Drug Formularies – Y or N?

| | Evidence Based Medicine, Utilization Review

Kats Formulary Update Article 2-8-2016
Claimants, attorneys, physicians, insurance carriers and others – all workers’ comp stakeholders have opinions about prescription drug dispensing and formularies. Many states have implemented drug formularies or rules that allow formularies in the future in order to contain escalating workers’ comp costs and increase claimant safety. The Texas formulary is often cited as a reference when states consider implementing such regulations. Why is that? Texas has addressed concerns related to Schedule II–IV drug use as well as claims costs associated with the medications.

Like some states, UniMed Direct references the Texas formulary process. The Texas reform implemented the Official Disability Guideline (ODG) to determine if a drug is an “N” drug or a “Y” drug. The “N” drugs require preauthorization to determine if there is a valid reason to prescribe the drug. If not, the prescriber is encouraged to find an alternative drug to substitute for the “N” drug. If the drug is a “Y” drug (on the formulary and approved for use), no preauthorization is required.

Upon implementing the formulary, the Texas Department of Insurance encouraged carriers to reach out to prescribers to (1) discuss alternative drugs, (2) negotiate use of the drug during weaning or (3) authorize continued use of the drug for up to one year. This allowed collaboration to help ensure that the health and well-being of claimants were at the center of the transition. It also reduced the potential animosity by the prescribing community toward transitioning to the formulary.

Beginning in February 2016, ODG is adding MS-Contin and Fentanyl to the “N” drug list. Open communication will again need to occur in order to transition claimants via a weaning program or alternative drugs.

According to the Workers Comp Research Institute (WCRI) study on the impact of the Texas Formulary:

Physicians reduced prescriptions for non-formulary drugs by 70 percent AND physicians infrequently substituted formulary drugs for non-formulary drugs.

Many states have passed laws pertaining to physician dispensing and no longer allow physicians to dispense Schedule II–IV drugs from their offices. Pricing for physician dispensed drugs was exponentially higher than the same drug dispensed from the pharmacy.

There are countless studies regarding drug usage. Many of them indicate not only a drug problem but a serious issue with prescribing physicians. A California Workers’ Compensation Institute study shows that 80 percent of opioids (Schedule II drugs) were written by 10 percent of the physician population. In a JAMA study, 57 percent of opioid prescriptions were written by 10 percent of prescribing physicians.

Why are we so concerned about this? It’s not just about the cost – although prescription drug use is driving the increase in claims costs in nearly every state. At the beginning of 2016, studies were released outlining increased drug costs. The price of one of the most commonly used pain medications, Lyrica, increased 9.4 percent.

In addition to spiraling costs, we are seeing an increase in overdose deaths from opioids. According to the Centers for Disease Control:

Overdose deaths from opioids, including opioid pain relievers and heroin, hit record levels in the U.S. in 2014, increasing 14 percent from 2013. The age-adjusted death rate from heroin increased 26 percent, and the death rate from synthetic opioids such as Fentanyl, but excluding Methadone, increased 80 percent.

Many states have elected not to pursue a formulary as their total claims costs have not substantially increased. There is certainly merit to the thought process that if costs are not escalating, a formulary may not be necessary. But that point of view does not address the safety of the drugs or the fact that the majority of Schedule II or Schedule III drugs are prescribed by a small portion of physicians in any region of the country.

Karen Atkins

Karen Atkins, Chief Operating Officer with UniMed Direct, is leading the conversation, and the industry, on how to make the utilization review process more efficient for all stakeholders: physicians, insurance companies and, most importantly, patients.