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California weighing closed workers comp drug formulary

Posted On: Aug. 13, 2015 12:00 AM CST

California plans to implement a closed drug formulary for its workers comp system and is consulting its counterparts in Texas and Washington state in its effort to reduce opioid use and overall costs, officials said.

David Lanier, secretary of the California Labor and Workforce Development Agency in Oakland, has directed the Department of Industrial Relations to begin the process to establish a formulary, said Christine Baker, director of the Department of Industrial Relations, which oversees the Division of Workers' Compensation.

“We are poised to move forward on a formulary and use it in the California system,” Ms. Baker said Friday of the process that is to begin this fall.

The state would benefit by implementing an evidence-based prescription drug formulary to curb overuse of certain medications, particularly opioids, as states such as Texas and Washington have done.

California regulators have already started talking with their counterparts in other states about their closed drug formularies, officials said.

Texas' formulary allows a broader choice of drug groups and brand drugs, while Washington's formulary has more limited choices. Both, however, would significantly reduce pharmacy expenses in California, concluded a study last October by the California Workers' Compensation Institute (see interactive chart below).

A bill pending in the California legislature, A.B. 1124, would direct state officials to establish an evidence-based drug workers comp formulary effective in mid-2017. A.B. 1124 was passed by the Assembly and ordered to the Senate in June, and a state Senate committee is to hold a hearing on the bill Aug. 17.

Not everyone likes the legislation, however.

“It could get rammed down everyone's throats and the injured workers don't have a voice in the matter,” said Robert Rassp, a Sherman Oaks, California, attorney who represents comp claimants. He expressed concern that a closed drug formulary could prompt injured workers to go outside the comp system to get drugs through their group health coverage.

But California regulators believe they already have the authority under the state's labor codes and regulations to move forward with a closed drug formulary even without the bill, Ms. Baker said.

Passage of A.B. 1124 could actually restrict implementing a closed drug formulary by including specific mandates, said Steve Suchil, the American Insurance Association's assistant vice president of state affairs in Sacramento, California.

Adopting a formulary would benefit California because it would address the current lack of pricing control and provide guidance on prescribing and usage of prescription drugs, he said.

“Not only would it affect and control the costs, it would also affect the quality of life of injured workers who become addicted to these substances,” Mr. Suchil said.