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Study Examines Impact of California Workers’ Comp Formulary

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 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, a new stud shows.

The California Worker’s Compensation Institute study released on Wednesday looks at the impact of a Assembly Bill 1124 passed in 2015 requiring that the California Division of Workers’ Compensation to adopt a formulary that meets evidence-based medicine standards.

After two years of development, the Medical Treatment Utilization Schedule Prescription Drug Formulary took effect on Jan. 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.

The authors of the CWCI study compared pre-formulary data from prescriptions 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 to examine the formulary’s impact on the mix of drugs used in California workers’ comp and the distribution of prescription drug payments.

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 four-day supply of which is exempt from prospective UR if prescribed at an initial visit within seven days of injury); and “Perioperative” drugs (a limited supply of which is exempt from prospective UR if prescribed four days prior to a surgery to four days after a surgery).

Among the findings, the study showed that after the formulary took effect:

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

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. The report can be downloaded from the Research section at

This article was first published by Insurance Journal.

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