What's Past is Not Prologue: Formularies Differ by State

I've recently heard predictions regarding California's forthcoming formulary that are based on the experience of Texas over the last five years.  Both are large states.  Both have well recognized, embedded utilization review processes.  And they have tertiary dispute resolution processes that, while not precise analogs, nonetheless look similar to one another (the Texas IRO process and the California IMR process).

So we might expect California, when it adopts it's drug formulary on or about July 1, to exhibit behaviors and results that are similar to the results Texas has achieved with its formulary (see my colleague Mark Pew's recent blog posts for insight into the CA timeline).  In Texas, prescriptions for "N" drugs fell by 81% and the costs for those same drugs dropped by 80%.  Total opioid scripts dropped by 8% and total drug costs in the state's work comp system fell by 15%.  All of this occurred with no discernible increase in loss adjustment expense (primarily, utilization review). So we might expect the same from California, right?  

I don't think so.  I offer three key data points in defense of that view:

First, the formularies are not the same.  Texas relies on Work Loss Data Institute's Official Disability Guidelines, Appendix A (which lists medications are either "N" or "Y" based on whether they are recommended for first-line therapy).  California has used as its starting point Reed Group's MDGuidelines in order to incorporate a formulary into MTUS.  The list of "non-preferred" drugs in these guidelines is a different, and frankly more restrictive, list than the ODG list of N drugs.  For instance, ODG has some opioid analgesics in the "Y" category.  The MDGuidelines categorized all opioid analgesics as "non-preferred." The two organizations take different approaches and I'm careful to avoid expressing preference for one or the other (PRIUM works closely with both sets of guidelines).  The important take-away here is that the two states are relying on different formulary approaches.

Second, about 38% of CA's lost-time claims have attorney representation.  That number for TX is 6%.  There are lots of reasons for this (attorney fee schedules come immediately to mind) that have nothing to do with formularies.  But adopting a formulary in a state with injured worker representation in the single digits is a fundamentally different proposition than adopting it in a state where 4 out of every 10 injured workers on indemnity have a lawyer.

Finally, loss adjustment expense in CA is already running at about 35% of total losses (which is 83% higher than the median in WCRI's latest study on LAE).  When the TX formulary came into full effect in 2013, the number of IRO decisions from 2013-2015 ranged in the 1200-1400 range per year over that three year period post-formulary implementation.  The number of IMR decisions in CA in 2016?  164,136.  And this is before the adoption of a formulary. Long term, as the prescriber community adjusts to the formulary list and its associated rules, the number of medication-related IMRs may in fact moderate.  But for the latter half of 2017, I wouldn't count on that happening.

Two different states, two different formularies, two different environments.  Beware of drawing conclusions regarding one based on the other.

Michael
On Twitter @PRIUM1

The Mistakes That States Make

As 2017 gets rolling, state legislatures are convening all over the country.  Several of them are about to make mistakes in the area of medication management in workers' compensation.  

My colleague, Mark Pew, and I have written and spoken extensively on the topic of drug formularies. And we're currently working, formally and informally, with regulators and other stakeholders in jurisdictions across the country on approaches that make sense for employers, doctors, pharmacists, and, most importantly, injured workers.  While there's not a lot to be gained for any of us in calling out individual states, there's a great deal at stake for all of us in the successes and failures of drug formulary implementations.  A failure (perceived or real) in one jurisdiction can lead another jurisdiction to delay its own attempt at a formulary - or to scrap it altogether.

So how can we tell if a law or rule set is headed in the right direction?  Or, alternatively, if a state's efforts are more likely to lead to sub-optimal results?  Here's a quick litmus test that you can apply to make your own determination:

1) Will the formulary rely on independent, 3rd party medical treatment guidelines?  
There's a great deal of industry discussion surrounding this topic, mostly focused on the definition of 'evidence-based medicine.'  While that conversation is interesting, it's not the critical factor in overall formulary success.  The crucial questions are two-fold: First, will there be room for political influence in the formation of the guidelines? Second, will the guidelines be updated with sufficient frequency?  

