Maximize the Value of Your Pharmacy Benefits Manager


PBMs Can Be More Than Discounted Prescriptions
Insurers and self-insured employers often utilize Pharmacy Benefit Managers (PBM) to manage the cost of prescription medications in their workers’ compensation claims.  The contracts that PBMs have with the national drug store chains reduce the cost of each individual prescription given to an injured employee. Unfortunately, that is where many insurers and self-insured employers stop utilizing their PBM.  Often more, or even much more, can be done by insurers and self-insured employers to control the cost of medications.
Most Doctors Disconnected From Cost of Workers Comp Claim
Most doctors treating injured employees have little or no direct contact with the employers and adjusters handling the workers’ compensation claim.  The doctor’s office staff will handle all telephone calls, emails or faxes from employers, nurse case managers or adjusters. The limited contact the doctors have with anyone besides the employee will be brief discussions with the nurse case manager. For the most part, doctors work absent of any input from other parties involved in the workers’ compensation claim and are oblivious to the cost control activities on the claim.
The goal of the treating doctor is to assist the injured employee in regaining as much functionality as possible.  The treating doctor will normally prescribe all necessary diagnostic testing, medical treatment and medications without concern for the cost. 
Lack of Involvement Leads to Higher Costs
This lack of involvement in the cost of medications often leads the doctor to make medication choices that cost more, but are no more beneficial to the injured employee than alternative choices.  For instance – doctors will often write a prescription with the notation “DAW”.   DAW stands for ‘dispense as written’ which tells the pharmacist not to substitute a generic drug for the name brand drug.   As many drugs have a generic version that is biochemically and therapeutically equivalent, the DAW adds additional cost to the prescription, but does not provide any additional benefit to the injured employee.
The PBM should contact the medical provider’s office and inquire why the DAW is needed when there is a generic equivalent.  If your PBM is not doing this when the medical provider writes the prescription for the name brand drug, you should request they start doing so.  Also, a follow up letter should be sent by the PBM to the medical provider asking for all future prescriptions to be for the generic version of the medication.  If your PBM is not doing this, again you should request they do so.
PBM Should Push for Generics
If the medical provider continues to write prescriptions for the name-brand drugs when generic equivalents are available, a Letter of Medical Necessity should be generated by the PBM and sent to the medical provider before the PBM authorizes the pharmacist to dispense the medication.  The Letter of Medical Necessity will ask the doctor to provide documentation as to why the name brand drug must be used and not the generic equivalent.  Often there is no reason for the name brand drug other than that is what the doctor has always prescribed for the particular medical need.  When the doctor has to respond to the Letter of Medical Necessity, the prescription usually gets changed to the generic version.  This is not to say that there are no situations where the name brand drug is a better option.  The Letter of Medical Necessity does not dispute the use of the name brand drug, but does ask why.
If neither an inquiry as to why a prescription is written as DAW nor a Letter of Medical Necessity changes the behavior of the treating doctor, the employer, nurse case manager or adjuster should request a Peer-to-Peer Review, which may make a difference. 
Your PBM Should Have Medical Opinion to Review All Prescriptions
Your PBM should have on-staff, or at least on retainer, a doctor who can discuss with the treating doctor the reason a particular prescription is being written (especially with narcotics and other medications which are utilized on a long-term basis).  The treating doctor may have a valid reason why the more expensive (or most expensive) option is necessary.  The Peer-to-Peer Review will frequently result in the treating doctor recognizing that cost is a factor in the medical treatment, resulting in the treating doctor writing prescriptions that provide the needed medical care while controlling cost.
We recommend you confirm with your PBM they are questioning all DAW prescriptions, sending a letter to the doctor asking for future prescriptions to be generic, sending a Letter of Medical Necessity when generics are not used, and utilizing Peer-to-Peer Reviews when needed to control the cost of medications.

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and 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. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:


Editor Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. Contact






Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.


©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at:

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