Texas adopts closed drug formulary rule changes to require preauthorization on compounded medications

Optum Workers' Comp
| Apr 18, 2018

Effective July 1, 2018, the Texas Division of Workers’ Compensation (TDWC) formally enacts changes to its Closed Drug Formulary. The changes enforce new requirements for preauthorization and prospective review of compounded medications. 

Under the current TDWC Closed Drug Formulary, preauthorization is only required on compounded medications containing a drug component indicated as “N” on the ODG Drug Appendix A. The newly amended language requires preauthorization for compounds with an “N” drug component for prescriptions written prior to July 1, 2018, and eventually requires preauthorization for all compounded medications prescribed and dispensed on or after July 1, 2018. 

The recently adopted rule change will amend this existing language and add
new language eventually requiring prior authorization on all compounds.

Modification of existing rule language
The divided language of the rule change allows for a transition period. For existing/ongoing treatments where compounded medications are currently in use, the preauthorization language only requires preauthorization on compounds with an “N” drug component for medications prescribed before July 1, 2018.

Under the new rule, all compounded medications prescribed prior to July 1, 2018 containing a medication identified with a status of “N” require preauthorization.

It is our understanding the TDWC intends to permit remaining refills on original prescriptions written prior to July 1, 2018. This provides an opportunity for prescribers and payers to discuss transitioning claimant treatments to medications not requiring preauthorization.

All compounded medications prescribed and dispensed
on or after July 1, 2018
require prior authorization.

The new language to the existing Closed Drug Formulary ensures once all existing compounded medication refills terminate due to age/date, future prescriptions for compounded medications will require preauthorization, regardless of the compound drug components. This clearly closes an unintentional loophole permitting ongoing unnecessary overuse of compounded medications in Texas. 

Supporting the solution
Optum Workers’ Compensation and Auto No-Fault Division were pleased to work with TDWC during the rule-making phase, providing data on compounded medication use and oral testimony to support this rule. This change will reduce risk to injured workers as well as exorbitant costs associated with the overuse of medically unnecessary compounds in Texas.

For a copy of the rule and rule-comments click here:

Please contact our Executive Director of Government Affairs, Kevin C. Tribout, at with questions regarding public policy matters.

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