A PRIMER ON FORMULARIES ‒ THOSE HERE AND THOSE COMING
The next wave of legislative activity in the workers’ compensation world will be the introduction of “closed formularies.” As a practical matter, this means that a doctor will be required to prescribe a medicine on the formulary as opposed to a medicine that he or she prefers. And these formularies are often connected to “treatment guidelines” which instruct the treating doctor in the medical protocol to be followed with respect to a particular injury. Hence, the combination of treatment guidelines/medicine formularies means the clinical decisions are being effectively dictated by insurance protocols.
Formularies have existed in the world of health insurance for many years but, in that case, the medicine is not kept from the patient but higher co-pays are in place so that there may be three “tiers” of medicine with the insurer preferred medicine having the lowest copay. Of course, there are no co-pays in workers’ compensation insurance and, hence, the health insurance model does not apply.
At the present time (September 2017), 12 states have or are about to implement workers’ compensation “formularies.” A number of other states are considering formularies as well.
In six states, a for profit company known as ODG was selected to provide the formulary and the related “treatment guidelines.” ODG is a wholly-owned subsidiary of the Hearst Corporation. ODG has a monopoly in Texas, Tennessee, Arizona, Oklahoma, New Mexico and North Dakota. ODG sells “subscriptions” to participants, including doctors who treat workers’ compensation patients, and the “subscriptions” allow the doctor to know the treatment that he or she is to follow and the medicines which are allowed.
ODG’s main business rival is ACOEM/Reed (Reed), a subsidiary of Guardian Life Insurance Company. Reed has the contract in Nevada and California and is about to be awarded the contract in New York.
Three other states (Washington, Ohio and Colorado) have developed their own formularies and two of those (Washington and Colorado) are recognized by the National Guideline Clearing House (see below).
The “formulary industry” consists of for-profit formulary companies such as ODG and Reed, their insurance industry allies and Pharmacy Benefit Managers (PDMs) which create their own formularies for insurers and employers. Each of these groups has a vested economic interest in encouraging the use of formularies whether it be in the health insurance space or in the workers’ compensation world. The opioid crisis is now being used by the “formulary industry” as a reason to enact “formularies” in the various states. However, very few of the” formulary” medicines are opioids.
The ODG formulary allows for certain opioids to be “yes” medicines but does not allow longer acting opioids, contrary to the advice of the Centers for Disease Control as outlined by Dr. Mark Loev below. Of course, commentators in the “formulary industry” argue that opioids should never be a “yes” medicine (http://www.joepaduda.com/2017/05/sheral-kellar-right-formularies) and ignore the fact that opioids, properly used, are necessary medicine for many chronic pain patients.
NGC: The Gold Standard
The National Guideline Clearinghouse (NGC) is the creation of the United States Department of Health and Human Services under its Agency for Healthcare Research and Quality (AHRQ). The NGC is the “gold standard” for treatment guidelines and it recognizes any number of medical specialties in the treatment of multiple conditions.
ODG will not file its treatment guidelines with the NGC and maintains that it is not appropriate for a “subscription service” such as that provided by ODG. Interestingly, the Reed Group has filed two of its guidelines with the National Clearinghouse and uses that to distinguish itself from ODG. Reed is about to be awarded the New York contract because the New York law requires treatment guidelines to be validated by the NGC. At this point only two Reed guidelines are approved, but Reed has artfully shut ODG out of the New York contract. “Formulary Criteria Tailor Made for One Commercial Vendor Over the Other” (J. Todd Foster, www.workcompcentral.com, June 13, 2017)
One legislative or regulatory “fix” is to require all “evidence based” guidelines to be certified by NGC. See “Model Legislation” module on PRI website. This will insure that the guidelines are truly “evidence based.”
The question is why are formularies and related treatment guidelines necessary at all? Medicine is constantly evolving so a proper treatment today may not be thought appropriate in 5 years. This is one reason that doctors must complete CME credits every year in order to maintain licensure and regularly read their specialty journals. Are all doctors up to date? Probably not, but are the “evidence based” guidelines and formularies always up to date and, more importantly, are they “good” medicine?
The Reed subscription contract is 10 pages long but only one portion (Section 10) is capitalized and reads in part: “Reed Group does not directly or indirectly practice medicine or dispense medical services…” However, it is clear to any neutral observer that treatment guidelines/medicine selection are the core aspects in the “practice of medicine.”
These workers’ compensation treatment guidelines/medicine formularies are a “rerun” of the dispute between HMOs and treating doctors in the 1990s. At that time, HMO Medical Directors were overseeing the treatment of clinicians and deciding whether to allow or reimburse. There, too, HMOs maintained their Medical Directors were not “practicing medicine” although it was abundantly clear that non-treating “Medical Directors” who were directing treating doctors were, in fact, “practicing medicine.”
