Building Blocks of a Drug Formulary

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Another year, another legislative session, and another handful of ways to tackle a drug formulary.  Since 2011 when Texas introduced their closed drug formulary to the workers' comp world, states have been lining up to discuss if a drug formulary is right for them. 

Presently, Arizona, California, Oklahoma, Ohio, Tennessee, and Texas all have drug formularies in place, and states like Indiana, Pennsylvania, Massachusetts, North Carolina, and Louisiana are considering legislative or regulatory efforts to create drug formularies for their worker’s comp systems. 

Deciding on a Drug Formulary

Every state’s formulary looks different, even if they’re relying on the same source.  Take for example Texas and Arizona, who both rely on the ODG drug formulary - but both systems look very different.  Texas adopted the ODG formulary for all injuries and updates it monthly, but Arizona only adopted the ODG formulary for chronic pain and opioid cases. With so many formularies floating around it is always helps to take a minute and think about what exactly makes a formulary and what states need to think about when developing their own formulary. 

First things first, a state must think about what they’re basing their formulary off of.  Are they going to use a commercially available formulary, like ODG or ACOEM, or are they going to go the way of Washington and create their own, state-specific formulary?  Even that choice isn’t easy. 

Meeting the States Needs

Many states have relied on commercially available formularies, like the ODG in Tennessee and ACOEM in California, but don’t adopt the full formulary.  California has only adopted formulary medications that are specified in the ACOEM medical treatment guidelines they have adopted.  While the formulary is based on ACOEM, they’ve still made changes that reflect the unique nature of California. 

Another thing to consider, is how restrictive you want to make the formulary.  In some states, like Texas, the formulary is fairly broad, encompassing numerous medications and providing doctors several options within the Y-drug list for treatment.  For example, in Texas, as of this publication several opioids are considered Y-drugs and don’t require prior authorization, but in contrast, California requires prior-authorization for all opioids.  California’s formulary is also significantly less inclusive, with less drugs included overall.  Along with opioids, other classes of medications, like anti-depressants or sleep aids require prior authorization.   The restrictive nature of the formulary is entirely up to the state, even if they adopt a commercial available formulary, like ODG, they still have the authority to remove drugs from the formulary as it meets the needs of their state.

Other considerations for formularies include making it mandatory, meaning that a carrier and a provider are required to comply with the formulary as developed by the state. In Texas, a carrier has to abide by the formulary, but in California, a carrier can have their own formulary that’s less restrictive.  States also must determine how often they want to update their formulary to account for changes in medical research.  Some states opt for monthly updates, others a less formal process where updates occur “as needed.”

It’s clear that formularies in workers’ comp are here to stay. As states continue to introduce legislation, IWP will be tracking and reporting on the development of state-based drug formularies, like the one recently passed by Indiana. Subscribe to our blog here to receive weekly updates on important pharmacy and workers’ comp legislation.

See Why Drug Formularies are a Growing Trend in Workers' Comp


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