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The Journey of AB 1124: Developing the California Formulary

| Mar 03, 2016

With the passage of AB 1124 in 2015, California has begun its journey in developing a workers’ compensation-specific drug formulary. On February 17, the California Division of Workers’ Compensation (DWC) held its first stakeholder meeting led by Barbara Wynn with the consulting group RAND to discuss several issues, followed by a joint legislative hearing by the Senate Labor Industrial Relations Committee and the Assembly Insurance Committee on March 2 to provide an update on the progress of the formulary thus far.

Stakeholder Meeting

A broad cross-section of interests attended the February 17 stakeholder meeting, including the Helios government affairs team. The first issue discussed was the types of medications to be included in the formulary, all Food and Drug Administration (FDA) approved medications, over-the-counter medications, intrathecal medications, or non-drug items. During the discussions, we shared our general support for the inclusion of FDA-approved prescription medications that are commonly used for treating workers’ compensation injuries, are recommended by California’s adopted treatment guidelines, and have not proven to have adverse side effects or excessive costs as they relate to the benefits provided. Since the formulary will limit access to certain types or classes of medications, it is important that the there are enough recommended medications to allow flexibility in the treatment of the varied injuries that can be sustained by workers. Formularies do not typically address inpatient medications, therefore, it was suggested the DWC study the feasibility of including in-patient prescriptions and intrathecal medications.

Another set of issues discussed were prior authorization and when it should be required, if there should be a “first fill” policy and if different policies should apply to physician-dispensed medications. We recommended medications prescribed for “off label” use, opioid analgesics, compounded medications and high-cost specialty medications, along with experimental or non-FDA-approved medications should be subject to prior authorization. With specific regard to a “first fill” policy for initial prescriptions, we recommended the initial first fill be limited to the first seven days following the date of injury and for no more than a five to seven day supply. Additionally, we asserted that the initial first fill should only be for medications on the approved or recommended list. Non-formulary medications should still go through a prior authorization process, even if a “first fill.” This requirement would support one of the primary goals of the formulary, which is to reduce the use of problematic medications by injured workers. Additionally, we believe physician-dispensed medications should be subject to the same rules and reimbursement policies as medications dispensed by pharmacies. We also support limiting physician dispensing to initial fills because keeping medications within the managed pharmacy care environment enhances patient safety and can help improve outcomes.

Discussions were had on policies for generic versus brand medications, off-label usage, compounded medications, and investigational or experimental medications. We shared our position that generics should be mandated when available, and that off-label usage, compounded and experimental medications should require prior authorization. Additionally, there were discussions on how to integrate the medical treatment guidelines, medical necessity review, dispute resolution, and retrospective review processes into the formulary. We believe that it is imperative that the formulary reflect the underlying care and outcome goals of the treatment guidelines so guidance is consistent, making it easier for prescribers to utilize medications that are the safest and most appropriate for the injury.

Another topic of discussion was how a formulary would be enforced at the point of sale and how policies would differ for network versus non-network pharmacies. On this topic we spent a great deal of time talking about Pharmacy Benefit Managers (PBMs) and the value they bring in helping employers and carriers manage a drug formulary. We provided insight on the automation PBMs can provide at the point of sale and the role we play in making sure that any medication dispensed follows the underlying rules of the state-mandated formulary. We also mentioned how PBMs help ensure that the medications prescribed are appropriate and related to an injury.

How frequently the formulary should be updated and the process to update the formulary was also discussed. We recommended quarterly updates unless there is a medication on the formulary that is pulled by the FDA or receives a black box warning. Those medications should be removed immediately. We cautioned on the importance of making certain there was sufficient lead time for any changes to allow for the necessary programming adjustments at the PBM and payer level.

The last point of discussion was if any special policies were needed for injuries occurring before the mandated implementation of the formulary, July 1, 2017, or for injured workers affected by a formulary update. We recommended that injured workers who were receiving medication prior to the effective date of the formulary should be placed into some type of transition period to allow for weaning from addictive medications where needed and appropriate, and proper assessment of the medication therapy regimen. Timeframes suggested ranged from six months to one year. We noted that one year should be the longest time period considered because one year provides enough time to evaluate the medication therapy regimen of current injured workers, but is also a short enough timeframe so that all claims can benefit from the outcome goals of the formulary. Additionally, we recommended the DWC engage in a focused education campaign with higher volume prescribers once the formulary is developed to facilitate understanding of the goals of the formulary and how it will work. Texas preceded their formulary launch with a targeted outreach to higher volume prescribers in their workers’ compensation system. The effort fostered communication and resulted in almost immediate adherence to the formulary by most prescribers.

The meeting was very informative and our comments were well received and supported by other attendees. Following the meeting, Barbara Wynn from RAND invited us to participate with her as she studies the best ways to help California build their formulary.

Joint Legislative Hearing

The California Legislature held a joint hearing of the Senate Labor Industrial Relations Committee and the Assembly Insurance Committee for an update on the creation of a workers’ compensation drug formulary required by recent passage of AB 1124. The Joint Committee heard from a varied group of stakeholders, individuals and state agencies. Testimony by stakeholders ranged from an update on the current regulatory process by the California DIR/DWC, to application of formulary requirements on physician prescribing practices as presented by the California Medical Association. Providing support for a drug formulary and offering insight into pros and cons of formulary adoption in California, Alex Swedlow from the California Workers’ Compensation Institute (CWCI) opined that a drug formulary could be a major reliever of friction costs and friction points in the system related to medication utilization, and could also help reduce a fairly large percentage of overall utilization reviews (UR) directly related to prescription medications. 

Christine Baker (DIR), George Parisotto and Dr. Ray Meister (DWC) updated the committee on the progress of formulary development and their intent to meet the legislatively-mandated goal of July 1, 2017. The Division’s testimony focused on several key points, largely supported by other stakeholders:

  • The formulary must integrate with other existing Medical Treatment Utilization Schedule (MTUS) requirements
  • It should help reduce the friction points/costs of URs and Independent Medical Reviews (IMRs) for medications
  • The formulary must focus on the need for treatment with specific medications and be based on evidence-based medicine
  • It must include transparency to the medication list, as well as any updates
  • The formulary must establish a phase-in period for all dates of injury (DOI) to protect the needs of injured workers undergoing long-term therapies

Christine Baker from DIR/DWC clearly indicated to the Joint Committee that use of a drug formulary in California should have as its main goal, the ability to provide timely and appropriate care that is cost effective to the injured workers. During testimony, the DWC stated they hope to have a first draft of a formulary regulation out for public consumption by May, and they will issue follow up with the Legislature through an interim study in July.

Helios will remain engaged in the process and continue to support the efforts of the California DWC, RAND and the California Legislature as the formulary development moves forward.

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