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Strategies for Employers to Reduce Pharmacy and Workers’ Compensation Costs


Employers can manage the prescription drug costs in their workers’ compensation programs by working closely with their insurers, brokers, third-party administrators (TPAs), and pharmacy benefit managers (PBMs), according to speakers on a webcast sponsored by Marsh’s Workers’ Compensation Center of Excellence (COE). 

Although there are signs that employers are improving in their ability to manage prescription drug costs, they still represent a significant expense in workers’ compensation programs. Prescription drug costs represented 17% of total medical costs for accident year 2014 — and from 2011, the cost of prescription drugs per claim increased 25%, to $429 per claim, according to the National Council on Compensation Insurance. 

Among other steps, employers can manage these costs by working with high-quality medical providers who follow evidence-based guidelines, said Frank Radack, a vice president at Liberty Mutual Insurance. Employers should also track pharmacy spending through risk management information systems or other reporting tools made available by their insurers, TPAs, or PBMs. 

PBMs and others can also offer several tools and services to help manage injured employees’ opioid use, said Brigette Nelson, a senior vice president at Express Scripts. These can include point of sale and formulary limits, outreach to patients and prescribers, and reporting and analytical tools. 

A claims advocacy model can lower costs for prescription drugs and other remedies, said Dennis Tierney, director of claims in Marsh’s Workers’ Compensation Center of Excellence. Such a model should emphasize constant communication, education, and transparency with injured workers, which can contribute to better medical outcomes. 

Listen to the webcast replay.