AB-1124 passed the California legislature and has now been signed by Governor Brown. This new law gives the DWC Administrative Director clear authority to establish a drug formulary which should help control rising prescription drug costs and limit the over-prescribing of highly-addictive opioids. Notwithstanding this new law, the DWC has already commenced public hearings on a drug formulary believing that it has authority to adopt one without further legislation.
Drug formularies have proven to be very effective at managing the cost of prescription drugs. Health plans have been using formularies in California for decades and they are commonly accepted as a useful cost control mechanism. They control costs by limiting the utilization of high priced drugs and reducing the price of drugs. Formularies are usually developed by companies known as pharmaceutical benefits managers (PBMs) who design formularies and manage prescription drug benefits for a contracting health plan. At the most basic level a formulary is a list of drugs that a health plan or insurer agrees to cover.
This new law requires the DWC Administrative Director to establish a drug formulary, on or before July 1, 2017, as part of the medical treatment utilization schedule.The Administrative Director would be required to meet and consult with stakeholders, prior to the adoption of the formulary, and publish at least 2 interim reports on the Internet Web site of the DWC. The Administrative Director is required to update the formulary at least on a quarterly basis to allow for the provision of all appropriate medications, including medications new to the market.The Administrative Director is also required to establish an independent pharmacy and therapeutics committee to review and consult with the Administrative Director in connection with updating the formulary.
The California Applicants Attorneys Association argued against the law claiming that establishing a formulary is just another in a long line of take-aways from injured workers. Business groups supported this bill and the California Labor Federation supports the concept of a formulary.