Pharmacy Cost Control

N.C. Drug Formulary Could Save $9 Million

According to a WCRI study, North Carolina stands to reap huge savings by adopting a Texas-style workers' comp drug formulary.
By: | April 25, 2016 • 2 min read

If a drug formulary was implemented for injured state employees, North Carolina could potentially see significant savings, says a new study. The state is considering formularies to curb abuse and reduce costs in its workers’ comp systems.

The Massachusetts-based Workers Compensation Research Institute reviewed approximately 14,000 claims with 183,000 prescriptions over a three-year period from January 2012 through December 2014. They applied a drug formulary and developed several scenarios to determine the potential impacts of each.

“Over the three-year period, the state paid approximately $29 million for prescription drugs filled by injured state employees,” the study said, “and there may be potential to save $1.4 million to $8.7 million with adoption of a Texas-like formulary under a range of scenarios.”

The authors found the biggest potential savings would occur if physicians in the state adopted prescribing patterns similar to those in Texas when the formulary was adopted there. Physicians in Texas reduced prescriptions for non-formulary drugs by 70 percent and “infrequently” substituted formulary drugs for them.

“Where physicians [in North Carolina] adjust to a closed formulary in ways that are similar to what we saw with Texas physicians, we estimate large effects of adopting such a formulary,” the report said. “We estimate reductions from 22 -23 percent to 6-7 percent of all prescriptions that are for non-formulary drugs and a 30 percent reduction in total prescription costs or close to $8.7 million over the three-year period.”

“There may be potential to save $1.4 million to $8.7 million with adoption of a Texas-like formulary under a range of scenarios.”

In a second scenario, North Carolina physicians reduced their use of non-formulary drugs but fully substitute formulary drugs from the same drug group. In that case, the estimated reduction in prescription costs was 8 percent to 9 percent.


In the third scenario, North Carolina physicians reduce the use of non-formulary drugs by just 25 percent but did not often substitute formulary drugs. In that situation, the authors estimate cost reductions of 12 percent.

Finally, the authors considered the possibility that North Carolina physicians reduce their non-formulary drug prescribing by 25 percent but fully substitute them with formulary medications. For that scenario, they estimate the percentage of all prescriptions for non-formulary drugs could decrease from 22-23 percent to 16-17 percent.

Overall, non-formulary drug use accounted for 23 percent of all prescriptions and 39 percent of total prescription costs filled in calendar year 2014 for the state workers. The top 10 most commonly prescribed non-formulary drugs in calendar year 2014 accounted for more than half the costs. Several on the list are long-acting Schedule II opioids of which all are considered non-formulary drugs in Texas.

“This category of medications accounted for 23 percent of non-formulary drug prescriptions and 33-34 percent of non-formulary drug payments across the three years,” the report said. “Thirteen to 15 percent of total prescription drug costs paid for North Carolina state employees were for long-acting opioids between 2012 and 2014. Adoption of a Texas-like formulary may decrease opioid use, particularly for long-acting opioids in the state.”

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]
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Opioid Risks

Survey Shows Need to Better Educate on Opioids

A majority of patients still believe that opioids are the most effective remedy for pain, and expect treating physicians to prescribe them.
By: | April 18, 2016 • 2 min read
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More than two-thirds of treating physicians surveyed say their patients’ expectations impact their decisions on opioid prescribing.


The vast majority incorrectly believe morphine and oxycodone are the most effective ways to treat pain. And 88 percent say they find it difficult to refer patients to treatment for abuse of opioids.

The sobering statistics are included in a survey of 201 treating physicians nationwide. The National Safety Council said overall 99 percent of the physicians prescribe opioids for longer than the three days recommended by the Centers for Disease Control and Prevention.

Nearly all the respondents — 98 percent — said they prescribe some form of opioids for pain control despite evidence that they are not the most effective medications to relieve pain.

“Many physicians prescribe opioids. We knew that, but not to that extent,” said Dr. Don Teater, medical advisor for the National Safety Council. Teater discussed the findings in the survey during a recent webinar.

Nearly all the respondents — 98 percent — said they prescribe some form of opioids for pain control despite evidence that they are not the most effective medications to relieve pain. The physicians also underestimate the impact of safer alternatives such as physical therapy.

Teater cited research indicating a combination of 500 mgs of acetaminophen and 200 mgs of ibuprofen was most effective for pain relief followed by 400 mgs of ibuprofen. Fifth on the list was 10 mgs of morphine. Yet, physicians ranked it as the most effective medication to treat pain.

“Opioids do not kill pain; they kill people.” — Dr. Don Teater, medical advisor for the National Safety Council

The survey also showed that while most physicians screen their patients for risk factors of opioid abuse, few ask about family histories of drug or alcohol abuse. Only slightly more than half consult their state’s prescription drug monitoring programs to see what additional medications their patients take.

“Opioids do not kill pain; they kill people,” Teater said. “Doctors are well-intentioned and want to help their patients, but these findings are further proof that we need more education and training if we want to treat pain most effectively.”

Teater said the findings point to the need to change prescriber practices by:

  • Providing more education and additional training on pain treatment.
  • Having open conversations with patients about alternatives to opioids.
  • Becoming certified to treat addiction in case a patient begins displaying signs of abuse.

