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California insurance experts are optimistic that a new workers compensation prescription drug formulary will help injured workers and reduce comp costs in the state, but the legislation could face hurdles from claimants who need to be weaned from banned drugs or want to continue using them off-label.
The California Legislature on Friday passed A.B. 1124, which would establish an evidence-based closed drug formulary by July 1, 2017.
Closed formularies limit approved medications for workers comp claims, and California legislators have closely observed closed formularies already in use in Texas and Washington state.
Assuming California Gov. Jerry Brown signs the bill as expected, it would require certain actions by the California Division of Workers' Compensation, including updating the formulary at least quarterly, establishing an independent pharmacy and therapeutics committee, accepting public comment and publishing two interim status reports.
Insurer groups have been optimistic about the California bill's chances of enactment.
The formulary “takes a significant step forward in improving the state workers compensation system as it will assist in injured workers' medical outcomes, decrease system bureaucracy and provide for savings,” Steve Suchil, Western region assistant vice president of state affairs at the American Insurance Association, said Wednesday in a statement.
Mark Sektnan, president of the Sacramento-based Association of California Insurance Cos., said the proposal could help curb opioid addiction and ensure injured workers receive appropriate medications.
“We need to be very careful about ensuring that we provide the correct drug at the right time to that injured worker so they can do what they need to do, which is get back to work,” Mr. Sektnan said.
The California Department of Industrial Relations, which oversees the state workers comp division, held a public meeting last week to receive preliminary comments.
The presence and participation of the agency's senior leadership at the meeting made a major difference because key points that normally would have been dealt with during the rulemaking process were addressed during the legislative process, smoothing the regulatory path, said Kenneth Eichler, director of regulatory and outcome initiatives at the Work Loss Data Institute's Official Disability Guidelines team in New York. Division officials were “very receptive and responsive,” he said.
While California's formulary has received positive reactions, experts say there also could be some pushback.
Mr. Sektnan said California insurance regulators have discussed limiting the off-label use of medications for conditions that aren't Food and Drug Administration-approved for such drugs.
For instance, injured workers would have difficulty getting prescriptions for some powerful opioids that are indicated for treating end-stage cancer pain, Mr. Sektnan said.
The formulary could include a process for claimants who want to continue taking medications for off-label uses (see story below).
Speakers also cautioned that patients already on medications need a robust and carefully managed transition process — a provision in the bill requires a yet-to-be-determined transition period.
However, Mr. Eichler advised against adopting transition rules from the plan Texas implemented in 2011, which used a two-year phase-in for legacy claims.
“It doesn't take two years to wean a patient,” Mr. Eichler said. “My personal recommendation is to go with one year for legacy claims. You need to protect injured workers with the best protocols possible.”
California's proposed new prescription drug formulary could include a process for claimants to seek approval for off-label medication use, but such decisions would need to be centered on evidence-based medical guidelines, said Mark Sektnan, president of the Sacramento-based Association of California Insurance Cos.
“We're ensuring that it's the appropriate use of that drug for that injured worker,” Mr. Sektnan said.
A major concern voiced by several participants during the public meeting was the need to ensure that the formulary is consistent with the state's medical treatment utilization schedule, which provides guidelines for utilization review, a framework to evaluate and treat injured workers; and information for providers on understanding which evidence-based treatments have been effective.
Kenneth Eichler, director of regulatory and outcome initiatives at the Work Loss Data Institute's Official Disability Guidelines team in New York, whose organization crafted guidelines that could be adopted by California, had particular praise for including the pharmacy and therapeutics committee to evaluate new science or uses of medications.
“I think it's a nice check and balance,” he said.
California workers compensation written premiums increased 9% year-over-year to $8.9 billion in the first half of 2015, according the California Workers' Compensation Insurance Rating Bureau.