Drug cost inflation in WC jumps by more than 7 percent in '08

Cost inflation for workers' compensation pharmaceuticals rose 7.5 percent in 2008, according to a recent survey.

Researchers from Health Strategy Associates said the increase came after five years of progressively lower drug cost inflation rates. The findings were included in the firm's Sixth Annual Survey of Prescription Drug Management in Workers' Compensation, which included input from 18 carriers and third-party administrators. The survey was sponsored by Cypress Care, a national workers' comp pharmacy benefit manager.

Respondents indicated that their 2008 drug expenses ranged from $1.2 million each to $148 million. The cumulative drug spend totaled $810 million -- 19.3 percent of the total workers' comp drug spend.

Use of Schedule II narcotics decreases among California injured workers (08/13/12)
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Study shows increasing frequency, costs of physician-dispensed meds (09/06/12)
Opioids, physician dispensing continue to concern practitioners (02/25/13)
Opioids, physician dispensing are major concerns among WC payers (02/11/13)

According to the study, workers' comp payers said the primary cost driver was utilization, citing specific issues such as the overuse of pain medications and physician prescribing patterns. To combat inflation, researchers found that payers are increasing investments in analytics and moving toward step therapy and stronger clinical management of pharmacy.

"Payers are also calling on their pharmacy benefit management firms for deeper insight into pharmacy trends, better management of claimants with chronic pain issues, and stronger first-fill capture programs," said Joseph Paduda, principal of Health Strategy Associates.

Other concerns cited in the survey were per-unit cost increases, the predominance of single-source brands, and OxyContin rebranding. Paduda said physician dispensing continued to be an issue for payers with significant business in California and the southeastern United States, especially Florida.

The survey noted that some respondents saw significant decreases in their drug costs, with four participants reporting drops of 9 percent or more from their 2007 costs. Unlike previous years, Paduda said drug cost inflation trended lower at smaller payers than their larger competitors.

"Smaller payers seem to be ?faster to market' with utilization controls, adjuster education, and data sharing with their PBM partners," he said.

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January 14, 2010

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