New Regulations Limit the Prices Paid for Doctor-Dispensed Rx and Reduce Costs, But Unlikely To Reduce Patient Access

Share Article

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 23 states. The study also analyzes the experience of California – a state that made a change in 2007 that has become a model for a number of other states.

Doctor writing a prescription.

Doctor writing a prescription.

There is a great discrepancy between what doctors and pharmacies charge for dispensing the same drug. One question for policymakers is whether the large price difference paid when physicians dispense is justified by the benefits of physician dispensing.

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 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 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 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.

For more information about this report or to purchase it, click on the following link: http://www.wcrinet.org/result/phys_disp_wc_result.html.

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. For more information about WCRI, visit our website: http://www.wcrinet.org.

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Andrew Kenneally
Follow us on
Visit website