A new California Workers’ Compensation Institute study shows that after adjusting for inflation and changes in the mix of prescriptions, average unit payments for prescription drugs in the California workers’ compensation system have fallen 9.6 percent since adoption of the workers’ compensation pharmacy fee schedule mandated by the 2002 reforms. That reduction was well below the initially projected 37 percent savings, as payments for brand-name drugs rose from 58 percent of workers’ comp prescription reimbursements in 2002 to more than 70 percent in 2004 — a relative increase of 22 percent. In addition, the study showed that repackaged drugs dispensed in physician offices, which are exempt from the tighter Medi-Cal fee allowances included in the new fee schedule, accounted for more than 30 percent of all prescriptions and half of all prescription drug payments in 2004. Despite concerns that the lower fees allowed under the new fee schedule could lead to an exodus of pharmacies willing to fill workers’ comp prescriptions, the study also found that injured worker access to pharmacies has actually improved since the reforms were adopted, with 95 percent of injured workers in the state able to obtain workers’ compensation prescriptions at a pharmacy within 4 miles of their home.

The study, “Changes in Prescription Drug Utilization, Reimbursement, and Accessibility following Adoption of the California Workers’ Compensation Pharmacy Fee Schedule” is the fourth in a 6-part series tracking the cost and utilization of medical services following implementation of fee schedules, utilization review, and other workers’ compensation medical cost containment strategies included in the 2002–2004 legislative reforms. The Institute has posted a report on the pharmacy study along with the first three reports in the series in the Research section of its website at www.cwci.org. The latest study includes an appendix that lists the top 50 drugs dispensed in the California workers’ compensation system in 2004. The appendix also notes whether the drug was repackaged or pharmacy-based, and shows the percentage of California workers’ compensation prescription dollars billed and paid for each drug.