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Employers should lead scrutiny on compounded drugs, physician dispensing

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Employers should work with brokers, claims administrators and pharmacy benefit managers to control workers compensation medical costs related to compounded drugs and physician dispensing, according to a report by Marsh L.L.C.'s Workers' Compensation Center of Excellence in New York.

Medical costs, which are influenced by compounded drugs and physician dispensing, represent 60% or more of workers compensation claims costs, according to Marsh's “Targeting Prescription Drugs to Decrease Workers Compensation Costs” report, released Monday.

Compounded drugs have added to medical expenses in workers comp, as compounding pharmacies generally raise the price of each ingredient included in a solution, the report states. Meanwhile, drugs commonly dispensed by physicians cost 60% to 300% more than drugs dispensed at retail pharmacies, according to the report, which cites a 2012 Workers' Compensation Research Institute study of claims from 2007 to 2011.

“The high costs associated with physician dispensing and compounded drugs should be a cause for concern for any employer,” Christopher Flatt, managing director and leader of Marsh's Workers' Compensation Center of Excellence, said in the report. “But by working with their claims administrators and pharmacy benefit managers, employers can take several steps to limit the effects of physician dispensing and compounded drugs, and better control overall prescription drug costs.”

For example, employers should build relationships with health care providers that have a “shared focus on driving better claims outcomes,” the report states.

Employers should also receive regular performance reviews from providers and PBMs that include metrics such as the “frequency of physician dispensing, compounded prescriptions and duplicate prescriptions, and the network's mix of brand-name and generic drugs,” according to the report.

“Prescription drug costs will likely continue to escalate for the foreseeable future. But by making strong decisions about their claims administrators and PBMs and ensuring that networks comply with policies governing physician dispensing and compounded drug prescriptions, employers can help to control those costs and drive better overall workers' compensation claims outcomes,” the report states.