Monitoring Major Pharmacy Updates to State-Specific Drug Formularies

In workers’ compensation, some states have unique drug formularies, which list the covered medications that do not require a prior authorization review. California and New York, for example, both have their own formularies, but seven states also use the Official Disability Guidelines (ODG) formulary. Those states include Indiana, Kentucky, Texas, Tennessee, Oklahoma, Arizona, and Montana. To ensure our clients comply with the latest industry changes, CorVel’s pharmacy team regularly monitors the regulatory changes within each jurisdiction. For states that do not have a state-specific formulary, we implement our best practices through our proprietary formulary for those jurisdictions.

Recently, two major opioid-related updates were made to the California and ODG state-specific formularies. As of November 1, 2022, the generic Lidocaine 5% prescription-only topical patches changed from “Non-Exempt” to “Exempt,” meaning it no longer requires prior authorization and will be charged automatically as a formulary preferred medication. Lidocaine patches are a safer alternative to opioids to treat multiple types of neuropathic pain.

Effective December 2, 2022, the ODG formulary classifies all opioid medications, including codeine, morphine, oxycodone, and tramadol, as “N-Drugs.” The only exception is for sublingual Suboxone (or Buprenorphine/Naloxone), which will classify as “N-Drugs” for pain but “Y-Drugs” if being used for an opioid use disorder treatment. In Texas (a restrictive ODG state), opioids as “N-Drugs” will now be rejected and sent to pre-authorization departments for utilization review. In the other ODG (non-restrictive) states, these opioids will be rejected and sent to the claim’s handler for a prior authorization review.

Both formulary changes have significant implications for the industry, as they affect drug coverage for every claim in eight different states. California claims will likely see more utilization and drug spend with Lidocaine 5% patches no longer requiring prior authorization review. The average cost of a thirty-day supply of the medication ranges from $200 – $300, based on the manufacturer. However, adding Lidocaine 5% patches to the formulary will expedite the process for injury claims to receive treatment for neuropathic (nerve) pain.

States with the ODG formulary will require more prior authorizations for affected opioid medications. These new opioid restrictions will add another barrier for patients seeking these therapies, which is critical for patient safety in the opioid epidemic. We expect these changes to contribute to a decrease in opioid abuse and misuse, and accidental overdoses.

CorVel’s pharmacy team has updated our formulary plans to guarantee all new changes will be automatically enforced at the point of sale. To learn more about these upcoming changes, refer to the State of California release here and the ODG release here, or contact us at pharmacy@corvel.com.