Impact of Prescription Drug Formularies

At the 2022 WCRI Annual Conference, Vennela Thumula from WCRI presented studies regarding the impact of prescription drug formularies in various states.

A workers’ compensation drug formulary is a list of prescription drugs that can be prescribed and dispensed with no prior authorization. 17 states now have drug formularies for workers’ compensation with Texas implementing the first in 2011. Some states develop their own formularies while others use the Official Disability Guidelines (ODG) or the American College of Occupational and Environmental Medicine (ACOEM) guidelines.

California

California implemented their drug formulary on January 1, 2018. In the first quarter following implementation, they saw a 40% decrease in prescription drug costs in the state.

California’s formulary was based on ACOEM guidelines. It included the list of approved and unapproved drugs and rules regarding physician dispensing and use of brand name drugs. Upon closer analysis, most of the decrease in costs was due to a substantial decrease in physician-dispensed prescriptions.

New York

New York developed their own formulary and implemented it on December 4, 2019. In the first quarter following implementation, they saw a 22% decrease in prescription costs.

New York’s formulary classified approved drugs into two categories: Phase A for claims under 30 days post injury and Phase B for more than 30 days after the accident. The formulary also addressed drug compounds which were a cost driver in the system.

Indiana

Indiana’s formulary was implemented on January 01, 2019 and was based on ODG guidelines. In the first quarter following implementation, Indiana saw a 13% decrease in prescription drug costs.

The drugs covered by the formulary (N drugs) only account for 6% of the total drugs in the system. Indiana had much lower prescription drug costs than California and New York before the formulary, so there was less system abuse to be removed.