2) Does the formulary process build off of existing dispute resolution processes?
States that have successfully implemented drug formularies thus far have done so by relying on existing rules regarding resolution of medical treatment disputes.  States that try to simultaneously create a formulary and new dispute resolution processes to support it are, in reality, trying to do two things at once.  Not impossible, but certainly creates execution risk. 

3) Does the formulary allow for a remediation period for legacy claims?
On the one hand, a single effective date creates chaos as employers and physicians try to figure out how to address legacy claims, which tend to be more complicated. On the other hand, only applying new rules to new injuries creates two standards of care within a workers’ compensation system, where an injured worker’s treatment plan is driven entirely by the date on which they were injured (which makes no clinical sense). I look for regulatory language that takes a balanced approach – an initial implementation date for new injuries, followed by a remediation period for legacy claims, followed by a fully effective date for new rules and all claims. 

4) Is the formulary process scalable?  
I always look to see if the dispute resolution process can stand up to a significant volume of cases. While the goal of any formulary adoption should be to streamline access to medically necessary medications for injured workers, states should take a 'hope for the best, plan for the worst' approach.  Dispute resolution processes that rely on one individual or one office for ultimate resolution may lead to bottlenecks and, in a worst case scenario, undue influence.  I always ask myself - what will this look like if there are more disputes than the state expects?  

One bad apple can spoil the bunch.  Let's get this right.

Michael
On Twitter @PRIUM1  

The Rule of Law: Laws Require Rules

Remember these two from when you were a kid?

Watching the video brings back fond memories... and highlights some pretty significant gaps in the process, as well.  

So it looks like California is putting the concept of a drug formulary into law (thanks, in no small part, to PRIUM's own Mark Pew and host of others that stayed close to the process, educated the stakeholders, answered a multitude of questions, and made the case clear that formularies are in the best interest of injured worker safety).  Assembly Bill 1124 passed through the California state legislature late on Friday night and will likely be signed by the governor sometime in the next few weeks.

Then what?

Then the hard work starts.  Where the charming childhood educational video ends, the real work of governing and public policy begins.  Most (though admittedly not all) laws are conceptual in nature.  AB 1124 is a good example.  The law instructs "the Administrative Director of the Department of Workers' Compensation to create an evidence-based drug formulary, with the maximum transparency possible, for use in the workers' compensation system..."  There are some other instructions and caveats in the bill, but this sums it up.

Perhaps you're wondering about that phrase "with the maximum transparency possible."  That language is a reminder to the DWC that the real work of creating regulatory infrastructure around the drug formulary needs to be an open, transparent process so that stakeholders throughout the system not only understand what's going to happen, but also have an opportunity to influence the ultimate outcome.

Some key questions that the rule-making process needs to address:

• What guidelines will we use?  In other words, what will be the "source" for determining inclusion / exclusion for specific drugs?
• How will the formulary leverage (or not) the existing utilization review and dispute resolution processes in California?  
• How will we deal with the concepts of dependence and addiction for long term, but medically inappropriate, opioid use?  
• How will the formulary balance the concepts of "authorization" and "access"?
• How will we measure the success or failure of the formulary?  

California needs a formulary.  The DWC now has a legislative mandate to create one.  Now we have to decide what it will look like and how it will work.  

Michael

On Twitter @PRIUM1 

California's Formulary: An Update from the Field

[Mark Pew, Senior Vice President of PRIUM, has been following, working, talking, meeting, eating, sleeping, and breathing California formulary for months - actually, years.  Mark's latest update below.]

The language has been approved (published late on Sep 4) for a bill to establish a Work Comp drug formulary in California - I will let you read it for yourself rather than restating it's contents here. AB 1124 should have its third reading on Sep 8, a vote on either Sep 9 or Sep 10, and with enough AYE votes Governor Brown will sign it into law shortly thereafter. I certainly don’t want to jinx it by unequivocally stating that a drug formulary will be implemented in California by July 1, 2017, but that possibility is as promising as it has ever been.

