A Mixed Bottle: Price-Focused Reforms Reduced Prices for Physician-Dispensed Drugs in Some Post-Reform States but Not All, Finds New WCRI Study

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This report documents the state of physician dispensing across 26 state workers’ compensation systems. It also evaluates the impact of the price-focused reforms in a multistate context, focusing on the frequency and costs of physician dispensing between the post-reform states and the non-reform or pre-reform states.

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With many states making changes to rules governing reimbursement for physician-dispensed pharmaceuticals, the Workers Compensation Research Institute (WCRI) released a study today that sheds a light on the impact of price-focused reforms on the frequency and costs of physician-dispensed prescriptions. The study compares the experience in post-reform states with states where there were no reforms or where only pre-reform experience was observed.

“With any reform, stakeholders want to know if the desired outcome was achieved,” said John Ruser, WCRI’s president and CEO. “This study answers the most important questions policymakers and other system stakeholders have with regard to these state reforms, including did they work as intended or have they led to unintended consequences?”

The study, A Multistate Perspective on Physician Dispensing, 2011–2014, found physicians dispensed fewer prescriptions after price-focused physician dispensing reforms. However, as of 2014, physician dispensing was still common and represented a large share of prescription costs in several states, including California, Florida, Illinois, Maryland, and Pennsylvania.

According to the study, the reforms reduced prices for existing drug products, which was evident in all post-reform states. However, physician prices increased for several drugs commonly used to treat injured workers in several post-reform states, including California, Florida, and Illinois. The increase in physician prices in these states was a result of frequent physician dispensing of higher-priced new drug products. When dispensing these new drug products, some physician-dispensers were able to bypass the reimbursement rules, which target physician-dispensed repackaged drugs, and were paid much higher prices than they were paid for existing strengths of the same drug. The results raise questions about the effectiveness and sustainability of the price-focused reforms in these states.

By contrast, physician prices changed little or increased in most non-reform or pre-reform states studied, except for Iowa and Maryland. The cost share of physician-dispensed prescriptions remained the same or increased in many of these non-reform or pre-reform states.

The study also reports noticeable changes in the dispensing pattern of specific drugs that were commonly dispensed by physicians in several states, including Florida, Indiana, Kentucky, and Tennessee. The shift observed in the prescription distribution of physician-dispensed prescriptions for common drugs suggests that the recent reforms that limit physicians’ ability to dispense certain drugs had a direct impact on patterns of physician dispensing.

The data used for this report came from payors that represented 36–68 percent of all medical claims across 26 states. The states included in this study are Arkansas, California, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin. The detailed prescription data cover service years from 2011 through 2014, for all medical claims with 24 months of experience.

To learn more about this study or to purchase a copy, visit WCRI’s website at https://www.wcrinet.org/reports/a-multistate-perspective-on-physician-dispensing-2011-2014.

The Cambridge-based WCRI is recognized as a leader in providing high-quality, objective information about public policy issues involving workers' compensation systems.

ABOUT WCRI:

The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization based in Cambridge, MA. Organized in late 1983, the Institute does not take positions on the issues it researches; rather, it provides information obtained through studies and data collection efforts, which conform to recognized scientific methods. Objectivity is further ensured through rigorous, unbiased peer review procedures. WCRI's diverse membership includes 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.

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Andrew Kenneally
Workers Compensation Research Institute - WCRI
since: 06/2011
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