Should All States Adopt a Drug Formulary?

| | Evidence Based Medicine, Utilization Review

Jaelene Drug Formulary Article for June 2016

The workers’ compensation community’s search for solutions to abet the opioid crisis is part of a national conversation. The news is filled with heart-wrenching stories and discussions of local and national initiatives to revert this crisis. But one state’s solution for solving a problem is rarely the right answer for all states. The nuances of each state’s workers’ compensation system must be understood when exploring solutions adopted in other states that might or might not work in your state.

One option under consideration for reducing potentially harmful prescription drug use, including opioids, is to adopt a drug formulary. Two renowned research institutes, the California Workers’ Compensation Institute (CWCI) and Workers’ Compensation Research Institute (WCRI) have modeled the outcomes of applying one state’s formula to other states.

The CWCI report “Are Formularies a Viable Solution for Controlling Prescription Drug Utilization and Cost in California Workers’ Compensation” modeled the potential effect of applying a choice of inclusive and exclusive formularies to California’s pharmaceutical utilization and costs levels. Earlier this year, WCRI released the “Texas-Like Formulary for North Carolina State Employees” report. Both of these reports point to potential savings if a formulary is adopted: but again, each state’s nuances can affect actual savings and return-to-work benefits for injured workers.

IAIABC, an association of workers’ compensation regulators and industry professionals who work to advance the efficiency and effectiveness of workers’ compensation systems throughout the world, recently published a paper entitled, “A Discussion on the Use of a Formulary in Workers’ Compensation.” This is an excellent resource that outlines jurisdictional considerations and decision points for states to consider when implementing a formulary. Five states that have adopted a formulary (North Dakota, Ohio, Tennessee, Texas, and Washington) share “Lessons Learned.” Both Tennessee and Texas have recommendations tied to utilization review:

• Tennessee: “Retrospective denials, the prior approval process, and utilization review should be integrated and consistent.”

• Texas: “Other facets of the workers’ compensation system such as treatment guidelines, preauthorization, utilization review, and medical dispute resolution should be in place to support the effective implementation of the closed formulary.”

Reviewing these recommendations, it is clear that “integration” is a key component for states considering adopting a drug formulary. Delivering prompt, evidence-based decisions for medications can be achieved if systems are in place that expedite and facilitate communication between all parties (health care providers, pharmacists, injured workers, employers, insurers and medical management partners). It is also important to have ready access to data to answer questions like those addressed in WCRI’s North Carolina study:

• How frequently are non-formulary drugs that require preauthorization under the Texas closed formulary prescribed to North Carolina state employees? And what are the frequently prescribed non-formulary drugs?

• What proportion of prescription costs are for non-formulary drugs?

• If a Texas-like closed formulary is implemented, what are the potential prescription cost savings?

Formularies are a viable solution, though not the only solution for states to consider as a means for improving injured worker medical and return-to-work outcomes.

Jaelene Fayhee

Jaelene Fayhee

Jaelene Fayhee, AVP, Client Solutions for UniMed Direct, is a regulatory expert who works hand-in-hand with clients and the technology department to deliver technology and medical solutions to clients. Jaelene is focused on using technology to ensure compliance with current and upcoming regulatory requirements and delivering prompt and appropriate decisions to expedite medical decisions for injured workers.