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The impact of a closed formulary on prescribing patterns in the treatment of injured workers

Marcus Dillender ()

Economics Letters, 2016, vol. 145, issue C, 88-91

Abstract: Prescription drug spending accounts for nearly twenty percent of workers’ compensation (WC) health care costs, and prescription drug overdose is a leading cause of death in the United States. To guide physicians to prescribe safer, less addictive, and more cost-effective drugs, Texas WC implemented one of the first formularies tailored specifically for the treatment of work-related injuries by establishing a list of non-preferred drugs that require preauthorization before they can be prescribed. I draw on Texas WC administrative data on medical and pharmacy bills to examine the impact of the formulary on health care bills paid for through WC several months after a worker’s initial injury. I find that the closed formulary results in workers being half as likely to use non-preferred drugs and reduces average spending on non-preferred drugs by half several months after claims begin. I find no evidence that spending on preferred drugs or spending on non-pharmacy medical care increase to compensate for the decreased spending on non-preferred drugs. The lack of a shift towards preferred drugs suggests that doctors were not choosing non-preferred drugs over preferred drugs prior to the formulary. Instead, non-preferred drugs were one of multiple approaches doctors used in treating work-related injuries.

Keywords: Pharmacy cost; Workers’ compensation; Formulary; Prescribing behavior (search for similar items in EconPapers)
JEL-codes: J28 I13 I18 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:eee:ecolet:v:145:y:2016:i:c:p:88-91