In this economic downturn, workers' compensation insurers are struggling to contain costs and remain profitable while continuing to provide quality care to injured parties. As payers investigate various cost-containment measures, many are reviewing pharmacy expenses, which account for seven to 12 percent of total workers' compensation costs, according to a recent study by the Workers' Compensation Research Institute.

Managing pharmacy costs is especially challenging with long-term claims. According to a recent study on workers' compensation industry prescription drug spending, prescription drugs typically amount to only three percent of medical costs in a claim during the first year. After seven years, however, these costs can account for almost 31 percent of overall drug costs, with drug spending alone potentially averaging $27,000 annually (Source: 2007 National Council on Compensation Insurance report).

One strategy for reducing pharmacy expenses may be to conduct an in-depth clinical review of claims with a history of utilization issues. This allows clinical professionals to identify inappropriate utilization, which typically results in overspending of up to 15 percent per claim. This strategy also helps monitor for problematic drug-to-drug interactions and allergies to ensure the safety of injured parties.