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Pharmacy Cost Control
Proactive Measures Needed to Cut Costs
Physician dispensing and compounded medications are major cost drivers of workers’ comp medical costs. But employers can take steps to control expenses and improve the safety of their injured workers, according to a recent report.
Marsh LLC’s Workers’ Compensation Center of Excellence’s report, Targeting Prescription Drugs to Decrease Workers’ Compensation Costs, identifies the financial and safety concerns of the two practices, and outlines actions employers can take.
“Prescription drug costs will likely continue to escalate for the foreseeable future,” according to the report. “But by making strong decisions about their claims administrators and pharmacy benefit managers and ensuring that networks comply with policies governing physician dispensing and compounded drug prescriptions, employers can help to control those costs and drive better overall workers’ compensation claims outcomes.”
Repackaged medications dispensed by physicians “can cost employers exorbitant sums,” the report states. It cites studies from the Workers Compensation Research Institute and the California Workers’ Compensation Institute showing costs were nearly 17 percent more in claims where there was at least one physician dispensed repackaged drug compared to those without. Also, the medications typically dispensed by physicians cost 60 percent to 300 percent more than the same drugs dispensed by a retail pharmacy.
Costs are not the only concern, though. The report says injured workers may be at risk by relying too much on physician-dispensed medications.
“Many injured workers have more than one doctor and these providers may not always be aware of every medication an injured worker may be taking for a work-related injury,” said Jennifer Kaburick, senior vice president for workers’ compensation product, compliance and strategic initiatives at Express Scripts. “That includes those prescriptions filled at pharmacies and other physicians’ offices.”
Compounding pharmacies also tend to inflate the price of their products, the report says. It notes that the average cost of the compounded version of the anti-inflammatory drug diclofenac was $770 compared to $46 for the commercially available alternative of the drug.
The report also cites safety concerns, noting the U.S. Food and Drug Administration does not test or approve these medications.
“Compounded drugs made using poor quality practices may be sub- or super potent, contaminated, or otherwise adulterated,” it quotes the FDA as writing. “Additional health risks include the possibility that patients will use ineffective compounded drugs instead of FDA-approved drugs that have been shown to be safe and effective.”
While a number of states have enacted reforms to address cost concerns of physician-dispensed and compounded medications, the effects may be questionable, according to the report. It advises employers to be proactive by:
Ensuring network compliance. Claims administrators and PBMs should have specific policies to limit physician dispensing and prescriptions involving compounded drugs such as requiring compounded prescriptions to be subject to prior authorization reviews routed to specialized teams of nurses or other trained claims management staff.
Educating key personnel to encourage injured workers to visit only in-network providers, if possible. Supervisors and managers, human resources personnel, and environmental, health, and safety professionals should be informed. Employees themselves should also be told about the dangers of physician dispensing.
Evaluating the PBM and claims administrator or TPA. Employers should select those with a shared focus on driving better outcomes rather than looking only at fixed or upfront costs. When building a PBM program, employers should consider several key features such as:
- Retail and mail order options for prescriptions.
- A generic conversion program with information provided to pharmacies and providers.
- Clinical management and oversight with medication reviews by pharmacists and outreach to physicians to ensure medications are necessary, not duplicative, and don’t present potentially harmful interaction effects.
- Formularies specific to workers’ comp that can be modified to address unique needs of certain classes of work.
- Utilization management techniques, including methods to analyze program trends, critical claims, and prescribing patterns of physicians.
- Fraud, waste, and abuse detection units that use analytics to identify and thoroughly investigate such cases.
