September 7, 2019

California Publishes One-Year Report on Workers’ Comp Formulary

In late August, the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) published a One-Year Checkup on the California Formulary, an early assessment of the California workers’ comp formulary’s impact on actual prescribing patterns.

Effective January 1, 2018, the formulary was intended to reduce frictional costs in workers’ comp, restrict inappropriate prescribing, and ensure that injured workers receive medically necessary medications in a timely manner. The formulary includes a list of about 300 drug ingredients that are assigned a status of exempt or non-exempt from prospective utilization review (UR). All opioids and compounded drugs are nonexempt from prospective UR.

The WCIRB’s report analyzed medical transaction data for medical services rendered between July 1, 2015 and December 31, 2018. Roughly 870,000 prescriptions were provided to California injured workers in 2018, a large decrease from 1.3 million in 2017.

Highlights of WCIRB’s findings include:

  • Prescriptions per claim decreased 29% in 2018
  • Pharmaceutical costs per claim decreased 32% in 2018
  • The utilization of drugs not subject to prospective UR increased by 41%
  • The utilization of drugs subject to prospective UR decreased 18%
  • Total drug payments for opioids decreased 33% in 2018, a stronger drop than the 14% decrease reported in 2017
  • The share of payments for physician-dispensed drugs fell from 13% in Q4 of 2017 to 6% by Q4 of 2018, after having remained steady throughout most of 2017
  • The share of payments to brand-name drugs with generic alternatives decreased from 9% in Q4 of 2017 to 6% in Q4 of 2018

These findings have led WCRIB to conclude that the California formulary has played an important role in reducing pharmaceutical costs.

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