Repackaged Drugs, Physician Dispensing and History

Medical groups and Florida-based Automated Health Care Solutions (AHCS) have argued that physicians will stop dispensing drugs and will stop seeing workers' compensation patients if price caps are imposed. They also argue patients sometimes face delays when prescriptions are filled at pharmacies.

AHCS sells software to doctors to assist with claims management and the dispensing of repackaged drugs.

But a just released study by the Workers Compensation Research Institute (WCRI) on physician dispensing and repackaged drugs shows that doctors in California have continued to dispense drugs since 2007 when a cap on prices was put into effect, and reported that physicians have begun dispensing non-repackaged drugs and charging prices in line with California pharmacies.

This compares with non-regulated states such as Florida and Illinois where prices increased 62% and 63% respectively during the WCRI study period, and where physician dispensed drugs are between 60% and 300% more than what is charged by pharmacies.

WCRI analyzed more than 758,000 claims involving more than seven days of lost-time from work. WCRI said it looked at nearly 5.7 million prescriptions from Arizona, Arkansas, California, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Maryland, Michigan, Minnesota, New Jersey, North Carolina, South Carolina, Pennsylvania, Tennessee, Virginia and Wisconsin.

WCRI also looked at data from Massachusetts, New York and Texas, which generally prohibit physician dispensing.

WCRI used data from claims arising in 2007 with all payments made through March 31, 2008. The study compared that data to injuries occurring between Oct. 1, 2009, and Sept. 30, 2010, involving prescription costs paid through March 31, 2011.

The study found:

• For most commonly dispensed drugs in the workers' compensation systems studied, the price per pill for doctors was often between 60% and 300% more than the price charged by pharmacies.
• In Illinois, 43% of all drugs dispensed came from doctors' offices during the 2010/2011 period and doctors collected 63% of all the money spent on prescriptions to injured workers during the period.
• Physician dispensing accounted for 48% of all drug costs in Georgia in 2010/2011. The State Board of Workers' Compensation capped the price of repackaged drugs by regulation in April 2011 – the month before WCRI's study period ended.
• Physician-dispensing accounted for 47% of all drug costs in Maryland, which withdrew a proposed price cap on repackaged drugs last month, after the Maryland General Assembly's Joint Committee on Administrative, Executive and Legislative Review (AELR) voted to oppose it in February.
• Between the 2007/2008 and 2010/2011 study periods, the doctors' share of prescription payments grew from 15% to 27% in Pennsylvania, 14% to 25% in Tennessee and from 5% to 15% in Wisconsin.

Physician groups interviewed by WorkCompCentral and AHCS try to discredit the WCRI work by stating that the organization receives funding from insurance companies - and that is partially correct. But WCRI also receives funding from many other sources, such as state agencies, that have no "teeth" in the game and simply need good information for policy decisions.

With national attention being paid to prescription drugs fueled by celebrity deaths and addiction, those arguing in favor of physician prescription drug dispensing have an uphill battle - they might win legislatures for a short time but the tide is against them.

When all of the rhetoric, innuendo and posturing is stripped away the truth is that physicians don't need to dispense drugs except in very limited, isolated situations. They certainly don't need to dispense 43% of all drugs (as in Illinois).

Eventually price caps and other regulatory tools will be implemented to either ban or discourage repackaging of drugs and physician dispensing - it is inevitable because physicians that engage in such practices have brought it upon themselves.

And besides, those doctors arguing against a price cap will find another profitable spigot to open once the repackaged drug supply dries up. Trust me. History repeats.