several states have successfully combatted this issue is by mandating prospective management via a drug formulary, which has in turn lowered their risk. Texas, Washington, Ohio and Oklahoma have all mandated drug formularies and report success.

WCRI’s recent Texas study correlates prospective management via Texas’s state-mandated closed drug formulary with: the reduction of overall pharmacy spend, and the reduction of class II narcotics, i.e., non-formulary medications. 

Based on the high degrees of reported success, Arkansas, California, Louisiana, Maine, Michigan, North Carolina and Tennessee are all considering their own formularies as well.

In workers’ compensation, formularies work by requiring a prior authorization (PA) on targeted medications – most frequently class II narcotic pain medications – before they are dispensed. In some cases, the prescribing physician is required to provide a letter or statement of medical necessity declaring the need for these medications before a PA is granted.

Experts believe that one of the reasons for the success of state-mandated formularies is the fact that when applied prospectively, formularies change physician prescribing patterns. Formularies applied after medications are dispensed do nothing to address physician prescribing patterns.

CorVel’s model drives prospective management. As such, CorVel prospectively captures and manages targeted drugs under their own formulary.

CorVel's clinical modeling program can help identify significant cost drivers in pharmacy utilization, prescription abuse and addiction, increased use of psychotic medications, and inappropriate prescribing. Their proprietary set of rules will flag certain indicators such as narcotics usage, length of use and certain drug combinations. CorVel has full visibility into a patient’s entire drug history that can include retail, mail order and physician dispensing, ensuring appropriate care and safety, while also managing payor exposure.