Nearly 40% of Rx Payments in Connecticut Paid to Physicians Who Dispense Drugs at their Offices—Up from 16% 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 Connecticut and 22 other states.

According to the study, the frequency and cost of physician-dispensed drugs in Connecticut grew the second fastest among the 23 states studied. Thirty-seven percent of drug payments in Connecticut were paid to physicians who dispense drugs at their offices, rather than to pharmacies—an increase from 16 percent 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 most commonly used drug, Vicodin®, nearly quadrupled when dispensed by physicians compared to the pharmacy—an average of $1.43 per pill at the physicians’ offices versus $0.37 at the pharmacy.

Moreover, the study found that the prices of physician dispensed drugs rose very rapidly during the 3 years studied. For example, the price for the most common drug, Vicodin®, increased by 66 percent. In contrast, the price of this drug dispensed at pharmacies 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.

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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