Home Report: Texas drug formulary has potential to reduce costs

Report: Texas drug formulary has potential to reduce costs


economic-forecast-headerA new study from the Workers Compensation Research Institute (WCRI) examines how a Texas-like closed drug formulary might affect the prevalence and costs of drugs in 23 other state workers’ compensation systems that do not currently have a drug formulary.

“As policymakers and other system stakeholders seek to contain medical costs, part of the focus is on prescription drug costs,” said Dr. Vennela Thumula, an author of the study and a policy analyst at WCRI. “With an evidence-based closed formulary, states have the potential to contain pharmaceutical costs while encouraging evidence-based care.”

According to the study, Impact of a Texas-Like Formulary in Other States, physicians in the other 23 states may have similar or different responses to the closed formulary from Texas physicians. A Texas-like closed formulary limits access to some drugs by requiring prior-authorization for drugs not included in the formulary. The study provides multiple scenarios to the readers to illustrate the impact of the formulary based on how physicians respond.

One of the scenarios finds if physicians in the 23 other study states were to change their prescribing patterns like physicians in Texas, they could reduce their total prescription costs by an estimated 14–29 percent. Non-formulary drug prevalence is estimated to drop from 10–17 percent to 3–5 percent of all prescriptions. Larger effects can be expected in Connecticut, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, and Virginia.

The study found non-formulary drugs were as prevalent in the 23 study states as they were in pre-reform Texas. They accounted for 10–17 percent of all prescriptions and 18–37 percent of total prescription costs. The comparable numbers for pre-reform Texas were 11 percent and 22 percent, respectively. Non-formulary drugs were most common in New York (17 percent) and Louisiana (16 percent). The most commonly prescribed non-formulary drugs in the majority of study states were Lidoderm®, OxyContin®, Soma®, Valium®, and Voltaren®.

The data for the study are based on utilization and costs of non-formulary drugs among newly injured workers in Texas and 23 other states that represent over 70 percent of workers’ compensation benefits in the United States. The study looks at prescription utilization for injuries arising from October 1, 2010, to September 30, 2011, with prescriptions filled through March 31, 2012, and paid for by a workers’ compensation payor. The data reflect an average 12 months of experience for claims included in the analysis.

The 23 states included in this study are Arkansas, California, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and Wisconsin.

To purchase a copy of this study, click on the following link: http://www.wcrinet.org/studies/public/books/tx_formulary_book.html.

The Cambridge-based WCRI is recognized as a leader in providing high-quality, objective information about public policy issues involving workers’ compensation systems.



The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization based in Cambridge, MA. Organized in late 1983, the Institute does not take positions on the issues it researches; rather, it provides information obtained through studies and data collection efforts, which conform to recognized scientific methods. Objectivity is further ensured through rigorous, unbiased peer review procedures. WCRI’s diverse membership includes employers; insurers; governmental entities; managed care companies; health care providers; insurance regulators; state labor organizations; and state administrative agencies in the U.S., Canada, Australia and New Zealand. For more information, visit http://www.wcrinet.org.



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