Workers Compensation Research Institute Releases Study on Effects of New Regulations Limiting Prices of Physician-Dispensed Drugs
Jul 19, 2012
The Workers Compensation Research Institute (“WCRI”) released a study today, July 19, 2012, on the growth and regulation of physician-dispensed drugs for injured workers under state workers’ compensation in Florida and 22 other states.
A WCRI press release on Florida-specific findings and a Workers’ Compensation Institute news article are reprinted below.
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CAMBRIDGE, MA, July 19, 2012– A new study, Physician Dispensing in Workers’ Compensation, from the Workers Compensation Research Institute (WCRI), examines the rapid growth of physician-dispensed pharmaceuticals for injured workers under state workers’ compensation in Florida and 22 other states.
According to the study, 62 percent of all prescription drug spending in Florida for injured workers was paid to physicians for drugs dispensed at their offices-not to pharmacies.
This raises costs to employers since the prices paid to physicians were typically much higher than what was paid to pharmacies for the same drug. For example, the price for the most commonly used drug, Vicodin®, more than doubled when dispensed by physicians compared to the pharmacy-an average of $1.08 per pill at the physicians’ offices versus $0.43 at the pharmacy.
“There is a great discrepancy between what doctors and pharmacies charge for dispensing the same drug,” observed Dr. Richard Victor, WCRI’s Executive Director. “One question for policymakers is whether the large price difference paid when physicians dispense is justified by the benefits of physician dispensing. Policymakers can learn from the California reform experience, which is also analyzed in this study.”
Certain drugs were prescribed and dispensed by physicians in Florida that were infrequently prescribed in other states where physician dispensing was not common. For example, 11 percent of the injured workers in Florida received prescriptions for either Prilosec® or Zantac® as compared to less than 2 percent in most other states. When physicians dispensed, the average price paid per pill was $7.07 for Prilosec® and $4.81 for Zantac®, compared to $0.64 and $0.42 per pill when the same drug was purchased over-the-counter at Walgreens.
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.
About WCRI:
The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization based in Cambridge, MA. WCRI is a recognized leader in providing objective, credible, and high-quality information about public policy issues involving workers’ compensation systems. WCRI’s members include employers; insurers; governmental entities; managed care companies; health care providers; insurance regulators; state labor organizations; and state administrative agencies in the U.S., Canada, Australia and New Zealand.
WCRI: New Regulations Limit Prices Paid for Doctor-Dispensed RX; Unlikely to Reduce Patient Access
As states around the country debate or adopt new regulations to limit the prices paid for doctor-dispensed drugs, a new study from the Workers Compensation Research Institute (WCRI) says the regulations reduce costs, but are unlikely to reduce patient access to pharmaceuticals.
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.
“There is a great discrepancy between what doctors and pharmacies charge for dispensing the same drug,” observed WCRI Executive Director Dr. Richard Victor. “One question for policymakers is whether the large price difference paid when physicians dispense is justified by the benefits of physician dispensing. Policymakers can learn from the California experience.”
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.
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 overwhelmingly 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 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 the study represent over two-thirds of the workers’ compensation benefits paid in the United States: 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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