But … It hasn’t been easy. And I and others at PRIUM have had a front row seat to the entire process:

• In November 2009, we started following the development of the Texas drug formulary, staying engaged through the 9/1/11 and 9/1/13 implementations.
• On November 8, 2012 at the National Work Comp & Disability Conference in Las Vegas, I presented an overview of the Texas drug formulary and opined that California was a logical candidate to consider something similar.
• In December 2013, I had my first meeting with California’s Department of Workers’ Compensation (DWC) to present the concept of a drug formulary.
• In January 2014, I had my first meeting with leaders in the Assembly, Senate and Labor to discuss the concept of a drug formulary.
• In October 2014, the first major milestone in California’s discussion of a drug formulary came after the California Work Comp Institute (CWCI) published a whitepaper “Are Formularies a Viable Solution to Controlling Prescription Drug Utilization and Cost in California WC” with a tentative answer of “yes”.
• On March 5, 2015, the second major milestone occurred when Assemblyman Henry Perea (D-Fresno) introduced AB 1124 to direct the DWC’s Administrative Director to adopt a formulary (read about it in thisWorkCompCentral article that requires subscription.

Since that date, the process of filling in the details has been a consuming priority for me and many others involved in Work Comp in California. There have been many formal and informal meetings involving almost every stakeholder and constituent. There was a public hearing in the Assembly and then in the Senate, both interesting in their content and participants, from praise to guarded optimism to limited opposition. An advisory committee has been working directly with Assemblyman Perea’s office in July and August to develop the content of the bill. It has been an adventure in spirited dialogue and compromise in a decidedly non-antagonistic environment (though one not totally devoid of disagreement). The committee was comprised of representatives from every possible corner of Work Comp in California, and while the final version of the bill does not reflect all of the suggestions, the dialogue has been extremely helpful in establishing what will need to be addressed in the rule-making process. In collaboration with the DWC, the focus has been on crafting a bill to become law that mandates action but provides flexibility.

The third major milestone? July 23, 2015 at the CCWC conference in Anaheim where David Lanier (Secretary of the Labor and Workforce Development Agency) stated “Based on the work to date and the urgent need I have instructed Christine [Baker, Director of the Division of Industrial Relations] to move forward with creating a formulary as expeditiously as possible". This strategic statement sent an unmistakable message that a formulary was going to happen. Period. I still recall seeing people in the audience turning their heads and whispering to each other “did I just hear that right?” while I was writing notes to myself with exclamation marks.

And it got done (well, almost done). Think about it – from March 5, 2015 until now, all constituents in the California Work Comp system have basically agreed that a drug formulary is needed. In California! In less than six months! Amazing!

Of course, there is much work still to be done. And likely the hardest work to be done. Deciding on the concept of a drug formulary and some general parameters is one thing – crafting the actual rules and process to initiate intended consequences and mitigate unintended consequences are yet another. My July 2015 article on Claims Management magazine, "A Formulary for Success", will provide some insights into guiding principles that should be taken into account.

The first step to that is September 8, 2015 from 10:00am till Noon when a public hearing will be held to establish the goals of the DWC and listen to feedback from all interested parties. This meeting will just be the start of a long journey, and I will continue to be a technical adviser as the rules are developed. Unfortunately, I will not be able to attend as I had previously committed to speak at a North Bay Work Comp Association event in Santa Rosa, but if you’re interested go to the Elihu Harris State Office Building (Room 2, Second Floor, 1515 Clay Street, Oakland, CA 94612) on Tuesday.

The stated goals of the DWC are:

• Improve appropriate care through the dispensing of evidenced-based medicine
• Expedite pharmaceutical treatment for ill and injured workers
• Reduce delays, including reducing the need for elevated utilization review and independent medical review
• Improve efficient delivery of medical benefits and reduce administrative costs

Those are the lofty goals that have driven this entire process since the beginning, and one reason why consensus through compromise has been achieved so quickly.

The common theme I’ve heard throughout this process has been to ensure injured workers receive appropriate treatment with a renewed focus to limit the damage prescription drugs with very dangerous and even life-threatening effects can wreak. Part of that is to ensure those who have become reliant / dependent upon / addicted to dangerous polypharmacy regimens are not suddenly thrust into withdrawal but allowed to thoughtfully and carefully be tapered to a more appropriate drug regimen while being equipped with more robust coping skills to deal with the pain that remains.

