Brand-name drugs driving up healthcare costs, study's findings suggest

The unnecessary use of higher-priced medications is a leading cause of waste in the healthcare sector, according to the results of a new study.

Pharmacies and hospitals routinely dispense higher-cost drugs over their generic, cheaper counterparts, according to a report released by Express Scripts, a major pharmacy benefits manager. In 2011, the use of such high-priced medications actually cost workers' compensation payers more than $2.1 billion, the study determined.

Express Scripts' report, "2011 Express Scripts Workers' Compensation Drug Trend Report," said that the use of high-priced medications is effectively hurting profitability and lessening the effects of business cost reduction initiatives. What's more, it noted that workers' compensation companies are struggling to cover the costs associated with the administering of such drugs.

Aside from waste generated by the use of brand-name drugs, the study also said that a number of other factors are hurting cost reduction campaigns. The report stated the use of out-of-network pharmacies and third-party billers, for instance, cost workers' compensation firms more than $107 million in 2011. What's more, $40 million of waste was generated from the use of higher-cost delivery channels.

Tim Pokorney, a pharmacist and clinical director of workers' compensation at Express Scripts, said the findings were not at all surprising, particularly considering how many pharmacies promote name brand drugs over less expensive versions of medications.

"By applying clinical evidence and behavioral science insights to workers' compensation, we can save billions of dollars and improve health outcomes," Pokorney said in a statement. "It is critical for employers and payers to get a handle on the costs associated with workers' compensation prescriptions, and we have the solutions to help them to do so, leading to better outcomes for injured workers with minimal disruption."

The report's findings also suggest that narcotic analgesics had the highest annual cost per user in 2011. Such medications accounted for approximately 38 percent of total drug spending, researchers from Express Scripts said. They also noted the top six therapy classes, including anticonvulsants, anti-inflammatory and dermatological medications, represented more than three-fourths of overall drug spending last year.