Texas Workers’ Comp Draft Rule Requires Preauthorization of Compounded Drugs

The Texas Department of Insurance – Division of Workers’ Compensation is accepting comments through July 7 on an informal draft rule that requires compounded drugs to be preauthorized.

The draft rule was created after the DWC analyzed compounded drug prescriptions for injured employees at the request of a Texas House committee and found that the cost of compounded drugs doubled from 2010-2014, and the average cost per prescription had risen to $829 in 2016. The division used its data on pharmacy billing and an ongoing audit of doctors’ practices in conducting the study.

According to the DWD, the numbers were concerning because compounded drugs aren’t recommended as first line medications in treatment guidelines for injured employees. After getting DWC’s report, members of the House Committee on Business & Industry asked DWC to address the issues through a new rule.

In response, DWC announced an informal draft rule to require that compounded drugs be preauthorized.

Compounded drugs are not FDA-approved and the FDA does not verify their safety, effectiveness, or quality. The FDA has found that the labeling of compounded drugs often omits important information and that poor compounding practices can result in serious drug quality problems, such as contamination or medications that do not possess the strength, quality, and purity they are supposed to have. Additionally, the FDA has reported its concern that some compounders produce drugs for patients even though an FDA-approved drug may have been medically appropriate for them.

Given these safety concerns, Workers’ Compensation Commissioner Ryan Brannan said the preauthorization process strikes a sensible balance.

“We want to make sure the use of these drugs is being reviewed and that physicians are considering efficacy and appropriateness of alternatives while still ensuring that patients who need compounded drugs will still be able to get them,” Brannan said in the TDI-DWC announcement.

Concerns about compounded drugs aren’t unique to the Texas workers’ compensation system. In 2014, the Employee Retirement System of Texas began requiring preauthorization for all compounded drugs costing $300 or more. The change reduced ERS expenditures on those drugs from $35.7 million in Fiscal Year 2014 to $1.2 million in Fiscal Year 2015. In January, ERS tightened the requirements even more, requiring preauthorization for compounded drugs costing more than $50.

Brannan said there will be multiple opportunities for public and stakeholders to have input on the rule. He also noted that DWC will educate providers on the steps for preauthorization before any change takes effect. The agency is accepting comments on the informal rule through July 7.

Looking at the Issue

A May report by DWC’s Research and Regulation group found that:

• The number of compounded drugs increased from 18,020 prescriptions in 2010 to 26,380 in 2014.
• The total cost of compounded drugs increased from $6 million in 2010 to $12 million in 2014.
• The average cost per compounded drug prescription increased from $356 in 2010 to $829 in 2016.
• Almost a third of compounded drug prescriptions were to treat back injuries.

Source: Texas Department of Insurance – Division of Workers’ Compensation

Topics Texas Workers' Compensation