FL Drugs, Lobbying & Market Forces

It turns out that capping repackaged drugs in Florida won't save as much money in the state's workers' compensation system as previously predicted.

But that's a good thing because market forces have helped curtail the costs of repackaged drugs, according the latest report prepared by the National Council on Compensation Insurance (NCCI) in preparation for Thursday's annual workers' compensation rate hearing in Tallahassee.

Despite the state's complete failure to move forward with closing a loophole in its drug policies, workers' compensation carriers have been following the lead of Miami-Dade Public School District, which refused to pay the prices charges by three repackaging houses in 2010 and cut its payments by an estimated $515,000 a year.

The District relied upon a portion of state law in Florida Statute 440.13(12) that allows carriers to pay the drug price for which they have contracted, even if the billing party is not a party to the contract.

As a consequence the state's carriers have not been paying out as much for repackaged drugs as was previously estimated by NCCI in its prior projections.

Using 2009 data, NCCI told the Florida Legislature last session the cap on repackaged drug prices would save $62 million and reduce overall costs by 2.5%.

The latest report, prepared last week, concludes that capping the price of repackaged drugs – those primarily dispensed by physicians – would save $27.3 million a year for the workers' compensation system and reduce overall costs by 1.1%. The newest estimate was calculated using data collected from carriers for 2011.

The flip side is that there are more billing disputes going to litigation.

DWC spokeswoman Nina Banister Ashley confirmed to WorkCompCentral Monday that disputes over physicians' drug bills are on the rise. This observation was also noted by NCCI State Relations Executive Lori Lovgren who told WorkCompCentral that the "Division of Workers' Compensation has been flooded with reimbursement disputes."

The state has attempted to cap repackaged drugs thrice already, with strong lobbying (and concomitant funding) coming from those in the business of providing software to doctors to assist with claims management and billing for repackaged drugs.

Bob Wilson, CEO of WorkersCompensation.com, in his blog Sunday noted that the state seems confused on its priorities - the state's prescription drug database is nearly out of money despite the fact that the maker of oxycontin, Purdue Pharma, had offered $1 million to pay for two years of operation of this database.

Yet, he notes, the state lets repackaged drug companies spend millions lobbying against a price cap.

Wilson concludes, "What it really means is that Florida has virtually no interest in preventing prescription drug abuse of any kind. And no Floridian is better off for that lack of effort."

I think Wilson is partially correct - he means that Florida LEGISLATORS have no interest. It seems that the market, however, is reading from a different script and will take matters into its own hands given the opportunity.

I'm with Wilson - shame on Florida's lawmakers. But at least where the dollar hits the payment system there are those willing to interpose their own regulation and deal with the consequences as they arise.