Sunday, April 24, 2016

Moving toward Regulatory Adoption of Formulary

The North Carolina Industrial Commission has issued a report regarding implementation of a drug formulary. The potential benefits of formulary programs have been discussed for several years, after Texas led the way. It is touted as a process to control costs in a market that sees seemingly ever-increasing medical costs. 

The North Carolina report acknowledges that a drug formulary was a legislative idea there. in 2015, the legislature discussed the idea and charged the "North Carolina Industrial Commission (“Commission”) to study the implementation of a drug formulary in workers’ compensation." The initial focus was to be upon "claims filed by State employees." There is significant concern about prescription prices. Health Care Finance News reports "one of every five dollars spent on employer health insurance benefits" is spent on prescription medication. They say this is the "fastest growing part of the nation's healthcare budget." 

Several states have put formularies in place since Texas started the trend. I have noted that Texas, Ohio, Washington and Oklahoma are already in the formulary club. California, Georgia, Louisiana, Maine, Montana and Tennessee are all working in that direction. North Carolina is a step closer with the issuance of the Industrial Commission Report

The Commission Report concludes "that a drug formulary could potentially generate significant cost savings while improving the process by which medications are delivered safely and efficiently to injured workers." The report acknowledges its mandate was focused on state employees, and yet the Commission went further and "also considered system-wide application." 

Encouraged by their research and examination, the Commission concluded data "suggest(s) that a drug formulary could be beneficial for . . . the entire North Carolina workers’ compensation system." However, the Commission finds the formulary concept "complex," and therefore recommended that study should continue to assure "potential benefits of a drug formulary are max." These include "implementation of related medical treatment guidelines." It would likely include a mandate for the use of generic medications. 

If the ongoing study outcome is favorable, the Commission proposes that a prescription formulary should come to North Carolina through the executive branch, not the legislative. The Commission concluded that it has existing "administrative rulemaking . . . authority," sufficient to pioneer this change. 

Meanwhile, the effects of a formulary are seen in yet another state. Tennessee will see an almost 3% decrease in rates following its adoption of a prescription formulary. According to WorkCompCentral, the prescription medication costs amount to 18% of total system costs in Tennessee. They predict that the formulary will have significant effects on decreasing those costs. 

Florida has been reluctant to restrict medication. The efforts regarding repackaged drugs were spread over multiple legislative sessions. Many deride the result of those efforts, and contend that the long legislative process accomplished little, if anything. They prognosticate that Florida lacks the will to streamline the prescription process with a formulary. 

The workers' compensation world is evolving around us. Medical costs continue to increase, both in real terms and as a percentage of overall claims costs. Will Florida legislature or regulators discuss the path of formulary control?

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