Study Shows California Workers Compensation Drug Costs Up

September 10, 2009

Despite the adoption of California workers’ compensation medical reforms and a pharmacy fee schedule in 2004, a new study finds that both the average number of prescriptions and average prescription drug payments per claim are on the rise – increases that coincide with the growing use and soaring cost of “brand” drugs and highly addictive “schedule II” medications, including opioid painkillers.
The study, from the Oakland-based California Workers’ Compensation Institute, is based on data from nearly 1.1 million California job injury claims that involved more than 4 million prescriptions filled between January 2002 and June 2008, resulting in $313 million in pharmaceutical
The study results show that California workers’ compensation prescription drug utilization and reimbursement are growing, despite reforms adopted in the state in 2004 that were intended to keep costs down, the institute said in a statement.
Comparing first-year prescriptions and pharmaceutical payments across six years, the study found that prior to reform, the average number of prescriptions per claim rose 15% from 3.3 in 2002 to 3.8 in 2004. In contrast, total prescription payments per claim rose just 9% from $269.05 to $293.41, indicating a shift toward less expensive generic drugs. Average payments for generics fell nearly 10% during this period. Average payments for brand drugs rose almost 8%.
After the reforms, utilization continued to grow, increasing from 4.0
prescriptions per claim in 2005 to 5.0 prescriptions per claim in 2007 (up 25 percent). Meanwhile, total payments per claim for first-year prescriptions declined almost 8% between 2005 and 2006, spurred by a 31% drop in the average amount paid per generic prescription, which fell from nearly $74 to just over $51, while the average
paid for brand medications continued to rise, increasing nearly 14% to more than $141 per prescription. Total first-year prescription payments per claim headed back up in 2007, however, as utilization continued to rise while the average amount paid for generics climbed 12% to $57.33, and the average reimbursement for brand drugs rose 15% to $162.25.
Overall, for the post-reform period of 2005-2007, the average number of first year prescriptions per claim was up 25% while first-year prescription drug payments per claim rose 35.6%, the study found.
The study also found a huge increase in the use of painkillers and short-acting barbiturates. In 2002, prescriptions for “schedule II” drugs–which include oxycodone, fentanyl, and morphine, in addition to the barbiturates–represented just 0.4 percent of prescriptions in workers’ compensation. By the third quarter of 2008, those drugs were 6% of prescriptions.

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