Physician Dispensing in Comp Worse than you Think

Monday, January 17, 2011 | 0

By Joe Paduda
CompPharma and Health Strategy Associates

The good folks at the National Council on Compensation Insurance just released research that focuses attention on what looks to be the fastest growing part of the work comp medical dollar drugs dispensed by physicians.

The lead sentence in their annual update on prescription drug costs puts it bluntly: "The volume of prescription drugs dispensed by physicians to workers compensation (WC) claimants has risen sharply in recent years putting upward pressure on WC costs."

While that's bad enough, the current situation is likely worse. Why? NCCI based their report on 2008 data. If the 2007-2008 trend (excluding California) continued for 2009/10, physician dispensed drugs accounted for 64% of total spend last year.

Between 2007 and 2008, physician dispensed drugs went from about 8% of drug spend to about 16%. Now, I don't believe the trend continued for two more years; I also don't believe it went down. Therefore, I'm betting physician dispensed drugs accounted for somewhere between a fifth and a quarter of drug spend in 2010.

While you're digesting that, here are a few more factoids to ruin your lunch.

The study, authored by Barry Lipton, Chris Laws, and Linda Li and based on 2008 data, goes on to report:

physician dispensing has increased in most states, with particularly large increases seen in southeastern and central midwestern states
Georgia saw physician dispensed drugs hit about 30% of all drug costs, Florida hit about 45%, with Hawaii, Michigan, and Maryland all in the mid-to-upper twenties
dispensing is increasing for new and old claims; my bet is the growth in dispensing the initial script means there will be a downstream growth in dispensed drugs.

I don't believe all docs are just dispensing drugs to make more money. I do know the profits for docs and the dispensing companies can be enormous.

More on when, where, why, and how physician dispensing may be appropriate later this week.

Joe Paduda is co-owner of CompPharma, a consortium of pharmacy benefit managers, and owner of Health Stategy Associates, a Connecticut-based employer consulting firm. This column was reprinted with his permission from his Managed Care Matters blog, which can be found here: http://www.joepaduda.com