PMSI Drug Trend Report

PMSI is probably the largest provider of workers’ compensation drug benefit management.  Unlike health insurance, workers’ compensation coverage typically has no copayments or deductibles to create incentives for patients to avoid overuse and abuse and in some states, providers get paid fairly well for providing workers’ compensation services.  Medical costs are now the dominant component of workers’ compensation payouts, so industry and insurers have been avid seekers of solutions that help to control those costs.  PMSI issued its most recent report on the status of drug use and spending for workers’ compensation.   (PMSI Report)   Overall spending per claimant increased by 3.2% in 2011, compared to a 2.3% decrease in 2010.  The increase was driven by unit price increases of about 4.3% per day of drug supply, while the actual average days of drug supply per claimant declined by 1.1%.  The price increase was almost exclusively confined to brand drugs, consistent with the trend in commercial health insurance.

PMSI says that a workers’ compensation payer not using cost containment strategies would likely have seen a spending increase closer to 7%.  The cost containment mechanisms are often harder to implement in workers’ compensation, but include ensuring use of generics when possible, and early identification of potential drug abuse situations.  There is little impact of new drug launches on spending, nor is there much effect from brands going generic, in workers’ compensation.  Increasing use of mail fulfillment can help control spending.  Pain medications are a very significant part of workers’ compensation drug spending and there has been a lot of concern about excessive use of narcotics, which can actually exacerbate employees’ ability to return to work and can cause addiction problems.  Narcotics accounted for 34% of all drug spending in 2011, and overall, pain medicines were almost 75% of spend.   The number of injured workers using narcotics in 2011 declined by about 2%, according to PMSI data, so some gains are being made in ensuring appropriate utilization.