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CWCI Study Examines the Impact of the California Workers Comp Formulary

Oakland, CA  – New CWCI research shows that since California implemented its workers’ compensation formulary last year, an increasing share of drugs prescribed to injured workers are either “Exempt” from  prospective utilization review (UR) or “Not Listed” in the formulary, while “Non-Exempt” drugs that require UR before they can be dispensed account for a declining share of the prescriptions.

In 2015, state lawmakers enacted legislation (AB 1124) requiring that the California Division of Workers’ Compensation (DWC) adopt a formulary that meets evidence-based medicine standards.  After two years of development, the Medical Treatment Utilization Schedule (MTUS) Prescription Drug Formulary took effect on January 1, 2018.  The intent of the formulary was to improve quality of care by ensuring that drugs provided to injured workers meet evidence-based medicine standards in terms of frequency, duration, strength, and appropriateness; reduce the amount spent on drugs in the system; and reduce delays and frictional costs associated with prescription drug disputes.  The formulary adopted by the DWC includes Exempt and Non-Exempt Drug Lists, based on the need for prospective UR, while drugs that are not on either list (“Not Listed’) are allowed if the treating physician can show that their use for the specific injury is supported by the MTUS or other applicable guidelines.

To examine the formulary’s impact on the mix of drugs used in California workers’ compensation and the distribution of prescription drug payments, the authors compared pre-formulary data from prescriptions that were filled in the first half of 2016 and the first half of 2017 to post-formulary data from prescriptions dispensed to injured workers in the first half of 2018.  The 658,057 prescriptions in the study sample were grouped by fill date and formulary classification:  Exempt, Non-Exempt, or Not Listed; with the Non-Exempt drugs further segmented to identify “Special Fill” drugs (a 4-day supply of which is exempt from prospective UR if prescribed at an initial visit within 7 days of injury); and “Perioperative” drugs (a limited supply of which is exempt from prospective UR if prescribed 4 days prior to a surgery to 4 days after a surgery).  Among the findings, the study showed that after the formulary took effect:

  • Exempt drugs, which are available without prospective UR, increased to 38.5% of all prescriptions, up from 33.2% and 35.2% prior to the formulary.
  • Non-Exempt drugs, which require prospective UR, fell to 45.1% of the prescriptions, down from 54.3% and 52.9% in the pre-formulary periods.
  • Not Listed drugs rose to 16.4% of the prescriptions, up from 12.4% and 11.9% before the formulary took effect.
  • The mix of prescription drug payments also changed, as Exempt drugs declined from about 22% of the payments to about 19%; Non-Exempt drugs fell from more than half of the payments to 42%; and Not Listed drugs increased from about a quarter of the total drug spend to nearly 39%.

CWCI has issued its study in a Spotlight Report, which includes additional analysis and tables showing the changing distributions of prescriptions for the top 20 drug ingredients overall and for the drugs on the Special Fill and Perioperative drug lists; as well as breakouts showing the changing percentages for the top 20 drugs in the Exempt, Non-Exempt and Not Listed categories.  The report can be downloaded from the Research section at www.cwci.org.