Closed Formulary Helps Reduce Costs, Opioid Use in Texas

Nonrecommended drug prescriptions drop by 85%

A recent analysis by researchers at the Texas Department of Insurance (TDI) has found that the Texas pharmacy closed formulary is lowering costs and reducing the use of opioids.

“Other states are interested in the success we’re having in Texas,” Workers’ Compensation Commissioner Ryan Brannan told the Claims Journal. “We’re hopeful the closed formulary will continue to be a meaningful tool to reduce costs and decrease the use of drugs that may affect an employee’s ability to return to work.”

According to the TDI, new injury claims became subject to the pharmacy closed formulary beginning on September 1, 2011. The closed formulary requires prior approval before physicians can prescribe nonrecommended drugs (called N-drugs). These medications include 25 brands of opioid pain relievers, muscle relaxants, antidepressants, and cannabinoids.

The TDI’s analysis of pharmacy data before and after the closed formulary went into effect found that:

  • The number of N-drug prescriptions fell by 85%. Other drug prescriptions fell by 14%.
  • N-drug costs fell by 80%, whereas other drug costs fell by 5%.
  • Generic drug utilization rates for N-drugs increased from 58% to 71% of the prescriptions. Generics accounted for 23% of the cost pre-formulary, and for 35% post-formulary.
  • Opioid costs decreased from 27% of the total pharmacy costs in 2009 to 18% in 2015.

In 2007, a study by TDI’s Research and Evaluation Group found that approximately $130 million dollars was being spent annually on prescriptions, half of which was for opioids and certain anti-inflammatories. Drug costs consumed a substantial portion of workers’ compensation medical costs, with growing evidence that these prescriptions might not be the best choice to help employees recovering from injury or illness.

Sources: Claims Journal; August 19, 2016; Texas Department of Insurance; August 16, 2016; TDI Report; July 2016.