NCCI Publishes Update on Workers Compensation and Prescription Drugs

Posted Date: September 20, 2016

Prescription drug (Rx) costs represent a significant portion of workers compensation (WC) medical costs and is one of the most active subjects of WC-related legislative activity. NCCI estimates that for every $100 paid for medical services provided to workers injured in 2014, $17 will be paid for prescription drugs. Furthermore, the prescription drugs portion of medical costs increases rapidly as claims age. For every $100 of medical services paid on claims older than 10 years, approximately $45 to $50 will be for prescription drugs.

Past NCCI studies on the use of prescription drugs in WC have shown that utilization changes have been a major contributor to prescription drug cost changes; however, prescription drug price changes have also contributed to prescription drug cost changes. These studies have also reported on trends affecting prescription drug costs such as physician dispensing and the use of opioids. This update examines the most recent trends in the use of prescription drugs in WC. We also look at the possible savings that would result from implementation of drug formularies in certain states.

The major topics covered in this study are:

  • The estimated Accident Year 2014 prescription drug share of WC medical costs
  • The impact of price and utilization changes on prescription drug costs
  • Potential prescription drug cost savings from a drug formulary
  • Controlled substances
  • Physician dispensing
  • Brand name and generic drugs

Key Findings

  • Prescription drug costs per active claim continue to grow
  • The projected prescription drug share of total medical costs for Accident Year 2014 is 17%
  • The prescription drug share of total medical costs increases rapidly as claims age
  • In 2014, prescription drug prices increased 11%—substantially greater than the 10-year average increase of 4%
  • In 2014, prescription drug utilization declined by 4%, resulting in growth in prescription drug costs per active claim of 6%
  • In many states, introduction of a drug formulary has the potential to reduce WC prescription drug costs by 10% or more
  • In 2014, controlled substances’ prices increased 16%, while utilization decreased 7%
  • Both physician-dispensed prescription drug prices and utilization increased 4% in 2014
  • The share of prescription drug costs for generic drugs increased in 2014​