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Workers’ comp pharmacy costs – Survey says…

CompPharma, a consortium of workers’ comp pharmacy benefit managers, released the 12th Annual Survey of Prescription Drug Management in Workers’ Comp yesterday.  The Survey is an in-depth look at the issue based on telephonic interviews with 21 TPAs, insurers, state funds, and self-insured employers.

This year, we (I’m the author of the study) found that drug costs increased across all respondents.  Comparing total 2013 and 2014 drug spend across all respondents, costs climbed 6.4%.

However, that increase was driven by a minority of respondents as only 7 of the 21 saw costs go up.

Looking at inflation another way, we also calculated the average increase for each respondent; trend was essentially flat.

We offer these different metrics to provide readers with as much data as possible so they can draw their own conclusions.  One could argue that you have to look at cost changes across an entire industry to really understand what’s happening.  Another perspective focuses on individual payers. As the payer’s policyholder base doesn’t change that much from year to year, a payer-specific view is more accurate.

The big question is what is driving drug spend increases.  In that, respondents’ views were pretty consistent – physician dispensing, opioids, and compounds.  I’d note that the industry has had some pretty good success addressing opioids; PBMs that report on this have all been able to decrease opioid spend over the past couple of years.

Another cost driver, mentioned by a couple respondents, was likely a major contributor: price inflation for generic medications.  Fortunately, that has leveled off somewhat of late, although entrepreneurs will continue to look for opportunities to make their fortunes by buying up manufacturers (of little-used drugs) and dramatically increasing prices.

A couple points that bear making.

First, work comp pharmacy is about as different from group health/medicaid/medicare as chalk and cheese.  There are:

  • no deductibles, copays, coinsurance, or other cost sharing for patients
  • wide-open choice of drugs except in TX OH WA and OK
  • most spend is for pain; 24% of dollars go for opioids while about 84% of spend is for pain

Second, the PBM industry has done a remarkable job of bringing down the rate of inflation over the last dozen years.  Yes, there have been a couple spikes over that time, but ten out of twelve years we have seen a ‘decrease in the rate of increase.”


5 thoughts on “Workers’ comp pharmacy costs – Survey says…”

  1. I have been seeing an increase in the use of spinal injection procedures with costs for a single claimant sometimes exceeding over $100,000 just for the MD charges. (Epidurals, facet injections- multiple levels, repeat injections, etc). It seems this is a new form of money making and a number of physicians are not following ODG (Official Disability Guidelines). Has this been a discussed topic?

  2. PBM’s are providing information to drug manufacturers to help them market more expensive name brand drugs. How is this helping to keep drug expenditures down? Some PBM’s are getting rebates for pushing one drug over another, how come you do not expose this?

    1. Mr Gaines

      First, you may not be aware that generic efficiency in work comp pbm is north of 97 pct. That indicates that these efforts on the part of pbms to get patients to use specific branded drugs are an abject failure.

      That is, if there is such an effort. I’d add that I don’t know of any effort on the part of work comp pbms to get patients to switch drugs due to rebates.

      Perhaps you have evidence you’d care to share?

      1. You cannot separate Workers Compensation PBM’s from others. Many PBM,s do both Workers Compensation and group health, if they are providing data to the drug companies on any patients, they are contributing to the high cost of medication. Do the rebates received by PBM’s help keep cost down? You can honestly tell me that PBM’s have nothing to do with marketing of name brand drugs? You can honestly tell me that the marketing of name brand drugs helps consumers? Look at this

        1. Mr Gaines
          For some reason you chose not to address my question. Why not?

          Instead you made a statement unsupported with data or citations. In fact there are two WC pbms that are affiliated with broader pbms (these pbms have very high generic efficiency rates) but most are not. Were you not aware of this?

          If you provide support we can continue the discussion.

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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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