CompPharma: Workers’ Comp Drug Spend Continues to Decline

November 14, 2017

A new survey shows an 11 percent reduction in worker’s compensation payers’ year-over-year drug spend. The decline is associated with a 13.3 percent reduction in opioid cost, according to CompPharma’s 14th Annual Survey of Prescription Drug Management.

Total workers’ compensation annual pharmacy spend is estimated to be $3.6 to $4.1 billion.

According to the report, cost is defined as total drug expenses for a payer. Price and utilization are both contributors to cost. Cost should be thought of as Cost = Price x Utilization.

The survey analyzed the 2016 pharmacy cost data of 23 workers’ compensation insurance carriers, third-party administrators, self-insured employers and state funds.

The report noted all but four of 23 state funds,insurers, third-party administrators (TPAs), and self-insured employers surveyed spent less on drugs in 2016 than the previous year, with seven respondents reporting declines greater than 15 percent.

Working with their pharmacy benefit managers, payers cut one of every six dollars in opioid spend, which the report called a “truly remarkable result.” In contrast, across all payer types, pain medication use declined by a scant 1 percent (Quintiles IMS).

“Clearly the efforts of workers’ comp regulators, payers, desk-level staff, PBMs and prescribers have paid off,” said Joseph Paduda, president of CompPharma, LLC. “While we have much left to do, this represents a dramatic improvement in the lives of thousands of patients.”

Payers are far from complacent, with all respondents expressing grave concerns about the risk of opioid addiction or dependency. Most are continuing to refine and improve programs to help patients address pain while minimizing use of opioids, relying on physician and/or pharmacist review of claims, early identification of potentially risky prescribing, and increased use of drug testing.

In contrast, compound drug utilization and spend has dropped dramatically and is no longer of great concern to payers.

Outside factors affecting pharmacy management in workers’ compensation include:

  • The ACA’s expansion of insurance coverage;
  • Societal issues, such as the explosive growth in opioid abuse and misuse and the introduction of new brand drugs and patent expiration;
  • Generic price inflation;
  • Practice-pattern evolution, and
  • Pharmaceutical marketing practices

According to the report, drivers specific to workers’ compensation, such as fee schedule changes, implementation of state-regulated formularies, claim frequency, physician dispensing and novel drugs, respondents report that better programs — properly implemented — deliver lower loss costs, which translate to lower combined ratios and costs for work comp insurers and self-insured employers and better care for workers’ compensation patients.

A complimentary copy of the 2016 survey can be downloaded from

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