Additionally, the general public needs to be better informed about the risks of opioids.

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]
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Sponsored Content by IPS

Compounding: Is it Coming of Age?

Prescription drug compounding is beginning to turn a corner in managing chronic pain.
By: | April 28, 2016 • 5 min read

The WC managed care market has generally viewed the treatment method of Rx compounding through the lens of its negative impact to cost for treating chronic pain without examining fully the opportunity to utilize “best practice” prescription compounds to help combat the opioid epidemic this nation faces. IPS stands on the front lines of this opioid battle every day making a difference for its clients.  

After a shaky start cost-wise, prescription drug compounding is turning the corner in managing chronic pain without the risk of opioid addiction. A push from forward-thinking states and workers’ compensation PBMs who have the networks and resources to manage it is helping, too.

Prescription drug compounding has been around for more than a decade, but after a rocky start (primarily in terms of cost), compounding is finally coming into its own as an effective chronic pain management strategy – and a worthy alternative for costly and dangerous opioids – in workers’ compensation.

According to Greg Todd, CEO and founder of Integrated Prescription Solutions Inc. (IPS), a Costa Mesa, Calif.-based pharmacy benefit manager (PBM) for the workers’ compensation and disability market, one reason compounding is beginning to hit its stride is because some states have enacted laws to manage it more effectively. Another is PBMs like IPS have stepped up and are now managing compound drugs in a much more proactive manner from an oversight perspective.

By definition, compounding is a practice through which a licensed pharmacist or physician (or, in the case of an outsourcing facility, a person under the supervision of a licensed pharmacist) combines, mixes, or alters ingredients of a drug to create a medication tailored to the needs of an individual patient.

During that decade, Todd explains, opioids have filled the chronic pain management needs gap, bringing with them an enormous amount of problems as the ensuing addiction epidemic sweeping the nation resulted in the proliferation and over-consumption of opioids – at a staggering cost to both the bottom line and society at large.

As an alternative, compounded topical cream formulations also offer strong chronic pain management but have limited side effects and require much reduced dosage amounts to achieve effective tissue level penetration. In fact, they have a very low systemic absorption rate.

Bottom line, compounding provides prescribers with an excellent alternative treatment modality for chronic pain patients, both early and late stage, Todd says.

Time for Compounding Consideration

IPS_SponsoredContentThat scenario sets up the perfect argument for compounding, because for one thing, doctors are seeking a new solution, with all the pressure and scrutiny they’re receiving when trying to solve people’s chronic pain problems using opioids.

Todd explains the best news about neuropathic pain treatment using compounded topical analgesic creams is the results are outstanding, both in terms of patient satisfaction in VAS pain reduction but also in reduction potentially dangerous side effects of opioids.

The main issue with some of the early topical creams created via compounding was their high costs. In the early years, compounding, which does not require FDA approval, had little oversight or controls in place. But in the past few years, the workers compensation industry began to take notice of the solid science. At the same time, medical providers also were seeing the same science and began writing more prescriptions for compounding – which also offers them a revenue stream.

This is where oversight and rigor on the part of a PBM can make a difference, Todd says.

“You don’t let that compounded drug get dispensed when you’re going to pay for it without having a chance to approve it,” Todd says.

Education is Critical

IPS_SponsoredContentAt the same time, there is the growing, and genuine, need to start educating the doctors, helping them understand how they can really deliver quality pain management to a patient without gouging the system. A good compounding specialty pharmacy network offering tight, strict rules is fundamental, Todd says. And that means one that really reaches out to work with the doctors that are writing the prescriptions. The idea is to ensure that the active ingredients being chosen aren’t the most expensive sub-components because that unnecessarily will drive the cost of overall compound “through the ceiling.”

IPS has been able to mitigate costs in the last couple years just by having good common sense approach and a lot of physician outreach. Working with DermaTran Health Solutions and its national network of compounding pharmacies, IPS has been successfully impacting the cost while not reducing the effectiveness of a compounded prescription.

In Colorado, which has cracked down on compounding profiteering, Legislative change demanded no compound could be more than $350.00 period. What is notable, in an 18-month window for one client in Colorado, IPS had 38 compound prescriptions come through the door and each had between 4 and 7 active ingredients. Through its physician education efforts, IPS brought all 38 prescriptions down 3 active ingredients or less. IPS also helped patients achieve therapeutic success (and with medical community acceptance). In that case, the cost of compound prescriptions was down to an average of $350, versus the industry average of $788. Nationwide IPS has reduced the average cost of a compound prescription to $478.00.

Todd says. “We’ve still got a way to go, but we’ve made amazing progress in just the past couple of years on the cost and effective use of compound prescriptions.”

For more information on how you can better manage your costs for compound prescriptions, please call IPS at 866-846-9279.



This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with IPS. The editorial staff of Risk & Insurance had no role in its preparation.

Integrated Prescription Solutions (IPS) is a Pharmacy Benefit Management (PBM) and Ancillary Services partner to W/C and Auto (PIP) Insurance carriers, Self Insured Employers, and Third Party Administrators who specialize in Workers Compensation benefits management.
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