Nearly 2/3 of Rx Payments in Illinois Paid to Physicians Who Dispense Drugs at Their Offices—Up from 22% in Just 3 Years

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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. This issue has been the subject of regulatory or statutory change in a growing number of states, and is currently being debated in a number of others.

Doctor writing a prescription.

Doctor writing a prescription.

We rarely see a medical cost driver that has grown this rapidly.

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 Illinois and 22 other states.

According to the study, the frequency and cost of physician-dispensed drugs in Illinois grew the fastest among the 23 states studied. Nearly 2/3 of Rx payments in Illinois were paid to physicians who dispense drugs at their offices, rather than to pharmacies—an increase from 22 percent just three years earlier.

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®, nearly tripled when dispensed by physicians compared to the pharmacy—an average of $1.44 per pill at the physicians’ offices versus $0.53 at the pharmacy.

Moreover, the study found that the prices of physician-dispensed drugs rose very rapidly during the 3 years studied. For example, Vicodin® increased by 66 percent, Mobic® by 39 percent, and Ultram® by 24 percent. In contrast, the prices of these drugs dispensed at pharmacies stayed the same or dropped over the same period of time.

“We rarely see a medical cost driver that has grown this rapidly,” said Dr. Richard Victor, WCRI’s Executive Director.

In addition, physicians in Illinois increasingly prescribed and dispensed some medications that were available at much lower prices at a pharmacy without a prescription. For example, Prilosec® was prescribed for 7 percent of injured workers in 2010/2011 up from less than 1 percent in 2007/ 2008. Prices paid to physicians for this drug increased from $4.71 to $8.08 per pill over the same period. The same drug costs $0.64 per pill at Walgreens without a prescription. In study states with little or no physician dispensing, prescriptions for Prilosec® were infrequent.

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.

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Andrew Kenneally
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