October 12, 2021

The Impact of Prescription Drug Pricing on Workers’ Compensation Claims

Despite the decrease in opioid usage, injured workers are still too often prescribed unnecessary prescription drugs which can lead to dangerous health conditions and increased complexity of workers’ compensation claims.

Generally, prescription drug costs account for approximately 14% of a workers’ compensation claim. While prescription drug usage has decreased in recent years, the prices of prescription drugs continue to rise. The number of opioid prescriptions continue to decrease as physicians opt for alternative treatments for work injuries. There are several negative trends becoming more prevalent that could increase workers’ compensation claim costs. Specialty medication usage and pricing continues to increase for injured workers. Older worker injury claims tend to cost more due to the increase in prescription drug pricing. Lastly, despite the decrease in opioid usage, injured workers are still too often prescribed unnecessary prescription drugs which can lead to dangerous health conditions and increased complexity of workers’ compensation claims. 

Prescription Drugs

The increasing use of prescription medications places unique challenges on workers’ compensation programs. A 2020 report by the National Council on Compensation Insurance (NCCI) determined that prescription drugs account for approximately 14% of a workers’ compensation claim. The report reveals that the price of drugs continue to rise but the overall usage is decreasing. There are several factors leading to this trend. First, drug costs per claim have gone down due to lower utilization by injured workers. Second, prescription drug prices continue to rise, although at a slower rate than in recent years. Third, the number of opioid prescriptions continue to decrease as physicians seek out and opt for alternative pain control treatments.

There are, however, several negative trends that continue to drive the increased cost of prescription drugs

Specialty Medication Usage

Specialty medications account for a large portion of medical costs associated with work-related injury treatment. Specialty drugs are high-cost prescription medications used to treat complex or chronic conditions and injuries. The prices of these specialty medications continue to increase. Specialty drugs are very expensive—often $1,000 or more per month—and spending on them is growing almost 20% a year. Interestingly, specialty drugs account for 5.9% of total pharmacy costs, yet account for less than 1% of drugs used by injured workers. Individual claims impacted by these medications can become dramatically more expensive when considering these therapies can cost up to 40 times more than traditional medications. Employers must consider if a specialty drug provides significant clinical benefit over traditional therapy. For example, does a specialty medication have the potential to reduce or even eliminate long-term medical costs associated with chronic and/or advancing injury or disease. Nonadherence to treatment protocols by the injured worker can lead to consequences that include relapse, increased symptoms, increased costs due to absenteeism or hospitalizations. Due to the high costs of specialty medications, particular due diligence should be utilized when injured workers receive these medications, up to and including a utilization review process.

Older Worker Issues

Older workers have a higher opioid dispensing rate than younger workers. High prescription drug costs related to physician dispensing, opioid abuse and the extended recovery time for work injuries are widely believed to be exacerbated as people become older. Moreover, older workers are more likely than younger workers to sustain higher-cost permanent injuries. For example, older workers are more likely to have higher-cost rotator cuff and knee injuries while younger workers are more likely to have lower-cost back strains. Further, older workers experience more incidents of strains and sprains in moderate- and high-manual labor jobs. As a result, work injuries for older workers tend to be more expensive. An American Journal of Industrial Medicine study noted that the average cost of workers’ compensation claims increases incrementally with employee age. The study concluded that for every year a person ages, the medical cost of an injury increases by 1.1%. Prescription drug costs play an important role because the percentage of medical costs of a claim typically increases the longer a claim lasts because the emphasis may be more on relieving pain than curing the injury.

Unnecessary Prescriptions

Current evidence-based medical treatment guidelines do not consider opioids to be appropriate first-line therapy for pain. Nevertheless, physicians continue to prescribe and dispense opioids, which account for 13 of the 25 most commonly dispensed medications for injured workers. Opioids are also the most expensive therapy class in workers’ compensation and represent more than 31% of total prescription fills in more than 20 states. Lyrica, OxyContin and Gabapentin account for more than 15% of overall prescription drug costs.

Another issue of concern is compounding. Compounding is where a licensed pharmacist or licensed physician combines, mixes, or alters ingredients of a drug to create a medication tailored to the needs of an individual patient. Compounded medications may be deemed medically necessary in some cases to treat injured workers. But compounds are not tested and approved by the U.S. Food and Drug Administration (FDA), which has noted that such medications carry potential health risks. Nevertheless, the cost per prescription is far higher for compounds than other therapy. Additionally, injured workers taking such compound medications often require ongoing clinical monitoring and more intensive assistance and guidance from pharmacists or other caregivers which leads to an overall increase in workers’ compensation claim costs.

Opioid and Substance Abuse

The opioid epidemic affects employers in every industry category. Each year, thousands of individuals die from an opioid overdose. Every state has introduced legislation related to prescription drugs and many states have specific legislation addressing prescription drugs in workers’ compensation.

Opioids are generally prescribed for three reasons in workers’ comp claims: Catastrophic injury with chronic pain; an injury involving surgical treatment which necessitates immediate pain control; and general pain control. Many workplace injuries lead to chronic pain and the ongoing use of opioids to seek to reduce that pain.

Chronic use of opioids may lead to side effects associated with opioid use, potentially additional comorbidities, depression, anxiety and the risk of overdoes. Measures must be taken by employers in their workers’ compensation programs to address the opioid crisis directly to help reduce the risk of abuse and the potential of addiction. Employers should seek to provide injured workers with safer treatment alternatives to consider as opposed to opioid use. If injured workers receive the right treatment, at the right time for the right duration, this will help reduce overall workers’ compensation claims and improve outcomes.

Dangerous Health Effects

In the world of workers’ compensation, the medical benefits portion of a claim may be open for a number of years or even for the lifetime of the injured worker. As the years progress, prescription medications become a bigger portion of the medical expense which is especially true if the injured worker has become dependent or addicted to opioid medication to control pain. Opioids have many side effects, including constipation, gastrointestinal discomfort and erectile dysfunction. Long-term opioid use may also cause serious cardiac side effects including slow heart rate, low blood pressure, rapid irregular heart rhythm and depressed function of the heart muscle leading to heart failure, stroke or heart attack. Treatments should always take into consideration aspects of the injured worker’s health beyond the injury itself in order to prevent unnecessary harm from a prescription drug.

Increased Complexity of Workers’ Compensation Claims

Prescription drugs are a necessary component of any workers’ compensation program. Injured workers with longer-term workers’ compensation opioid prescriptions (at least three prescriptions six to 12 months after injury following at least one prescription in the first three months) resulted in a temporary disability that was more than three times longer than for similar workers with similar injuries who did not receive any opioid prescriptions. By closely monitoring and managing provider behavior, educating and collaborating with employees, and making strong decisions about prescription drug programs, employers can help to control those costs and drive better overall workers’ compensation claims outcomes.

Zachary Rubinich is a partner in the Philadelphia office of Rawle & Henderson. He focuses his practice on workers’ compensation. Rubinich defends and counsels a variety of businesses, insurers and third-party administrators against workers’ compensation claims in Pennsylvania.

Link to Article: The Legal Intelligencer

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