Thursday, July 26, 2012

IL Wisely Tackles Repackaged Drugs

Repackaged drugs have been in the headlines this past year for good reason - there are several studies indicating that the high cost of repackaged drugs do not correlate to a high return of value in workers' compensation systems.

The Illinois Workers’ Compensation Commission’s Medical Fee Advisory Board recommended by a 4-3 vote against a proposed rule that would regulate the price of repackaged drugs.

The proposed rule would provide that all prescriptions filled and dispensed outside of a licensed pharmacy "shall be billed at the average wholesale price, plus a dispensing fee of $4.18."

"If a prescription has been repackaged, the average wholesale price used to determine the maximum reimbursement shall be the average wholesale price for the underlying drug product, as identified by its National Drug Code from the original manufacturer," the rule states.

The rule also provides that the "average wholesale price or its equivalent as registered by the National Drug Code shall be set forth for that drug on that date as published in Medispan.”

Not surprisingly, the two employee and two medical representatives on the nine-member Advisory Board voted against the rule. The three employer representatives voted for it. One medical representative was absent for the vote and one employee slot is vacant.

What was surprising is that the full nine member Commission disregarded the Advisory Board's vote and on Tuesday voted 9-1 to continue the rulemaking process. According to Illinois observers, it is unusual for the Commission to disregard the advisory board's recommendation.

The debate included the usual arguments for and against.

Jason Keller, legislative director for the Illinois AFL-CIO and a member of the advisory board, said board members opposed to the rule cited various concerns, including injured workers’ ability to get prescriptions quickly, and the potential administrative costs of the program.

Employer representative Barbara Molloy, head of Molloy Consulting, Chicago, said she voted in favor of the rule because she believes other states’ experience with the increased costs due to repackaging illustrates the need for regulation. Molloy said she doesn’t believe opponents of the rule have demonstrated that it would deny access to, or delay delivery of, medications to injured workers.

Dr. William Werner, president of the Illinois State Medical Society, said in a statement to WorkCompCentral: "We do not believe that tying reimbursements to the average wholesale price ... is reasonable." Werner said that many physician offices rely on third-party vendors to obtain prescription medications and purchase them at levels above the average wholesale price.

Physicians also have overhead expenses associated with administering prescriptions, Werner said.

In my mind the physician's arguments are not substantial. States that have implemented price caps on repackaged drugs have not experienced denial of access to care issues. Physicians that are paying more than the average wholesale price for drugs aren't engaging in good business practices. If there are increased overhead expenses associated with administering prescriptions then that is a business administration problem, not a medical problem.

Repackaging of drugs has very little increased value to workers' compensation systems. There has been no demonstration that injured workers are better off with physician prescription fulfillment other than on an emergency basis or that they are unduly harmed.

Workers' compensation exists in part to provide injured workers with medical care at a cost that can reasonably be distributed and borne by employers, not to ensure the livelihood of vendors. It seems to me that Commission Chairman Mitch Weisz and his colleagues understand this.

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