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Closed formularies may be in the future for California

If there is one reoccurring theme to most topics concerning workers’ comp in California, it is cost reduction. Billions of dollars are spent on workers’ comp pharmaceutical payments every year. That is why one important state institute is considering ways to reduce workers’ compensation-related pharmaceutical costs.

Last year alone, the California Workers’ Compensation Institute estimates that well over $7 billion was spent on pharmaceutical and medical costs. And given that around 13 percent of those payments were linked directly to pharmaceutical expenses, many believe that adopting closed drug formularies could help to save the state’s workers’ comp program hundreds of millions of dollars annually.

Formularies have already been instituted in two other states, and it’s believed that implementing a similar system in California could cut prescription payments between around 30 to 70 percent. Payments associated with brand name pharmaceuticals would decrease considerably, and some are even suggesting that opioid painkiller use would also be seriously impacted.

Pharmaceutical formularies mandate that generic equivalents to name brand drugs be offered whenever possible. Formulary programs also eliminate some medications altogether. Regulating the availability and use of medications helps to discourage huge discrepancies from arising between drug prices. It is for that reason that implementing such a program is expected to decrease opioid use, in addition to related workplace injuries and deaths.

Interestingly, the state legislature would not be involved in establishing a closed pharmaceutical formulary in the state. Anyone with questions concerns over their medical needs, and what is currently covered under workers’ comp, can consult with an experienced attorney today.

Source: Insurance Journal, “Study: Formulary Could Save California Workers Comp $124M-$420M,” Don Jergler, Oct. 7, 2014 

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