December 10, 2017

Brian Allen: Closed Formulary Closing the Door on Opioids

By Brian Allen, Vice President of Government Affairs, Progressive Medical/PMSI

Brian AllenThe door hinges creaked slightly as the young teenage boy opened the door to his mother’s bedroom and peered into the darkness. It wasn’t an unusual occurrence. His mom had been enduring the pain of a back surgery performed nearly two years earlier. Most mornings she needed some encouragement to wake up from a drug-induced sleep. But, on this morning, the room was eerily quiet as the boy entered. He touched her arm and, instead of the soft warmth he expected, he confronted the cold and lifeless body of his 42 year old mother. After battling addiction to opioids for more than 20 months, she surrendered to her pain by accidentally ingesting a toxic overdose of the medications that had been prescribed by her physician.

Sadly, this young man was confronted with nearly the same scenario two years later, as he found his father dead from a medical episode brought about by an over use of opioids. These tragedies are one of the fabrics weaving my family’s story—the teen’s mother was my younger sister. Tens of thousands of other families face the fear of this becoming their story every day as they witness loved ones struggle with addiction.

The use of opioid analgesics to treat pain is a significant issue in our country, to the point that, in 2011, the Centers for Disease Control (CDC) declared overdose deaths from prescription opioids a national epidemic. The latest figures from the CDC indicate that 16,500 people died from a narcotic painkiller overdose in 2010. In workers’ compensation, there has been a lot of talk about opioid analgesics and their accessibility, use, and impact when treating injured workers with chronic pain. Many states have taken steps to control the use of opioid analgesics in their workers’ compensation systems using a variety of methods ranging from treatment guidelines, drug testing, prescription drug monitoring programs, weaning programs, and pre-authorization requirements. A standout approach adopted by Texas in 2011, with others more recently following suit, is the closed formulary.

The Texas Closed Formulary
In 2005, when the Texas legislature was debating a significant overhaul of their workers’ compensation system, House Bill (HB) 7 was passed, requiring the newly created Division of Workers’ Compensation to develop a “closed formulary.” At the time, none of the stakeholders really knew what a closed formulary would look like or how it would be implemented, but there was a consensus that the use of opioid analgesics and other potentially addictive medications needed to be controlled. HB 7 contained a host of new provisions that required rulemaking and many of those provisions, including medical treatment guidelines, needed to be implemented before rules for a closed formulary could be adopted.

As early as 2008, the Division began having informal discussions with various individuals and groups about what a closed formulary might look like. More formal discussions and hearings followed. The natural fit, after much discussion, was to adopt a closed formulary based on the drug list contained in the previously mandated treatment guidelines from the Official Disability Guidelines (ODG) and to phase it in over time.

In January 2011, Texas formally adopted the closed formulary rule1, which included all drugs and over-the-counter medications that did not have an “N” designation in the ODG drug list. Medications indicated as “N” drugs, which include most opioid analgesics, could be prescribed but required the prescribing physician to engage in an involved prior authorization process. Additionally, the Division designed the rule such that it would be phased in over a two year period, making it effective for all new claims occurring on or after September 1, 2011, and then effective on September 1, 2103, for all “legacy claims,” claims that had occurred prior to September 1, 2011. The additional two year time frame was intentionally designed to allow payers and prescribing doctors to work together to determine if the currently prescribed “N” drug was appropriate or if another medication might be more beneficial to the injured worker.

Early Outcomes
The Division released their latest study2 on the impact of the closed formulary in March of this year and the results are impressive. The cost to the system for “N” drugs has fallen by 82 percent. The total number of prescriptions for “N” drugs was reduced by 74 percent, and 66 percent fewer injured workers are receiving “N” drugs. Several factors have contributed to this early success. First and foremost, they invested a lot of time talking with stakeholders and listening to the ideas that were coming from the marketplace before they started formulating the rule. Secondly, they instituted a strong data reporting system early on so they had good comparative data to use once the closed formulary was implemented. Finally, in what was perhaps the genius idea of pre-implementation, the Division identified high prescribers in their workers’ compensation system and engaged in an aggressive outreach program to educate the physicians on the closed formulary, the process for approving “N” drugs, and the Division’s desire that other drugs be used instead of “N” drugs. Group training sessions and individual meetings were held across the state of Texas in an effort to reach as many physicians as possible. This monumental effort is the magic behind the success and is recognition of one of the basic but often ignored realities in the opioid debate – the best and most effective way to safely utilize opioid analgesics is through education. Opioid analgesics have a place in medication therapy but their use must be closely managed and carefully monitored.

