Prescription drug utilization decreased across all drug categories in two states that have recently adopted Official Disability Guidelines Workers Compensation Drug Formulary, according to a study released Tuesday by the National Council on Compensation Insurance Inc.

As of Dec. 31, 2018, 15 states have implemented a mandatory closed-drug formulary in workers compensation, which is a formulary that forbids reimbursement for nonpreferred drugs without prior payer authorization. In Formulary Implementations and Initial Impacts on Workers Compensation, Boca Raton, Florida-based NCCI looked at Arizona and Tennessee, which have both recently adopted the ODG Formulary, which is a closed-drug formulary. The study, which compared the drug utilization rates those two states pre-ODG adoption with post-ODG adoption 2017 figures, revealed that both states have seen the use of drugs that require prior authorization decrease, as well as a decline in the utilization of topical and compound drugs after the adoption of the formulary. 

Prior to the ODG adoption, nonpreferred drug payments made up about 34% of Arizona’s drug spend and about 31% of Tennessee’s drug spend, which is in line with the averages reported by similar states, and accounted for 19% and 18% of total scripts, respectively.

Tennessee’s formulary became effective on Aug. 28, 2016, while Arizona’s took effect Oct. 2, 2016. The researchers found that in both states the rate of change in nonpreferred drug utilization declined substantially, with a drop of 10.3% in Tennessee and a reduction of 12.6% in nonpreferred drug utilization post-reform in Arizona. These states also saw smaller post-implementation decrease in the use of drugs not on the ODG formulary, with both states experiencing about a 7% decline in the use of these drugs. Although different opioids are listed on both the formulary and as nonpreferred drugs, the states also experienced drops in opioid utilization compared with similar nonformulary states.