In other words, whether it’s Labor or applicant attorneys or defense attorneys or physician groups or carriers or self-insured employers or legislators or PBM's or any other interested party, the focus has been squarely on combating the epidemic of over/misuse of prescription drugs and creating a path to less dangerous and more efficacious pain management for those that need it. And who can argue with that? Apparently, nobody.

Because there have been so many people integral to this process, I won’t even try to name them all. So, instead, I will just say “Kudos Cali”!

Mark

On Twitter @RxProfessor

Formularies to the Right of Them, Formularies to the Left of Them

Formularies in front of them

Volleyed and thundered.

Everyone wants a formulary these days.  Louisiana, Nebraska, North Carolina, and South Carolina are the latest to make at least public mention of exploring a drug formulary for their respective states' workers' compensation systems.  They join California, Montana, Maine, Tennessee, and Arkansas, all of which are also thinking about formularies.  And this movement, of course, builds on varying degrees of success observed in those states that already have formularies: Texas, Washington, Oklahoma, and Ohio. 

Tennyson's Charge of the Light Brigade, to which I allude above, is a celebration of a very brave group of six hundred cavalry soldiers who fought in the Crimean War in the mid-19th century.  The British soldiers depicted in the poem didn't quite realize what they were getting themselves into. Neither do some state regulators who are contemplating formulary implementation.   

Formularies are an absolutely essential tool to mitigate prescription drug misuse and abuse within any workers' compensation system.  But they're not easy to implement and some of the states contemplating it have not done the work necessary to implement such a measure.  As I've stated time and time again, both here on this blog and in presentations and panels around the country, Texas passed HB 7 in 2005 - and finally got a formulary implemented in 2011 (and didn't get it fully implemented until 2013).  What took so long?  The hard work of creating, implementing, adopting and communicating critical prerequisites like pre-authorization processes, dispute resolution processes, medical treatment guidelines, and stakeholder acceptance. 

I recall presenting on the topic of formularies at the South Carolina Work Comp Education Conference back in February of 2013.  I talked about the concept generally and shared some of the early data coming out of Texas.  My enthusiasm for formularies must have been obvious... because the backlash was swift.  Several doctors in the room vowed they would cease taking work comp patients if such an approach was ever attempted in South Carolina.  Several adjusters commented that it sounded great, but they couldn't imagine how it would work in their state.  Defense attorneys told me they thought it was great... in theory.  And the applicant attorneys just chuckled.  

The desire to exercise better control of prescription drugs in work comp doesn't start with a formulary.  A formulary is the fruition of appropriate regulatory groundwork.  

My fear is that one or two bad formulary implementations at the state level will set the national movement toward formularies back several years.  We can't afford any setbacks in the fight against prescription drug misuse and abuse.  Better to do it right than to rush into something that a state lacks the infrastructure and experience to accomplish.  

One step at a time. 

Michael 

On Twitter @PRIUM1      

Unpacking the California Closed Formulary

With ever greater frequency, I'm encountering questions regarding California's legislative attempt to create a closed formulary.  "What do you think?" is the intentionally loaded question.  This is one of those interrogatives that requires unpacking, like a suitcase that's been the companion of a traveler on a long road trip.  There are a lot of layers, some messier and more complicated than others.  Courage is required to unload the suitcase and it'll take a while to sort through all the laundry.  And yes... the "baggage" metaphor is intentional.  So much baggage.  

Should California adopt a closed formulary?
Of course they should.  All state workers' compensation systems should.  A well designed formulary, properly implemented, is the best and fastest way to disseminate clinical best practices and contemporary medical evidence throughout the provider community (a community that is, I might add - through no fault of their own - perennially behind the curve on the latest science regarding appropriate, safe, and efficacious use of medications).  Doctors and patients clearly benefit from the "guide rails" of a formulary.   

What will the California closed formulary look like?  How will it work?
I have no idea.  No one does.  And should you encounter someone that claims to know, tread carefully and remain skeptical.  The sausage-making process is in full swing in Sacramento and everyone wants a seat at the table.  What's clear at this point is that the usual suspects have taken their predictable positions (Chamber of Commerce likes it, applicant attorneys don't, etc.)  Also clear is that each amendment added to the current bill creates significant swings in support.  At this point, it's hard to even ascertain the score, much less who has the momentum.  