ODG and Reed and other proprietary companies are the classic “middlemen” seen often in the health system. In the health insurance world, the drug “middlemen” are Pharmacy Benefit Managers (PBMs). PBMs create drug formularies for insurers and employers, generally of the three tier variety. They promise to save money on the drug but it appears that the “savings” may be imagined and not real and the source of robust profits for the PBMs. “How ‘Price Cutting’ Middlemen Are Making Crucial Drugs Vastly More Expensive” (Michael Hiltzik, Los Angeles Times http://www.latimes.com/business/hiltzik/la-fi-hiltzik-pbm-drugs-20170611-story.html,, June 11, 2017).
While ODG, Reed and others mouth the phrase “evidence based,” their bottom line selling point is that they save their clients’ money. ODG cites evidence of dramatic decreases in Texas but rates are dropping everywhere even where ODG is not involved. And there is a question about whether ODG is as “evidenced based” as it claims. The ODG guidelines were subject to review by RAND in 2017. While ODG touts its guidelines as “evidence-based,” RAND was not very complimentary. In Technical Quality, Rand gave ODG a 58% rating out of a possible 100%. In Clinical Acceptance, RAND gave ODG a “fair/good” rating. The principal criticism was that the ODG guidelines were, in many cases, not “evidence-based” at all and not supported by peer-reviewed literature. See https://www.rand.org/pubs/research_reports/RR1819.html.
Like PBMs, there needs to be transparency requirements on these companies so true information is obtained instead of puffery. And at the very least ODG and Reed, as well as other proprietary companies, need to have a licensed doctor certify the guidelines in the state in question as clearly these guidelines are the “practice of medicine.” The certifying doctor must remain responsible for the treatment guidelines in medicine selection.
Why formularies? We know that legislation is being initiated by the ODGs and Reeds of the world as they pursue monopoly contracts in the various states. And insurers eager to increase profits are happy to support their efforts.
The fundamental question is whether treatment guidelines and medicine selections should be made by insurance companies or their proxies as opposed to treating doctors who actually see and examine the patient. Formularies are a method to “save” money. There is no evidence that such treatment guidelines/medicine formularies are “better”” medicine or “better” for the patient. Indeed, fair-minded people can easily discern that “formularies” are cost mechanisms and not better care mechanisms.
Does It Matter?
The question is whether formularies end up in conflict with proper patient care. The answer appears to be “yes” when practicing and well respected clinicians are asked.
PRI engaged Marc Loev, M.D. to review the ODG Texas formulary. Dr. Loev is board-certified in Anesthesiology and Pain Management, having trained at the University of Pennsylvania. He has been practicing pain management for 19 years and was founder and CEO of National Spine and Pain Centers, an affiliated group of over 120 pain clinicians. Some of his comments on the ODG formulary:
- Opioids: It is concerning that there is a limited list of approved medications and ODG has chosen only short acting opioids which are fine for acute pain and rescue dosing of chronic pain. However, per the Centers For Disease Control 2016 Opioid Dosing Guidelines, the appropriate use of both short and long acting opioids “is critical in reversing the cycle of opioid pain medication misuse that contribute to the opioid overdose epidemic.” In addition, and of great importance, is that none of the ODG approved meds have any of the abuse deterrent characteristics that exist in some of the medications that it has disapproved.
- Topical Analgesics: Capsaicin, Voltaren Gel, and Topical Lidoderm are not approved but Ben Gay is approved ‒ yet has limited analgesic properties. The use of topical options is one of the first line non-systemic treatments for many topical and muscular conditions. These medicines allow the avoidance of NASIDs, muscle relaxants and opioids, all of which have significant side effects and should be avoided if possible.
- Injectable Nerve and Muscular Pain: Botulinum Toxin is a unique and long lasting pain medication which should be available when systemic muscle relaxants are ineffective. Eliminating this line of medications may result in chronic use of pain medication by patients.
- Anti-Constipation (Movantic): This is a new, unique and very effective medication used to work reverse opioid induced constipation, a very common side effect. Bulk laxatives frequently do not work and can compound the problem. An alternative such as Movantic needs to be available.
The ultimate question is whether a doctor should decide on the treatments and medicines necessary for his or her patients or have to abide by protocols dictated by insurers and employers who have no responsibility for the proper care of the injured patient.
Legislators should be very concerned about leaving patient care in the hands of out-of-state proprietary companies and not in the hands of locally licensed and treating doctors.