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.”