The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) released a “checkup” on the performance of the state’s formulary one year after it went into effect. In January 2018 the state adopted an evidence-based drug formulary to reduce costs and inappropriate prescribing, particularly when it comes to prescribing opioids, and to ensure that injured workers receive medically necessary medications in a timely manner.
They found that in the first year the share of prescriptions for drugs that were not subject to prospective utilization review (UR) as per the formulary increased by 41 percent, and drugs that were subject to UR declined by 2018. The use of opioids, compounds, physician-dispensed drugs and brand-name drugs with generic alternatives dropped sharply in the first year. Those drugs had been declining prior to the formulary’s implementation but really accelerated in 2018, which may suggest the formulary’s effectiveness.
The bill to adopt an evidence-based formulary was signed in October of 2015 and the Division of Workers’ Comp (DWC) adopted a formulary in 2017 to take effect January 1st of 2018. It includes an MTUS drug list of 300 drug ingredients that are exempt or non-exempt from prospective UR. All opioids and compounds are non-exempt. Some non-exempt drugs can be prescribed without prospective UR if it meets requirements of special fill or per-operative fill policies. Other drugs not on the MTUS list must obtain authorization through prospective UR before dispending.
WCIRB estimated the formulary would reduce pharmaceutical costs by 10 percent, resulting in a 0.5 percent reduction in advisory pure premium rate level. Though pharmaceutical costs had been declining even before the formulary implementation due to other reforms, WCIRB saw the amount of prescription drugs provided to injured workers dramatically decrease to 870,000 in 2018 compared to 1.3 million in 2017. Even though there was an increase in the share of prescriptions of drugs not subject to UR, those drugs only incurred a 13 percent higher share of the cost of pharmaceutical payments in 2018 compared to their pre-2018 levels. The share of payments to drugs subject to UR decreased by 2 percent even though their volume decreased disproportionally more.
Read the study from WCIRB here.
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