Prescription Costs

Physician Dispensing Increases as Lawmakers Consider Action

A new report says the prices have increased for medications dispensed by physicians but not for those dispensed by pharmacies.
By: | October 1, 2014

Nearly 30 percent of medications given to Pennsylvania’s injured workers in 2012-13 were dispensed by physicians. At the same time, the same providers were paid almost half the total amount spent for all prescriptions in the workers’ comp system.

A new report from the Massachusetts-based Workers Compensation Research Institute updates a previous study that looked at the prevalence and costs of physician-dispensed prescriptions in the state. It says in many cases the prices paid for physician-dispensed medications increased while the prices paid to pharmacies for the same drugs did not change or decreased.

“With an additional year of data, we continued to find higher and growing prices paid to dispensing physicians for drugs commonly dispensed to injured workers in Pennsylvania,” the report said. “In 2012/2013, physicians dispensed 29 percent of workers’ compensation prescriptions and were paid 48 percent of what was spent for all prescriptions for injured workers. This was an increase from 17 percent of all prescriptions and 17 percent of total prescriptions costs four years earlier.”

While supporters of physician dispensing say it is more convenient for patients and improves access and patient compliance to the prescribed drugs, opponents argue the costs are too high and according to some research does not lead to optimal outcomes. The WCRI report looks specifically at the prices paid for physician-

dispensed vs. pharmacy-dispensed medications.

Ibuprofen was the drug most commonly dispensed by physicians in Pennsylvania at an average cost of $0.74. The same pill dispensed by a pharmacy costs an average of $0.26, a difference of 186 percent. The report also noted that the price paid for physician-dispensed ibuprofen increased 20 percent in four years while the price for the same drug dispensed at a pharmacy decreased by 11 percent.

The report says the markup of Carisoprodol, a muscle relaxant, averaged 841 percent — $0.51 per pill dispensed by a pharmacy vs. $4.84 dispensed by a physician.

Among opioid prescriptions, oxycodone-acetaminophen (sold as Percocet) cost $0.64 per pill from the average pharmacy compared to $3.55 when dispensed by a physician. The most common opioid dispensed by physicians, hydrocodone-acetaminophen (sold as Vicodin), costs an average $0.40 per pill at a pharmacy vs. $1.38 from a physician.

Some medications commonly dispensed by physicians were “much less likely to be dispensed at pharmacies,” the report said, “which may mean that physicians who do not dispense them are less likely to write prescriptions for these medications.” Examples included naproxen sodium (Aleve), and omeprazole (Prilosec).

The report comes as the issue of physician dispensing is being considered by Pennsylvania legislators. Current law sets the maximum reimbursement amount at 110 percent of the average wholesale price for pharmacies as well as physician dispensers.

“The intention is to set reimbursement rates at the same levels for the same drugs regardless of the dispensing point,” the report said. “However, physicians in Pennsylvania often dispensed and billed for repackaged drugs, which were paid at higher prices than what pharmacies were paid for the original products of the same drugs.”

Amended legislation before the state Senate would limit reimbursements for physician-dispensed prescription drugs to 110 percent of the AWP of the original manufacturer National Drug Code, or the AWP of the least expensive clinically equivalent drug if the original manufacturer NDC is not included in the bills from physicians seeking reimbursement, the report explained. The bill also would limit physician dispensing of the more restrictive Schedule II and Schedule III opioids.

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected].

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