Use of Generic Drugs Decreases Workers’ Compensation Costs

A recent survey conducted by The Hartford revealed that the growing use of generic drugs has resulted in the first annual overall decrease in workers’ compensation pharmaceutical costs for 2005. The research data also showed that the increase in usage was directly related to the greater availability of generic substitutes, especially when it comes to expensive name-brand drugs. The Hartford has been publishing studies analyzing workers’ compensation pharmaceutical costs since 2001. Each of these studies has shown that although costs rose, the increase was becoming progressively smaller each year.

The study noted that the continued use of generic substitutes for OxyContin and Neurontin, which are two of the more expensive and commonly used drugs for treating pain in workers’ compensation cases, is having a positive effect on pharmaceutical costs. In addition, the withdrawal of Bextra and Vioxx, which were often taken to manage pain and inflammation, is helping to cut costs.

However, not all of what the study revealed was good news. According to the data, the overall increase in the use of drugs could slow down cost-cutting efforts. The use of OxyContin declined, but that decline was offset by adoption of its generic version, Oxycodone, which costs about 50 percent less. Total consumption of this painkiller increased by 6 percent.

Neurontin was last year’s second-highest ranked drug. It dropped to number 20 on the list, while its generic version, Gabapentin, took over the number two spot. Gabapentin was not even on the list in 2004, yet its popularity results from it being priced about 35 percent lower than Neurontin. Despite this savings, over the course of just one year, The Hartford survey noted a 25 percent price per-pill increase for both versions of this drug.

The Hartford isn’t the only study to uncover these trends in workers’ compensation pharmaceutical costs. Recently, The National Council on Compensation Insurance (NCCI) reported that the trend of rising drug costs in workers’ compensation cases was slowing in 2004, the most recent year for data. The increased rate in 2004 was 8.2 percent, down from 10.2 percent in 2003.

Many experts believe that drug costs for compensation claims are difficult to reduce because the work force has a growing population of older workers who typically use more medication after an injury.

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