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Jul
22

Work comp pharmacy – different indeed

The US spent $322 billion on outpatient drugs in 2015 – an 8.1% increase over the year before. (subscription required)

Over the next decade, CMS expects drug spending increases to outpace overall health care inflation by a significant margin at an average annual jump of 6.7%.

Things look remarkably different in the work comp world.

I’ve been surveying workers’ comp payers (insurers, state funds, TPAs, and large employers) for 13 years and the latest data indicates most are seeing a year-over-year decrease in drug spend.  I haven’t finished aggregating the data and checking the details, but this year looks like a continuation of the decreasing drug cost trend we’ve seen over the last several years (past Surveys available here).

More than 2/3rds of payers surveyed reported a drop in drug costs in 2015, and those that saw increases usually cited unique situations as primary drivers for those increases. Conversely, payers with decreases generally attributed their success to the same factors:

  • a strong focus on clinical management 
  • particular attention paid to opioid usage
  • ongoing, concerted effort to drive generic utilization

One other key driver – payers that work closely with PBMs on a variety of programs – retail network penetration, high risk patient identification, peer review, and outlier-prescriber outreach are seeing significantly better results.

I would note that work comp PBMs are spending a lot of money and resources to cut their revenues.  [I am president of CompPharma, a consortium of worker’s comp PBMs]

While there’s no question work comp can learn a lot from group health and other payers, the remarkable success workers comp payers have had in reducing the utilization of opioids shows that Medicaid and group health could and should carefully study what we’ve been doing.

What does this mean for you?

We are making progress, and work comp PBMs are leading the way.

 


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Joe Paduda is the principal of Health Strategy Associates

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A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.

 

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