Drug Formularies in the Workers' Compensation Industry


Drug formularies have become one of the biggest trends in worker's compensation over the last few years. A drug formulary or preferred drug list, is a continually updated list of prescription drugs supported by current evidence-based medicine and it is overseen by a body of clinical experts. The main purpose of the formulary is to promote the use of safe and effective medications, in addition to controlling costs.
Formularies are not a new concept, they are widespread in the group health market and have been utilized by many workers' compensation payors through their Pharmacy Benefits Managers. But, the increase in drug prices and the need to eliminate prescription drug abuse has led to several states worker's compensation systems across the United States adopting a formulary, and there are more states in the process of doing so hoping to show significant reductions in drug utilization and cost. 
North Dakota, Texas and Washington were states who adopted the formulary early on. All three states saw a reduction in overall drug costs and a reduction in prescribing patterns of certain drugs. Recently Delaware, Oklahoma, Ohio and Tennessee have adopted the use of a formulary. California is right behind them. While the use of drug formularies is on the rise it is important to note that some states currently utilize fee schedules, utilization review, treatment guidelines, use of prescription drug monitoring programs (PDMP) and other regulatory tools to better manage the cost of prescription medications in their state.
Care coordination and communication is vital when it comes to the use of the formulary process. The nurse case manager plays a critical role in providing effective communication with the injured worker, the providers, the payor and pharmacy networks. If a medication is not covered within the formulary the physician is usually required to provide more information to determine the necessity of that medication. This may cause a delay in getting the medication to the injured worker and there is no guarantee the medication will be covered.
Nurse case managers can communicate with all parties to ensure the necessary information is obtained from the physician to assist in expediting the review and if necessary discuss alternate treatment options with the physician if the requested medication is not covered. We generally see drugs with the highest abuse potential as medications that require a determination of necessity or pre-authorization.

While one of the main reasons for utilizing a formulary is to contain pharmacy costs, there are other benefits as well. One that comes to mind and should be considered as the most important benefit is the benefit to the injured worker. The injured worker has quick access to medications needed to treat the work injury. Also, there are less harmful and addictive medications prescribed allowing the injured worker a quicker recovery period and a successful return to work. The overall goal of the use of the formulary should focus more on producing better clinical outcomes for the injured worker and a safe return to their pre-injury way of life. All of which compute to cost savings for the payor.

Sherry Busbee, Assistant Vice President of Case Management Services