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Drug costs fall with less use – with and without formulary

Posted On: Dec. 21, 2021 2:14 PM CST

drug formulary

Closed drug formularies continue to attract attention in states’ workers compensation systems as a tool to manage the utilization of prescription drugs and provide evidence-based guidance to physicians prescribing drug treatments for injured workers.

The Official Disability Guidelines Workers Compensation Drug Formulary, also known as the ODG Formulary, has been adopted by several states including Indiana, Kentucky and Montana.

In a new report, the National Council on Compensation Insurance Inc. examined cost and utilization trends in the comp prescription drug experience after adopting the ODG Formulary, cross comparing two different sets of states.

In states that recently adopted mandatory use of the ODG Formulary – Indiana, Kentucky, and Montana – decreased utilization of drugs contributed to overall cost declines in all three states in the period immediately following formulary implementation. Post-reform decreases in drug costs for each state were comparable to decreases in overall drug costs observed in nonformulary states for the same periods, the report states.

In the two states NCCI first studied the initial impacts of formulary implementation, Arizona and Tennessee, overall drug costs decreased in each of the subsequent post-reform periods. According to the report, overall cost declines were driven by a decreased utilization of drugs, particularly those requiring prior authorization. ​

Additionally, opioid utilization declined by more than 20% in each post-reform period in both states. NCCI notes similar declines in opioid utilization were observed in nonformulary states for the same periods as well.