Printed from

Texas-style drug formulary could help other states reduce comp costs: Study

Posted On: Jun. 26, 2014 12:00 AM CST

Texas-style drug formulary could help other states reduce comp costs: Study

State workers compensation systems could benefit from following Texas and adopting a closed drug formulary, according to a benchmarking report released Wednesday by the Workers Compensation Research Institute.

Cambridge, Massachusetts-based WCRI found that implementing a Texas-like closed drug formulary — a limited list of covered medications — could reduce the prevalence and cost of drugs in 23 states studied by requiring prior-authorization for non-formulary drugs, including opioids such as OxyContin, Opana, Exalgo, Avinza, Kadian and Zohydro.

“To estimate the impact of adopting a Texas-like formulary in other states, we made various alternative assumptions about how physician prescribing practices might change,” the report said. “This is not to say these assumptions are realistic expectations of what might happen in the 23 states.”

According to the study, non-formulary drugs accounted for 10% to 17% of all prescriptions in the 23 states studied and 18% to 37% of total prescription costs.

If physicians in the states studied changed their prescribing patterns in the same way physicians in Texas did — by reducing prescriptions for non-formulary drugs and infrequently substituting formulary drugs for non-formulary drugs — adopting a closed drug formulary could result in a 14% to 29% decrease in total prescription costs, the study shows.

New York, which had the highest prevalence of brand name medications, could see substantial cost savings with a drug formulary in place, according to the study. With 57% of non-formulary drug prescriptions for brand name medications in the state, costs could decrease by 16% if it follows in Texas' footsteps, the study said.

Texas' closed formulary went into effect in September 2011 for new injuries, and in September 2013 for injuries that occurred prior to September 2011. From 2010 to 2011, the number of new claims with non-formulary drugs that required pre authorization decreased by 67%, the report said, citing the Texas Department of Insurance.

“As policymakers and other system stakeholders seek to contain medical costs, part of the focus is on prescription drug costs,” Vennela Thumula, study author and policy analyst at WCRI, said in a statement. “With an evidence-based closed formulary, states have the potential to contain pharmaceutical costs while encouraging evidence-based care.”

The study was conducted using more than 138,000 claims from October 2010 through September 2011, with prescriptions filled through March 2012. Each claim received at least one prescription paid under workers compensation and 1.1 million prescriptions were associated with those claims in Texas and other study states: Arkansas, California, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia and Wisconsin.