Early Success is Not without Challenges
Success acknowledged, this is not to say that a Closed Formulary is a proverbial “silver bullet.” The role of the pharmacy benefit manager (PBM), even absent the ability to apply their Medication Plans or formularies, is still vital to a payer’s cost containment strategy. Analysis of our data shows that some adjustments to the closed formulary may be needed to address “Y” drugs that appear to be unrelated to the workplace injury, yet are being permitted under the formulary rules. Additionally the data indicates that compounded medications that contain all “Y” drug ingredients may not be receiving sufficient scrutiny prior to approval. These are areas where the pharmacy management support provided by PBMs can help control some of the unnecessary costs and changes to allow for the application of a PBM’s medication plans and formularies could serve all stakeholders well. This is because the medication plans and formularies employed by PBMs and a closed formulary are not mutually exclusive. In fact, when they work together, they provide an effective checks and balance system starting at the prescribing level and continuing on through the dispensing and ultimate use of the prescribed medication.

Texas took a bold and innovative step when they implemented their closed formulary, and the rest of the nation is watching. To their credit, Texas has conducted data studies to self-assess their progress. They are also open to input and insight from other stakeholders in the system. As with any pioneering effort, experience is a great teacher and evolution is inevitable as more is learned about the Texas initiative. As changes are contemplated, we hope there will be continued emphasis on communication and education, particularly with physicians.

Other States are Following Suit
Sharing a bit of the limelight is Ohio. The Bureau of Workers’ Compensation announced earlier this year that their system has experienced a $20 million savings in drug costs since 2011, with $17.8 million of that savings attributed to controlling the dispensing of opioid analgesics. Prescriptions for opioid analgesics are down 27.8 percent and for skeletal muscle relaxants the drop is even more significant at 72.9 percent. These successes are prompting other states to consider initiating a closed formulary for their workers’ compensation systems.

Oklahoma formally adopted their closed formulary effective February 1st of this year. In doing so, they deviated from Texas in two key areas – first, they allowed the application of medication plans and formularies by PBMs to screen for unrelated medications and second, they require prior authorization for all compounds regardless of the ingredients. Louisiana had legislation proposed that has been sent to interim study. California recently announced that they are evaluating the idea and several others states are quietly looking at the viability of a closed formulary in their system.

The PBM as a Powerful Ally
Effecting change in the workers’ compensation systems in the various states is fraught with challenges. Workers’ compensation laws are often delicately balanced compromises between business, labor, applicant attorneys, insurance companies and providers. There is a natural suspicion among the stakeholders of any modification to the status quo for fear the one group may be disadvantaged in the process. Additionally, few legislators are conversant in workers’ compensation law and any change that becomes controversial is often delayed, if not completely derailed, by an interim study. However, with the epidemic levels of prescription drug abuse, there is growing unanimity among the political constituencies that something needs to be done.

Progressive Medical/PMSI is actively engaged to help shape solutions that are best suited for the workers’ compensation system. Closed formularies are one such tool that can be effective, particularly when used in conjunction with a PBM’s evidence-based medication plans, formularies, clinical tools and pharmacologic expertise. Not to mention the informed advocacy of an experienced government affairs team. Working together, we can continue to build upon this success through continued refinement and innovation of our solution so that no one has to confront the loss of a loved one to an opioid overdose.

About Brian Allen
As vice president of government affairs at Progressive Medical/PMSI, Brian Allen serves as an advocate for both payors and injured parties alike. He helps clients build effective strategies to navigate or otherwise comply with legislative and regulatory issues that impact workers’ compensation and auto no-fault payors.

A former Utah legislator and lobbyist, Brian is highly regarded by policymakers nationwide for his extensive governmental knowledge and ability to drive collaboration. He has an extensive history in a wide spectrum of legislative and executive branch assignments, including insurance, workers’ compensation, technology, and municipal and local government. Throughout his career, Brian has provided strategic advice, educated policymakers, authored rules and legislation, and given expert testimony.

A certified insurance counselor, Brian has a bachelor of science in business management from Western Governors University, an online educational institution for working adults that he helped to found. He also represents the company on CompPharma, a consortium of PBMs that develops solutions to some of the industry’s most pressing pharmacy issues, and is active on a number of boards for causes spanning the community, the arts and education.

About Progressive Medical and PMSI
Progressive Medical and PMSIProgressive Medical and PMSI, both leaders in developing solutions to control the growth of medical costs in workers’ compensation, liability, and no fault insurance, have merged to create one of the most dynamic workers’ compensation specialty services companies in the industry. The combined company, which will emerge as one brand in 2014, delivers proven solutions across the claims lifecycle, from first fill to settlement and is accelerating change in the industry by delivering solutions that provide more control to achieve better outcomes – both clinically and financially. Learn more at www.FirstFilltoSettlement.com

Notes:
1Texas Administrative Rules, Chapter 134, Subchapter F, §134.520
2Texas Workers’ Compensation Research and Evaluation Group Report – “Impact of the Texas Closed Formulary, A Preliminary Report Based on 12-month Injuries with 12-month Services, March 2014

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