Our Positions | Drug Formularies

Drug formularies continue to increase in size and usage of those who avail themselves of workers’ compensation systems. Although they have been implemented in traditional health plans and managed care organizations for many years, a trend has begun over the past decades to implement in the workers’ compensation arena. Formularies allow for utilization and determination of efficacy of use of certain medications for claimant treatment. They can be closed, in which only certain drugs can be prescribed, or have a preferred list. Only those medications which have been proven to assist in the rehabilitation, recovery and ultimately if possible return to work of the injured employee are eligible for reimbursement. Other non-formulary drugs can be obtained if the physician can detail why the usage is of paramount need usually through a pre-authorization procedure. These drugs may be flagged in a formulary because of the high abuse potential and/or long-term damage implications if misused. In the absence of such justification, the medication may not be dispensed or reimbursed to the claimant and alternatives need to be arranged. Unfortunately, some workers’ compensation health care providers do not manage the care of patients but only continue to repeatedly prescribe prior medications without ascertainment of current health of the patient and/or fail to follow evidence based rehabilitation protocols.

Drug formularies have been vital in the ascertainment and utilization of chronic opioid prescriptions. While some may need opioids for intractable pain, many others are carelessly allowed to overutilize the medication causing costly addiction and chronic management issues in the future and possibly for the life of the claimant. Ineffective use of medications can hinder and delay return to work. Additionally, in many instances rehabilitation and other chronic pain management may be more indicated than continual pain medication on a long-term basis. Many studies have shown that delayed return to work may reduce the likelihood of the patient ever returning to the productive workforce. A return to work, where possible, has been shown to be in the best interests of the long-term health of a claimant. Additionally, cost savings have been shown to be more than nominal which benefits all stakeholders in the system. Use of step therapies within formularies have been shown to effectively save costs by utilizing the least costly and lowest strength medication before increasing dosage, strength, and ultimately costs. A large portion of settlements that are submitted to CMS for Medicare Set Aside approvals deal with prescriptions drugs. Inflated or non-necessary prescription medications harm the ability to arrive at legitimate, fair and reasonable settlements which potentially increases litigation and other administrative costs.

Drug formularies can decrease costs to the system, reduce exacerbation of side effects of potential drugs that are improperly prescribed, foster serious return to work policies, protect claimants from delay in recovery and create a check and balance to pain management and other long-term therapies that may develop into something that was never originally intended in the treatment of the patient.


NAMIC supports the use of drug formularies as an effective mechanism to reduce costs and protect patients from ineffective or dangerous medications distributed in workers’ compensation claims. A paramount goal in any workers’ compensation program is, where applicable, that the worker should be returned to work for their overall health and the health of the system itself.


Erin Collins
Senior Vice President - State and Policy Affairs