Rx Abuse Problem? Just Follow the Money

Since I have been on a roll recently about prescription drug abuse in workers' compensation, what's another column? Especially since the National Council on Compensation Insurance (NCCI) released another study yesterday on the excesses the industry faces from pharmaceutical overindulgence.

Some astounding, yet not necessarily surprising, new facts: the cost of prescriptions were 19% of overall medical costs in 2008 and 2009, and the opioid painkiller OxyContin has become the most prescribed drug in work comp.

Florida takes the lead during the study time period for physician dispensing and surpassed California. Georgia ranked third. In all three states the balance of physician dispensing was over 40% of all drug costs.

The experts in Florida say that the recent amendment to that state's laws won't change the picture. The Florida Legislature passed a ban on physician dispensing of drugs on Schedules II and III of the U.S. Drug Enforcement Agency's controlled substances list. According to the NCCI report, nine of the 10 drugs dispensed by Florida doctors to injured workers in 2009 were not on the DEA's schedules.

Former Gov. Charlie Crist vetoed legislation passed in 2010 that could have capped the price of drugs sold by repackagers at the average wholesale price (AWP) established by the drugs' original manufacturer plus a $4.18 dispensing fee.

The Florida Senate passed a similar bill last session. But the bill stalled in a House-Senate conference committee that passed the physician-dispensing bill instead.

The NCCI report concludes that:

• Overall cost increases were driven more by utilization than price increases.
• Increased physician dispensing also boosted drug costs per claim. Florida average prescription costs per claim increased by 40% between 2005 and 2009, while the share of physician dispensing jumped more than 30% during the period.
• By comparison, Oregon prescription costs per claim dropped by nearly 140% during the period. NCCI noted Oregon recently reduced reimbursement rates and dispensing fees for workers' compensation prescriptions.
• In California, which capped the price of repackaged drugs at the maximums in the state fee schedule in 2007, the share of costs associated with dispensing physicians dropped to about 45% of total drug costs in 2008 but increased slightly in 2009 to about 46%. California doctors began to substitute drugs bought from original manufacturers in place of repackaged drugs during the past two study years.

You can draw your own conclusions about one of the primary drivers in the prescription drug abuse problem facing the workers' compensation industry. The anecdotal implications on what to do are likewise apparent - just follow the money.