Drug formularies are touted as a way to fight prescription drug abuse and contain prescription drug cost. But one major Nebraska employer appears to be questioning whether drug formularies really contain prescription costs.
The City of Omaha was echoing widespread concerns about the possibility of conflict of interests in drug formularies. Those concerns were explained by me in a blog post published last December. In short, drug formularies are administered by pharmacy benefit managers. Pharmacy benefit managers make money by negotiating discounts from drug manufacturers. This gives pharmacy benefit managers incentive to put more expensive drugs on drug formularies because they can negotiate a more lucrative discount than they could for a less expensive generic drug.
LB 408 was held in committee by the Business and Labor committee so it is unlikely it will be considered in this legislative session. Opioids abuse is a topic of high interest for political leaders so drug formularies as a way to reduce opioid use will likely be discussed further in Nebraska.
The City of Omaha has a workforce this is more heavily unionized than most other workplaces in Nebraska. In some instances, labor and management will collectively bargain how some aspects of a workers’ compensation program is to be administered. Supporters of organized labor originated the idea of “labor pluralism” during the New Deal and Post-War era. (4) Labor pluralism means that government should minimize interference between the labor-management relationship. In a unionized workplace, labor and management have a complicated relationship that is both cooperative and confrontational depending on the circumstances. A mandate from the state requiring the use of drug formularies could be as undermining labor-management relations when a labor and management have bargained about the administration of workers’ compensation benefits.
While drug formularies are a relatively recent development in workers’ compensation, they are well established in the larger world of health insurance. Drug formularies have long been criticized for increasing costs in health insurance plans by reducing prescription usage because costs are shifted to insureds, which forces insureds to seek more expensive care, because chronic conditions go untreated. Overall costs are increased. The costs are also shifted onto insureds who have to pick up the costs for more expensive procedures that could have been taken care of through medication. Cost shifting from the employer onto the employee, other forms of insurance and the government is already a serious problem in workers’ compensation. Drug formularies in workers’ compensation could exacerbate the issue of cost-shifting.
Do Drug Formularies add up? Cost = Price * Utilization
When you study drug formularies for any amount of time, you run across the equation that drug costs equal price multiplied by utilization. Proponents of drug formularies tout that they can decrease both the utilization and the price of prescription drugs. Ohio has provided detailed information about the decrease in the utilization of certain drugs like opioids because of formularies. However, the decrease in the utilization in opioids cited by proponents of drug formularies coincides with an overall long-standing decrease in the frequency or number of workers’ compensation claims. Fewer overall claims mean less overall utilization, which could explain some of the cost decrease. A better measure of the effectiveness in drug formularies in controlling costs would be measured by looking at prescription cost per claim. So far, drug formulary proponents have been unable to show that data. Even if drug formulary proponents could show that data, there is still the issue of whether reductions in prescription drug costs lead to increases medical costs by forcing injured employees to seek more expensive care that could have been taken care of by prescriptions.
On the price end of the equation, drug formularies are thought to control costs by having pharmacy benefit managers negotiate bulk discounts on prescription drugs. But pharmacy benefit managers have come under fire with allegations that they actually increase drug prices or at the very least are powerless to stop the increases in drug prices. The issue of drug formularies, pharmacy benefit managers and drug prices is complicated and will be addressed in Part 2 of this series.
Acetaminophen, known to most of us as Tylenol, is one of the most commonly used drugs for pain. The vast majority of our injured clients take this drug at one stage or another of their treatment and recovery. A recently published investigative report from ProPublica explores just how dangerous this drug is. Everyone who uses this drug would benefit from reading this report.
Tylenol is an extremely common drug, but it can be more dangerous than you think, so please both read carefully and follow the directions on the bottle, especially if you’re giving it to a baby or child or if you’re an adult who drinks alcohol, even occasionally.
The article is lengthy and disturbing because it talks about the makers of Tylenol minimizing the deaths and liver damage of people who took the product. However, ProPublica has done a comprehensive job of including a lot of information and several graphics caught my eye, including “How the Liver Processes Acetaminophen” and “How Much Acetaminophen Are You Taking?”
The report’s “Major Takeaways” are below, and I hope they make you want to read more of the report. I would urge you to be sure with any drug, even over-the-counter ones, to always read the label, follow the directions, and ask a doctor or pharmacist if you have questions.
4 Over more than 30 years, the FDA has delayed or failed to adopt measures designed to reduce deaths and injuries from acetaminophen. The agency began a comprehensive review to set safety rules for acetaminophen in the 1970s, but still has not finished.