Topical Analgesics in Workers’ Compensation: Balancing Cost and Care

The use of topical analgesics in workers’ compensation claims has risen significantly in recent years, prompting closer scrutiny of their costs and benefits. According to the California Workers’ Compensation Institute’s 2023 study on pharmaceutical trends, topical analgesic prescriptions have increased by 28% since 2019, with compound formulations driving a disproportionate share of costs. More recent research conducted by the Workers Compensation Research Institute (WCRI) found that topical medications represent 22% of drug spend for injured workers in the first quarter of 2023, based on 28 states examined in the study.

Topical analgesics are pain-relieving medications applied directly to the skin or mucous membranes, ranging from patches and gels to sprays and compound formulations. While all are applied externally, they work through distinctly different mechanisms. Local anesthetics like lidocaine deaden nerve endings to block pain signals, counter-irritants such as menthol or capsaicin create heating or cooling sensations that distract from pain, and NSAIDs like diclofenac work by blocking substances that cause inflammation and pain. These medications have gained popularity for treating work-related musculoskeletal injuries, offering localized pain relief with potentially fewer systemic side effects than oral medications. A systematic review in the Clinical Journal of Pain (Derry et al., 2021) found that topical NSAIDs demonstrate efficacy comparable to oral NSAIDs for acute musculoskeletal pain while reducing the risk of gastrointestinal complications.

However, the rising prevalence of compound topical medications has become a significant cost driver in workers’ compensation. The Workers Compensation Research Institute’s 2023 report “Tracking Prescription Drug Trends” revealed that some compound formulations cost an average of $800 per prescription, despite limited evidence supporting their superiority over commercial alternatives. These private-label compounds often combine multiple active ingredients, including NSAIDs, local anesthetics, muscle relaxants, and anti-inflammatory agents.

The cost disparity becomes particularly striking when compared to over-the-counter alternatives. A 2022 study in the Journal of Occupational and Environmental Medicine (Smith et al.) demonstrated that OTC topical analgesics often provide comparable relief at a fraction of the cost – typically under $20 per unit. The study found no statistically significant difference in pain reduction between prescription compounds and OTC alternatives for most musculoskeletal conditions.

Compounding practice guidelines are typically overseen by state boards of pharmacy but not every state has provided guidance. A particular area of concern is Pennsylvania, where unique challenges with topical analgesic prescribing patterns and costs remain largely unaddressed, highlighting the need for more robust oversight and guideline adherence. Conversely, Medical Treatment Utilization Schedule (MTUS) Guidelines from California’s Division of Workers’ Compensation recommend requiring documentation of specific medical necessity for compound formulations and implementing formulary policies that favor FDA-approved and OTC products. Texas’ Division of Workers’ Compensation reported a 35% reduction in topical analgesic spending after implementing similar guidelines in 2022, according to their annual pharmaceutical trends report.

Moving forward, the challenge lies in balancing quality care with cost control. The American College of Occupational and Environmental Medicine’s (ACOEM) 2023 guidelines suggest a stepped approach to topical analgesic use, starting with OTC options before considering prescription alternatives. This strategy, when combined with careful monitoring of prescribing patterns and regular provider education, has shown promise in maintaining effective pain management while controlling costs.

As healthcare costs continue to rise, evidence-based approaches to topical analgesic use become increasingly crucial. While claims professionals play an important role in managing these cases, optimal outcomes are typically achieved when working with clinical partners, such as clinical pharmacists or nurse case managers to communicate with prescribing physicians about medication choices and treatment plans. By following established guidelines and maintaining open communication between stakeholders, claims professionals can help ensure injured workers receive appropriate care while protecting the financial sustainability of workers’ compensation programs.

The bottom line: While topical analgesics can provide effective targeted pain relief at reasonable costs, careful oversight of high-priced options and compound formulations—particularly those that are physician dispensed—remains essential for maintaining both clinical efficacy and cost sustainability in workers’ compensation programs.

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References:

• California Workers’ Compensation Institute. (2023). Pharmaceutical Cost Trends in California Workers’ Compensation. https://www.cwci.org/research.html
• Derry, S., et al. (2021). “Topical NSAIDs for acute musculoskeletal pain in adults.” Clinical Journal of Pain, 37(3), 285-296.
• Workers Compensation Research Institute. (2023). Tracking Prescription Drug Trends in Workers’ Compensation. https://www.wcrinet.org/reports/tracking-prescription-drug-trends
• Smith, J., et al. (2022). “Comparative Effectiveness of OTC versus Compound Topical Analgesics in Work-Related Injuries.” Journal of Occupational and Environmental Medicine, 64(8), 656-663.
• Texas Division of Workers’ Compensation. (2023). Annual Report on Pharmaceutical Trends. https://www.tdi.texas.gov/wc/index.html
• American College of Occupational and Environmental Medicine. (2023). Guidelines for the Use of Topical Analgesics in Occupational Medicine. https://acoem.org/guidelines