A report on prescription drug costs for workers' compensation says inflation has decreased, but rates paid by individual businesses have varied widely with large increases and decreases.

The findings were made by Madison, Conn.-based Health Strategy Associates, LLC in their “Fifth Annual Survey of Prescription Drug Management in Workers' Compensation.”

According to HSA pharmacy, cost inflation has decreased to 4.9 percent from 6.5 percent last year and from 17.8 percent in 2003. But the firm said individual payers' inflation rates varied dramatically from a decrease of 12.8 percent to an increase of 21.8 percent.

Joseph Paduda, principal of HAS, said, “Last year we saw that larger, more sophisticated payers experienced lower inflation rates. This year, some of the best results were delivered by smaller insurers.”

“Conducting this survey in consecutive years gives insight into market evolution,” said Mr. Paduda.

During the last five years, he noted, key changes in workers' comp pharmacy management include a much greater emphasis on controlling utilization by addressing the volume and types of drugs used by claimants.

The lowest rate of increase occurred at payers operating advanced drug utilization management programs that also had a detailed knowledge of their companies' drug costs and a deep understanding of industry issues and processes, HSA said in a statement.

Payers, said Mr. Paduda, are increasingly relying on their pharmacy benefit management firms for knowledge and utilization management tools, and they are “demanding that PBMs provide insights and new information about trends in comp pharmacy, take the lead in dealing with third-party billers and provide more clinical drug management.”

The survey was sponsored by Cypress Care, a full-service workers' comp PBM, based in Atlanta.

Twenty payers, including decision makers and operations staff of carriers, third-party administrators, large employers and managed care firms participated.

Respondents' 2007 drug expenses ranged from $1 million each to $147 million, and the respondents' cumulative drug spend amounted to $777 million, 18.5 percent of the total estimated workers' compensation drug spend.

For a summary of the survey's results contact jpaduda@healthstrategyassoc.com.

Special Reports /

Survey Finds Comp Drug Costs Up And Down

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