Study: Workers’ Comp Drug Costs Higher in Texas, Louisiana

July 29, 2011

A new study indicates that Louisiana had the highest workers’ compensation prescription costs among the 17 states studied and that Texas also was among the states with the highest cost of prescription drugs per workers’ compensation claim.

The study published by the Workers Compensation Research Institute (WCRI), Prescription Benchmarks, 2nd Edition: Trends and Interstate Comparisons, found that at $1,182, the average workers’ compensation prescription payment per claim in Louisiana with prescriptions was more than three times as high as that in the lowest cost state. It was also 50-70 percent higher than the states with higher prescription costs.

The prescription cost per claim with prescriptions in the Texas workers’ compensation system was $736, which was 44 percent higher than the 17-state median of $512.

The study cited a number of factors behind the high costs in Louisiana, including:

  • The higher workers’ compensation pharmacy fee schedule in Louisiana;
  • The higher average number of pills per workers’ compensation claim – 85 percent higher than the 17-state median, particularly for pain medications and muscle relaxants;
  • More frequent use of brand names where generic equivalents or alternatives were available;
  • Higher prices paid to physicians who dispensed drugs directly to their patients.

The two key drivers for the higher prescription costs per workers’ compensation claim in Texas were (1) injured workers in Texas received 30 percent more pills per claim compared to the median state in the study, and (2) more brand names were dispensed when generic alternatives were available – 20 percent in Texas versus 14 percent in the 17-state median.

The report summarizes state policies used in some states to help lower workers’ compensation drug costs, including a closed formulary in Texas slated to take effect on Sept. 1, 2011. The formulary will encourage use of generic drugs and help eliminate certain medications considered ineffective, such as a muscle relaxant named Carisoprodol.

WCRI is based in Cambridge, Mass., and is a nonpartisan, not-for-profit public policy research organization supported by employers, insurers, insurance regulators, state regulatory agencies, managed care companies, and health care providers, as well as several state labor organizations.

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