Drug Formularies – Lower Costs at the Expense of Injured Workers? 

workers compensation lawyerDepending on the state involved, the cost of prescription drugs for injured workers make up 11%–17% of the overall cost of the average workers compensation claim. The overall cost includes all medical expenses as well as indemnity benefits for lost time from work. Nationally, drug costs per claim have gone down in recent years, but prescription drugs remain the target of the insurance industry and state workers compensation agencies, for further cost reduction.

Although pursuing the goal of cost reduction may have an added benefit of reducing the overuse of certain medication, most notably, opioids, the long-term effect is to reduce the treatment options for medical providers who are treating injured workers.

Many state agencies, often spurred on by insurance companies, have instituted, or are in the process of developing drug formularies. Generally, these formularies are composed of rigid rules that direct medical providers on the specific drugs that can be prescribed to treat certain injuries and conditions. More expensive medications, such as brand name drugs or compound topical pain creams which are formulated by individual pharmacies, may be completely prohibited. These rules also define the dosage and the number of refills which will be allowed for certain medications. If the treating medical provider wants the medication to be continued for a longer duration, there is often an elaborate process the provider must navigate in order to get authorization for continued use of the medication. In many states, the process may be especially onerous and convoluted and beyond the capabilities of many medical providers to contend with. This may produce the unwanted effect of driving some providers out of the system, thereby further reducing the quality of care for the injured worker.

The development of drug formularies is often promoted by the insurance industry as a device to provide better and more consistent care for injured workers. The purpose may be described as a need to safeguard patients by curbing the misuse of prescription medication and preventing dangerous drug interactions. Supposedly, the newly developed formularies are built on evidence-based medicine and therefore, will provide the best care for the patient. Rarely stated though is the obvious fact that the use of prescription medication under the formularies, will be severely limited. The ability of the attending physician to treat his or her patient and to meet that patient’s individual needs, will be curtailed. The restriction on the availability of various prescription medications may prevent or deter the recovery of the injured worker.

Because of these concerns, some lawmakers have been hesitant to implement formularies in their states. They may be coming to the realization that the quality of care for injured workers may be sacrificed in a primarily cost based system such as a formulary. Adoption of formularies is certainly not assured in such states. However, not all states would require legislation. In New York for instance, a formulary was adopted through a simple administrative rulemaking process by the agency overseeing the state’s workers’ compensation system.  Given these factors, it remains to be seen whether drug formularies will become the dominant system nationwide for handling prescription medication in workers compensation cases. Injured workers and their Workers Compensation attorneys hope not. 

Thanks to our friends from Hurwitz, Whitcher & Molloy for their insight into workers’ compensation law.