Physician dispensing costs triple that of retail


A recent study shows how much physician dispensing is costing states.


Physician dispensing is more expensive than pharmacy dispensing. Sometimes 10 to 20 times more expensive.

That’s a key finding from the 2012 Survey of Prescription Drug Management from CompPharma, LLC, a consortium of workers’ compensation pharmacy benefit managers (PBMs). Physician dispensing and opioid use are the top 2 cost-drivers of workers’ comp spending. Physician dispensing alone accounted for more than 35% of workers’ comp drug costs in 2011, up from 28% in 2009.

Physician-dispensed prescriptions typically cost 3 to 4 times what the same prescriptions cost in a retail pharmacy, said Joseph Paduda, president of CompPharma.

“The taxpayer ends up footing the increased profits and bills, because workers’ comp is typically first-dollar coverage with no tiers, no copays, and no utilization management,” Paduda said.

Florida, which has no restrictions on physician dispensing, paid an average of $565 per workers’ comp drug claim in 2010, 38% more than the median for states surveyed.

After Massachusetts banned physician dispensing, the average payment per claim for workers’ comp scripts dropped by $289, about 30% less than the median for states in the survey. California saw a significant decrease in prescription drug costs after it tied workers’ comp drug reimbursement to the state Medicaid fee schedule.

Most physicians dispense repackaged products, noted Anne Burns, American Pharmacists Association vice president for professional affairs. Repackaging gives drug distributors an opportunity to create a new NDC number. The new NDC number lets physicians sidestep state laws that link workers’ comp drug reimbursement to average wholesale price (AWP) by creating new, often inflated, AWPs.

Driving up cost of care

Michael R. Cohen, RPh, MS, president of the Institute for Safe Medication Practices (ISMP), calls physician dispensing a practice that begins with good intentions but has uncertain outcomes. Proponents cite improved patient access to prescription products, convenience, enhanced adherence, and higher rates of generic substitution. ISMP cites safety issues in opposing physician dispensing.

“There is no oversight at all,” Cohen said. “The safety aspect should outweigh convenience in most places. These scripts may or may not go through drug use review. Whoever is giving out these meds may or may not check on other drugs and potential interactions. And there could easily be a conflict of interest that puts patients at risk by giving them drugs they don’t really need.”

Physicians Total Care, which markets dispensing technology to physicians, claims dispensing can produce $20,000 to $100,000 in additional profits per physician per year. Another physician dispensing firm, Automated HealthCare Solutions, spent more than $3.3 million in political contributions in Florida to beat back legislative attempts to curb physician dispensing.

“Those who make policy in our state are aware of the spread between actual acquisition cost and what the same drug costs through a physician who dispenses,” said Michael A. Jackson, BPharm, CPh, executive vice president and CEO of the Florida Pharmacists Association. “It is a political debate, not a care debate. It comes down to who has more friends in the state capital.” 

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