CALIFORNIA How Pharmaceuticals Affect Workers Comp Cost Reform and Rising Costs

Final Part of a synopsis of “Changes in Pharmaceutical Utilization and Reimbursement in the California Workers’ Compensation System,” available at http://www.cwci.org/

Regulatory Reform and Rising Costs

The Institute also took a look at the effectiveness of regulatory reforms enacted in 2007 to close a loophole allowing medical providers dispensing repackaged drugs from their offices to obtain much higher payments than pharmacies for dispensing the same drugs.

In 2006 data showed (just prior to closing the loophole) repackaged drugs represented well over half (54.7%) of all filled prescriptions and 59.2% of all prescription payments in California workers’ comp.

By the mid-2007, repackaged drugs declined to 10.5% of RXs and 8.3% of the payments, and these percentages continue to decline, with data for the first three quarters of 2008 showing repackaged drugs accounting for just 8.1% of workers’ comp prescriptions and 5.8% of the pharmaceutical payments.

The Institute study shows even though reforms such as modified fee schedules and non-differential pricings for repackaged drugs can successfully curbed some of the excesses in California workers’ comp, prescription drugs remain a key cost driver as the fluid nature of pharmaceutical pricing, new drugs, limited generic substitution, direct-to-consumer advertising, and lack of formulary controls limit the system’s ability to better control utilization and cost increases from year to year. (workersxzcompxzkit)

In addition, the recent addition of a Pain Management treatment guideline to the Medical Treatment Utilization Schedule (MTUS) raises questions about the future use of pain medications and ancillary services. The Institute plans to conduct follow-up research next year which to measure the association between pain management protocols, changes in pharmaceuticals, the use of opioids and claim outcomes.

Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: [email protected] or 860-786-8286.

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