PA Chamber Testifies on Workers’ Comp Drug Costs, Calls for Reform
Source: PA Chamber of Business and Industry
PA Chamber Senior Vice President of Government Affairs Alex Halper testified last week before the Pennsylvania House Labor & Industry Committee, urging lawmakers to address rising prescription drug costs in the state’s workers’ compensation system.
The hearing, held on Tuesday, October 9, focused on the Federated Insurance Co. v. Summit Pharmacy case, which exposed flaws in the state’s use of the so-called “Red Book” employers had been required to use for years to determine prescription drug prices for workers’ compensation claims. The court ruled that this pricing model was inconsistent with the law and often results in inflated costs, forcing Pennsylvania employers to pay significantly more for medications compared to other states.
“This case revolved around a pharmacy which had been dispensing prescriptions drugs to a workers’ compensation claimant beginning in 2019 and submitting claims to the employer’s insurance carrier totaling over $100,000, with costs determined by the Red Book.” Halper said in his testimony. “They cited bills submitted between April 2021 and September 2022 totaling about $74,000 and compared those costs to the amount determined by a different pricing source, the National Average Drug Acquisition Cost Index (NADAC), which totaled a little over $1,500.”
Halper highlighted findings from the Workers’ Compensation Research Institute, showing that Pennsylvania ranks first in the nation for average prescription costs. The state also leads the nation in payments for dermatological medications. Despite a decrease in the overall number of claims, prescription costs continue to climb due to inflated prices.
The PA Chamber has consistently advocated for reforms to control these costs, including the implementation of a prescription drug formulary. Halper urged lawmakers to take action to ensure injured workers continue to receive necessary care while preventing employers from being overcharged.
“We need a solution that protects both workers and employers from these excessive costs,” Halper said.
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Founded in 1916, the Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association, with its membership comprising businesses of all sizes and across all industry sectors.