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Friday, July 20, 2012

Workers Compensation Pharmaceuticals Targeted For Reform

Ritalin (Photo credit: Wikipedia)
An insurance based research organization, the Workers Compensation Research Institute (WCRI), has published a report concerning newly adopted State regulations limiting the prices paid for doctor-dispensed drugs (repackaging) and comparison costs between prescription medication and similar, less costly, over-the-counter (OTC) drug costs. WCRI also reports on the costs between brand-name drugs and generic prescriptions.

The study examines the results of a change to the California statute that has become a model for many other states. Critics of the regulations express concern that many patients will not get needed medications if they do not get them at the physicians’ offices.

The study, Physician Dispensing in Workers’ Compensation, examines physician dispensing before and after a 2007 change in the California statute that governed the prices paid to physician-dispensers. Prior to the statutory change, physicians typically charged much higher prices than pharmacies for the same medication. For example, for the most common drug, Vicodin®, physicians were paid $0.85 per pill compared to $0.43 for pharmacies—nearly double the price. After the reforms, physicians were paid $0.52 per pill compared to $0.48 for pharmacies. After the law changed, physicians were paid prices for prescription medications that were similar to those paid to pharmacies for the same medication.

This study finds that:

· physician-dispensed drugs became increasingly common in most states that permit physician dispensing;

· prices paid for physician-dispensed drugs were often substantially higher than if the same drugs were dispensed by a retail pharmacy;

· prices paid to dispensing physicians rose rapidly for medications that were commonly dispensed by physicians, while the prices paid to pharmacies for the same drugs changed little or fell.

One of the chief concerns expressed by supporters of physician dispensing (in California and in other states) was that doctors would stop dispensing needed prescriptions when it became less profitable. However, the California post-reform experience shows that physicians continued to dispense prescriptions, even when the prices paid were lower. Before the reforms, 55 percent of all prescriptions were dispensed at physician offices. Three years after the reforms, 53 percent of all prescriptions in California were physician-dispensed so patients had similar access to physician dispensed medications, but at a much lower cost.

Robert Ceniceros, a reporter for Business Insurance, reported, "...But critics contend such price regulations may discourage doctors from dispensing drugs and discourage patients from getting the prescription drugs they need."

The report also examines several other concerns expressed by supporters of physician dispensing. One is that spending on prescription drugs might increase if a California-type reform were adopted. They argue that physicians almost always dispense less expensive generic versions of drugs, while pharmacies dispense both brand names and generics. The study found that for the specific medications commonly dispensed by physicians, generics were almost always dispensed by both physicians and pharmacies. In many states, when generic drugs were dispensed, physician-dispensers were paid much higher prices per pill than pharmacies for the same prescription.

The data used for this study include nearly 5.7 million prescriptions paid under workers’ compensation for approximately 758,000 claims from 23 states over a period from 2007/2008 to 2010/2011. The 23 states in this study represent over two-thirds of the workers’ compensation benefits paid in the United States. These states include Arkansas, Arizona, California, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin. Several of the states in this study (Arizona, California, Georgia, South Carolina, and Tennessee) recently adopted reforms aimed at reducing the prices of physician-dispensed drugs.

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