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Workers’ Compensation Insurance Carriers Fear Rising Insurance Costs

It should come as a shock to no one that prescription drug costs in the United States are extremely high. We do not have many of the cost control measures implemented by governments of other countries, such as Canada and Europe. In fact, Congress has actually made it illegal to purchase and ship drugs to the U.S. from Canada or Mexico, where the same drugs are cheaper.

caduceus-1219484-m.jpgWith prescription costs being as high as they are and still getting higher each year, workers’ compensation insurance carriers are worried these high costs will make it costly to provide benefits to injured workers in need of expensive prescriptions.

In other words, as our Boston workers’ compensation attorneys can explain, large insurance companies, which collect trillions of dollars in premiums each year, are worried high prescription costs will cut into their profitability, which tends to upset investors, and that is the last thing way want. Essentially, the lobbyists from the pharmaceutical industry are having more success in keeping prescription costs high than insurance industry lobbyists are having in keeping them low or getting federal subsidies.

According to a recent article from Insurance Business Magazine, the cost increases in pharmaceuticals are due to what industry insiders call high price inflation for brand and specialty drugs. They also argue there are fewer big name drugs going generic in the near future, which in the past had served as a cost corrector, as insurance companies can require a patient to use a generic drug if one is available. While they have not said how this actually affects workers’ compensation claims, they claim specialty treatments for Hepatitis C are very costly, and this is having a big impact on the value of claims.

In context to drugs more obviously associated with on-the-job injuries, such as antibiotics, narcotic painkillers, and antidepressants, many of which are already generic, and still increasing in costs, which is contributing to higher costs for workers’ compensation claims. It is not small increases these insurance companies are claiming either, as they note some generic drugs have increase in costs nearly 1,000 percent in the past year alone.

As a consequence of this, and as a means to get Congress to assist, workers’ compensation insurance carriers are saying they may be forced to raise employer premiums for workers’ compensation coverage. There is no question employers will protest any major increase in coverage and will also allege this will hurt the nation’s economy on a much larger scale than simply costing more for workers’ compensation coverage policies.

With the FDA not currently having power to step in and regulate the cost of these medications, many are turning to the United Stated Federal Trade Commission (FTC) to regulate rising costs in the pharmaceutical industry. However, the FTC has no jurisdiction to join the fight, either, unless they have credible evidence competing pharmaceutical manufacturers are illegally colluding with one another to fix prices in an anti-competitive manner. This is often extremely difficult to prove, since it is easy for one company to raise it prices and others to follow suit without any communication between them or actual collusion with respect to setting of prices.


If you are injured on the job in Massachusetts, call the Law Offices of Jeffrey S. Glassman for a free and confidential consultation to discuss your workers’ compensation claim: 1-888-367-2900.

Additional Resources:

Double-digit pharmacy cost increases could hurt workers’ comp costs em> , Insurance Business Magazine, April 22, 2015 More Blog Entries:

LeFiell Mfg. v. Super. Ct.: Workers’ Compensation Exclusivity and Rare Exception, August 18, 2014, Boston Workers’ Compensation Lawyers Blog