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The Division is currently accepting public comments on proposed amendments to Division Rules 134.500, 134.530, and 134.540 affecting the provision of compound prescription drugs in the workers’ compensation system. The proposed amendment to Rule 134.500 would exclude from the closed formulary all compound prescription drugs, and proposed amendments to Rules 134.530 and 134.540 would require preauthorization of compound prescription drugs for both network and non-network claims.
The proposed rule changes would not prohibit the use of compounded drugs, but those drugs would need to be determined to be medically necessary via preauthorization through utilization review prior to being dispensed to a workers’ compensation claimant.
According to the Division’s data on pharmacy billing and its ongoing audit of doctors’ practices, the cost of compounded drugs doubled from 2010 to 2014, increasing from $6 million to $12 million. Although the average cost per prescription was $829 in 2016, increasing from $356 in 2010, our firm saw multiple individual prescriptions topping $10K per 30-day supply in 2016. And a May 2017 report by the Division’s Research and Evaluation group found that the number of compounded drugs increased from 18,020 prescriptions in 2010 to 26,380 in 2014. Of that, almost a third of compounded drug prescriptions were to treat back injuries. The Division found these numbers concerning because compounded drugs aren’t recommended as first line medications in treatment guidelines for injured employees, and members of the House Committee on Business & Industry asked the Division to address the issues through a new rule. As a result, on June 16, 2017, the Division announced an informal draft rule to require that compounded drugs be preauthorized.
Compounded drugs are not FDA-approved, nor does the FDA verify their safety, quality, or effectiveness. In fact, the FDA has found that the labeling of compounded drugs often omits important information. Moreover, poor compounding practices can result in serious drug quality problems, such as contamination or medications that do not possess the purity, strength, and quality they are intended to have. Finally, the FDA has reported its concern that some compounding pharmacies and pharmacists produce drugs for patients even though an FDA-approved drug may have been medically appropriate for them.
Commissioner Ryan Brannan believes the preauthorization process will strike a balance against these concerns. “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.
The Division is accepting written comments to the proposed rule changes until 5:00 p.m. February 20, 2018, and will conduct a public hearing relating to the proposed changes on Thursday, February 15, 2018 at 10:00 a.m. in the Tippy Foster Room of the Texas Department of Insurance, Division of Workers’ Compensation, 7551 Metro Center Drive in Austin, Texas 78744. The hearing will also be audio streamed and the audio stream may be accessed via the DWC Calendar at www.tdi.texas.gov/wc/events/index.html.
~ This blog submission was prepared by Erin Shanley, an attorney with Stone Loughlin & Swanson, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Stone Loughlin & Swanson is a member of the National Workers’ Compensation Defense Network (NWCDN). If you have any questions about this submission or Texas workers’ compensation in general, please contact Erin by e-mailing her ateshanley@slsaustin.com or by calling her directly at (512) 343-1300.