WCRI Identifies Policies to Hold Down Pharmacy Costs

Why are prescription costs up to 40 percent lower in Washington state than average?

According to the Workers Compensation Research Institute (WCRI), the northwestern state implemented policies that kept these costs down.

“Prescription Benchmarks for Washington,” points to these four tools:

1. A formulary of approved drugs and therapeutic interchange.
2. Lower-than-typical pharmacy fee schedule.
3. Mandatory generic substitution.
4. Infrequent physician dispensing.

In the study, WCRI looked at 17 other states and found “a wealth of detailed price and utilization statistics that may be useful when debating such issues as: pharmacy fee schedules, physician prescribing patterns, medical cost drivers, and laws that mandate the use of generics.” Other states included in the study were: California, Florida, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Pennsylvania, Tennessee, Texas, and Wisconsin.

“There may be some important lessons for policy makers in other states from the regulatory approaches used by Washington State,” said Dr. Richard A. Victor, WCRI’s executive director.

Other findings include:

1. The average prescription cost per claim in Washington was 40 percent lower than the median of the 17 states in the second edition of the WCRI prescription benchmarks—after adjusting for the longer claim duration. Without this duration adjustment, the average prescription cost per claim was 11 percent lower than the 17-state median.
2. The average price per pill paid to Washington pharmacies was 35 percent lower than the median state as a result of state policies and programs, such as: a formulary of approved drugs and therapeutic interchange, lower than typical pharmacy fee schedule, and mandatory generic substitution. (WCxKit)
3. Physicians in Washington more often prescribed stronger, Schedule II narcotics, compared to physicians in the other study states.

More information on this study, available for purchase, can be found here.

Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing, publishing, pharmaceuticals, retail, hospitality, and manufacturing. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com.

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