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A California bill that would establish a closed formulary for medications prescribed in the workers compensation system has unanimously passed the Assembly Insurance Committee.
A.B. 1124, introduced by Democratic California Assemblyman Henry Perea on Feb. 27, would require the administrative director of the state's Division of Workers' Compensation to establish a formulary for medications prescribed to injured workers. The formulary would take effect Jan. 1, 2017.
Closed formularies require proof that nonformulary medications — called N drugs — are medically necessary before they can be prescribed to injured workers. Meanwhile a limited list of covered medications — called Y drugs — don't require preauthorization.
Ohio, Oklahoma, Texas and Washington currently have closed formularies in place, and Louisiana could be next. Republican state Sen. Danny Martiny filed a bill earlier this month that would create a closed formulary in the state to help combat overutilization of opioids and compounded drugs.
The proposed law in California would also require the administrative director to create a Workers' Compensation Formulary Advisory Committee to help develop the state's formulary, according to the bill. The committee would convene on a quarterly basis and provide its recommendations to the administrative director on or before Dec. 31, 2016.
California has talked about implementing a formulary for several years. An October 2014 study by the California Workers' Compensation Institute found that adopting a mandatory formulary like Texas or Washington could reduce California's workers comp pharmacy costs by $124 million to $420 million a year.
A.B. 1124 passed the Assembly Insurance Committee in a 12-0 vote on Wednesday and has been referred to the California Assembly Appropriations Committee.
Workers compensation systems in Arkansas, California and Tennessee are working to implement closed formularies for prescription drugs in part to combat overutilization of costly opioids.