Laying a Foundation for a Workers’ Compensation Drug Formulary

At the 2016 PARMA Annual Conference, Mark Pew from PRIUM talked about general guiding principles for developing workers’ compensation drug formularies and how this applies to current efforts in California.

As has been widely reported, the misuse and abuse of opioids and other prescription drugs has reached epidemic proportions in this country. Between 1999 and 2013, over 175,000 people have died from prescription drug overdoses. Who is responsible for this epidemic? The seven “P’s”; prescribers, patients, pharmacists, big Pharma, payers, politicians and plaintiff attorneys.

A drug formulary is an important part of a comprehensive strategy to prevent the overuse of prescription drugs in workers’ compensation. Formularies have been in group health for years and they are primarily focused on cost. Workers’ compensation drug formularies are more focused on medical effectiveness and appropriateness. They are more focused on clinical outcomes, not savings. Formularies need to be based on evidence-based medicine, designed through consensus, and all stakeholders need to be educated before, during and after the adoption of the formularies.

Formularies are relatively easy to implement and enforce and they should include a dispute resolution process with expedited appeal. Also, when you implement a formulary, you need to be able to deal with legacy claims differently so that people can be weaned off medications they have been taking for years.

One of the main goals of a formulary is to expedite the delivery of appropriate medical care. If drugs are on the formulary, they should be approved quickly without being subject to utilization review. One problem in California is that the state does not mandate which treatments are subject to utilization review (UR). Other states dictate exactly which procedures are subject to UR. The use of formularies should also increase patient safety and promote other conservative treatment options.

Two things that the formulary in California is going to address is physician dispensing and compounds. These are both areas that have been widely abused.

Finally, drug formularies also must allow for exceptions when there is appropriate clinical rationale. Also, provider education is key so they understand the alternatives to the prohibited drugs.

The Texas Example

Texas implemented a comprehensive drug formulary for workers’ compensation, which provides a road map for other states. After implementation, “N” drug prescriptions dropped 74% and claims with an “N” drug dropped 67%. The formulary was enforced at point-of sale and pharmacies could not dispense the “N” drug without utilization approval.

Legacy Claims

One of the challenges of implementing a drug formulary is the legacy claims where people have been taking what are now “N” drugs for several years. Formularies usually allow a weaning down period for the legacy claims. However, payers must also be willing to cover the costs of detox programs and alternative pain management programs. You cannot simply cut off treatment for someone who has chronic pain. Cognitive Behavioral Therapy (CBT) is an important element in dealing with legacy claims as you need to change the pain behavior to have a successful weaning from the medications.

California

A 2014 study by CWCI showed that adopting a drug formulary could result in significant workers’ compensation savings. At the CCWC conference in July 2015, David Lanier publicly stated that he had instructed Christine Baker to get a formulary constructed as soon as possible. AB 1124 requiring the state to develop a drug formulary was approved by the legislature in late 2015 and signed into law by the governor.

The rule-making process for this new formulary is now ongoing and the law requires the formulary to be adopted by July 1, 2017. One of the questions right now is whether California develops their own formulary or adopts one of the existing ones (ODG or ACOEM). Given the amount of work required to develop and maintain a formulary, and the recent turnover of the medical director with the DWC, it appears that California will likely be adopting an existing formulary. Tennessee and Texas adopted ODG guidelines for their formularies.