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Drug utilization in comp: more details

NCCI’s latest report on drug costs makes for pretty compelling reading. At least among those of us who find this stuff remotely interesting. The report, published this November, adds much-needed depth to our understanding of the factors driving drug costs. Everyone (well, everypne defined as the hundred or so who pay attention to this) knows utilization is the big driver; the study goes well beyond to provide detail on how much utilization contributes and where.

The NCCI report breaks states down into high average and low-cost; the eight high cost states have drug costs at least twice as high (per claim) as the low cost ones. No surprise, utilization is the differentiator. In fact, there was essentially no price difference among the three categories.
Instead, high cost states had a different mix of drugs and more scripts per claim than the lower cost states.
Over the five years ending in 2005, the overall mix has changed as well. Specifically the percentage of drug costs spent on pain meds has increased dramatically while the percentage spent on sedatives has gone up nine-fold. Compound medications are also
growing, increasing four times over the five years.
A big contributor to these changes is the demise of the COX IIs. That said, the changes in the drug mix, coupled with the marked differences among states makes it all the more important for payers to make sure they stay on top of trends.

Joe Paduda is the principal of Health Strategy Associates




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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