A Rising Cost Factor in Workers Compensation Claims
In 2007, California workers’ compensation reforms curbed physician dispensing of drugs. However, physician repackaging seems to have been replaced by the increased prescribing of compound drugs and medical foods, many of which have not been approved by the Federal Drug Administration.
According to a study done by the California Workers’ Compensation Institute, the use of compound drugs, co-packs and medical foods is on the rise. The study found that the percentage of California workers’ compensation prescriptions of these products quadrupled from 1.2 percent of prescriptions in 2006 to 4.7 percent in 2009. Over the same three-year period, the percentage of medication dollars paid for compound drugs, medical foods and co-packs increased more than five-fold from 2.4 percent of all drug payments in 2006 to 12 percent in 2009. With the average cost of each prescription of compound drugs at $590, co-packs at $420 and medical foods at $233 it is easy to see how prescription drug costs are escalating in the California workers compensation arena.
Dr. Pohl of Professional Dynamics, Inc. weighs in on the subject: “In my view, the above agents are being overused by doctor’s offices, which dispense these medications at excessive costs, more so for financial gain, then proven clinical benefits.”
What are Compound Drugs?
Compound drugs are typically a mix of pharmaceuticals and ointments or creams. One example is a combination of a nonsteroidal anti-inflammatory medication such as Ketoprofen with a topical anti-neuropathic agent such as a Lidoderm patch.
What are Medical Foods?
Medical foods are defined by the FDA Orphan Drug Act as a food which is formulated to be administered under the supervision of a physician and is intended for the specific dietary management of a disease or condition. The most common is Theramine, which is alleged to improve pain, sleep disorders and anxiety.
What are Co-Packs?
Convenient packs or “co-packs” are essentially medical foods combined with pharmaceuticals to create medications. An example is Theraprofen (Theramine combined with Ibuprophen). The charge for these co-packs is considerably higher than either agent alone.
Managing Drug Costs
It is imperative that claims administrators use tools to manage these rising drug costs as a part of the overall management of a worker’s compensation program. Combination agents can be non-certified through a utilization review program if even one of the medications in the compound is not recommended by the Chronic Pain Guidelines of the Medical Treatment Utilization Schedule.
A pharmacy benefit management program can also aid in the control of drug costs through:
- Formularies that guide physicians to substitute generic drugs for name brands
- Built-in network discounts
- A comprehensive system for reducing inappropriate or duplicative drug use
- Management of drug-to-drug interaction
- Outcome management reports that show trends
Another way to help manage prescription drug costs is to get involved in the legislative process. Support AB 2770 (Solorio) which proposes that under workers’ compensation law, a compounded drug dispensed on or after November 1, 2010, shall be reimbursable only if all active ingredients in the compounded drug have been approved by the Federal Food and Drug Administration.
For more information on compound drugs see the following links:
California Worker’s Compensation Institute
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