Pharmacy Cost Control

N.C. Drug Formulary Could Save $9 Million

According to a WCRI study, North Carolina stands to reap huge savings by adopting a Texas-style workers' comp drug formulary.
By: | April 25, 2016

If a drug formulary was implemented for injured state employees, North Carolina could potentially see significant savings, says a new study. The state is considering formularies to curb abuse and reduce costs in its workers’ comp systems.

The Massachusetts-based Workers Compensation Research Institute reviewed approximately 14,000 claims with 183,000 prescriptions over a three-year period from January 2012 through December 2014. They applied a drug formulary and developed several scenarios to determine the potential impacts of each.

“Over the three-year period, the state paid approximately $29 million for prescription drugs filled by injured state employees,” the study said, “and there may be potential to save $1.4 million to $8.7 million with adoption of a Texas-like formulary under a range of scenarios.”

The authors found the biggest potential savings would occur if physicians in the state adopted prescribing patterns similar to those in Texas when the formulary was adopted there. Physicians in Texas reduced prescriptions for non-formulary drugs by 70 percent and “infrequently” substituted formulary drugs for them.

“Where physicians [in North Carolina] adjust to a closed formulary in ways that are similar to what we saw with Texas physicians, we estimate large effects of adopting such a formulary,” the report said. “We estimate reductions from 22 -23 percent to 6-7 percent of all prescriptions that are for non-formulary drugs and a 30 percent reduction in total prescription costs or close to $8.7 million over the three-year period.”

“There may be potential to save $1.4 million to $8.7 million with adoption of a Texas-like formulary under a range of scenarios.”

In a second scenario, North Carolina physicians reduced their use of non-formulary drugs but fully substitute formulary drugs from the same drug group. In that case, the estimated reduction in prescription costs was 8 percent to 9 percent.

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In the third scenario, North Carolina physicians reduce the use of non-formulary drugs by just 25 percent but did not often substitute formulary drugs. In that situation, the authors estimate cost reductions of 12 percent.

Finally, the authors considered the possibility that North Carolina physicians reduce their non-formulary drug prescribing by 25 percent but fully substitute them with formulary medications. For that scenario, they estimate the percentage of all prescriptions for non-formulary drugs could decrease from 22-23 percent to 16-17 percent.

Overall, non-formulary drug use accounted for 23 percent of all prescriptions and 39 percent of total prescription costs filled in calendar year 2014 for the state workers. The top 10 most commonly prescribed non-formulary drugs in calendar year 2014 accounted for more than half the costs. Several on the list are long-acting Schedule II opioids of which all are considered non-formulary drugs in Texas.

“This category of medications accounted for 23 percent of non-formulary drug prescriptions and 33-34 percent of non-formulary drug payments across the three years,” the report said. “Thirteen to 15 percent of total prescription drug costs paid for North Carolina state employees were for long-acting opioids between 2012 and 2014. Adoption of a Texas-like formulary may decrease opioid use, particularly for long-acting opioids in the state.”

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]