Physician Dispensing in Comp: Growth is Exploding

Friday, July 20, 2012 | 0

In Illinois, physician dispensed drugs accounted for almost two-thirds of all drug costs in 2010-11. Same in Florida.

Maryland - 47%; Pennsylvania - 27%; Tennessee 25%; Michigan - 22%.

The data are from the Workers' Compensation Research Institute's just-released study on Physician Dispensing in Workers Comp, and reveal growth in physician dispensing that can only be described as "explosive".

In Illinois, physicians' share of all prescription costs increased from 22% to 63% of all prescription payments from 2007-08 to 2010-11.

You read that right; growth tripled over three years.

Even more revealing, the volume of scripts dispensed by docs grew from 26% to 43%.

You read that right too. In Illinois, costs went up more than twice as fast than the number of scripts, which means the physicians dispensing medications raised their prices dramatically. A specific example; the price of Vicodin purchased at a retail pharmacy dropped 2%, while physician dispensed Vicodin went up 66% over that three-year period.

Notably, prices did not change much in Florida, perhaps as physician dispensing firms and repackagers, responding to heavy political pressure, kept a lid on pricing rather than face added scrutiny.

The study reported on physician dispensing across 23 states, representing over two-thirds of all work comp benefits in the nation.

A couple other points deserving of attention. First, proponents of physician dispensing claim lots of benefits including increased compliance, lower cost, and more rapid return to work. Note that they make these claims without a single shred of evidence to support those claims. Contrast that with the overwhelming evidence in this and other reports from WCRI, the National Council on Compensation Insurance, the California Workers' Compensation Institute and other sources that clearly demonstrate the exploding costs of this practice, costs that are borne by employers and taxpayers.

Second, these proponents assert that limiting reimbursement to the price of the non-repackaged drug will mean docs won't dispense (and thus won't deliver the "benefits" noted above). Not true.

California instituted price controls limiting reimbursement to the price of the non-repackaged drug several years ago; over half of all scripts California are still dispensed by physicians, just as they were pre-reform.

There's much more in WCRI's study; lead author Dongchun Wang points out that prescribing patterns for dispensing docs are dramatically different than non-dispensing physicians, and docs have dispensed over-the-counter medications and charged much higher prices than retail pharmacies.

NCCI reported physician dispensed drugs accounted for 28% of all drug costs back in 2008. Now, three years later, it could well be that two-fifths of drug costs are from physician dispensed repackaged drugs.

Joe Paduda is co-owner of CompPharma, a consortium of pharmacy benefit managers, and owner of Health Strategy Associates, an employer consulting firm in Connecticut. This column was reprinted with his permission from his Managed Care Matters blog.