If (emphasis on that word "if) this happens, when will it go into effect?
Likely not until mid-year 2017 at the earliest.  Keep in mind that the Texas closed formulary was phased in starting in September of 2011 and applied to legacy claims in September of 2013... after the legislative mandate for the formulary was signed into law via HB 7 in 2005.  These things take time.  
What will this mean to you?
Well, CWCI says it could mean injured workers are treated more appropriately... to the tune of $120 million - $420 million in annual savings.  That's a lot of prescriptions never dispensed... a lot of drugs never taken... a lot of addiction never rearing its ugly head... a lot of injured workers saved from greater pain and suffering brought on by inappropriate treatment.

What are the chances?
Perhaps the most complicated question of all... because it's really two different questions.  What are the chances of something passing... something the state calls a "formulary"?  Pretty good, I think. What are the chances the resulting regulatory approach really creates a safer medical treatment environment for injured workers that subsequently saves payers millions of dollars?  It's possible... but not probable.  Like any major legislative/regulatory change, this will be flawed.  Let's hope it's not so flawed that it's not worth doing.  

Michael
Follow us on Twitter @PRIUM1  

A Terrible Excuse for a Formulary

I'm sitting in New Orleans, Louisiana at the annual RIMS conference and right down the road in Baton Rouge, the state is about to do something that will put a lot of injured workers at risk.  Ironic, right?

Louisiana Senate Bill 256 is scheduled for a hearing at 10 am central tomorrow.  I hope someone at that hearing points out the following:

1) Evidence based medicine isn't produced by a panel.  The bill calls for a panel (made up of one doctor and four pharmacists) to meet regularly and, by majority vote, decide what changes should be made to the formulary.  This is an awful idea.  Evidence based medicine is developed through peer reviewed research and should be adopted as the evidence dictates, not according to a majority vote.  For a brief glimpse into how guidelines adoption by committee works (or, rather, doesn't work) in Lousiana, check this out.

2) But should the state insist on a committee, we need to move beyond a single doc and four pharmacists.  Where is the voice of the employer on this proposed panel?  Where is the voice of the injured worker?  Wh y does a single doc and four pharmacists get to decide?

3) Worst of all... and the point that will lead to the greatest risk to injured workers... and the part of the bill that shows how very little its authors know about medical management: All "non-narcotic drugs" will be approved and not require pre-authorization.  Since when are narcotics the only dangerous drugs in work comp?  Hydrocodone might require authorization under this bill, but injured workers can have all the benzodiazepines, antidepressants, antipsychotics, anticonvulsants, sleep aids,  muscle relaxants, etc that they'd like.  The distinction between drugs that require authorization vs those that do not shouldn't be based on the drug's class.  Rather, good formularies assess the appropriateness of a given medication for first line therapy, regardless of class.  The approach outlined in SB 256 is worse than silly; it's dangerous.

A closed formulary is a great idea in concept and I genuinely hope to see Louisiana adopt one.
Just not this one.

Michael
Follow us on Twitter @PRIUM1

Ohio’s Formulary Updates: Excellent Progress

I picked on Ohio’s new “lock in” program last month.  While I liked the overall concept, I was concerned that medically unnecessary drugs would still be prescribed and dispensed (albeit by a single physician and a single pharmacy).  And then I saw some of the formulary changes BWC has made (effective February 1).  Some highlights:

• Morphine sulfate will be the only sustained release opiate eligible for reimbursement as an initial sustained release opiate (i.e., don’t even try to jump right to Oxycontin or Fentanyl – BWC won’t pay for it).
• Fentanyl patches won’t be reimbursed if combined with another long acting opiate.
• Unless there is a documented treatment failure or allergy to MS CR tablets and Oxycontin tablets, Fentanyl patches will only be approved for claims when the injured worker cannot swallow or absorb oral products.

While there’s still work to be done, this is a move in the right direction to clean up Ohio’s work comp prescription drug issue.  To Stephen Buehrer (Administrator/CEO of BWC) and John Hanna (Pharmacy Director of BWC), I say well done.  To work comp professionals in other, non-monopolistic states, I say (as I’ve said before) don’t wait for your state legislature; get to work on a market-driven solution.

Michael
On Twitter @PRIUM1