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Workers compensation drug prices may be capped in Florida

Workers compensation drug prices may be capped in Florida

Insurance and business advocates are hopeful that Florida legislators will pass a bill this week that would limit escalating prices for physician-dispensed medications in the state's workers compensation system.

House Bill 511 generally would cap workers comp drug pricing in Florida to a medication's average wholesale price set by the original manufacturer, plus a $4.18 dispensing fee.

Boca Raton, Fla.-based NCCI Holdings Inc. would ask Florida's Office of Insurance Regulation for an immediate 2.5% decrease in workers comp rates if the House bill is signed into law by Gov. Rick Scott, said Lori Lovgren, division executive-state relations for the ratings and research organization. The bill would take effect July 1, if approved.

Trey Gillespie, Austin, Texas-based senior workers compensation director for the Property Casualty Insurers Assn. of America, said the pending legislation could provide a framework for other states to tackle workers comp prescription costs.

“I think a lot of people are basically looking at Florida in terms of how the fight is playing out,” Mr. Gillespie said.

Florida's bill would close a loophole that allows significantly marked-up prices for physician-dispensed and repackaged drugs, Ms. Lovgren said.

Drug repackaging firms purchase and redistribute bulk medications from pharmaceutical manufacturers. Repackagers can assign a separate National Drug Code for such medications, and assign them with a new AWP that is higher than the average price set by the original manufacturer.

Those repackaged prescriptions are dispensed by physicians directly to patients and typically billed at higher rates than pharmacy-dispensed medications.

Markups for repackaged drugs such as carisoprodol, a muscle relaxant, and oxycodone-acetaminophen were more than 600% higher than prices for nonrepackaged drugs in 2009, according to a presentation last year by NCCI.

With Florida's legislative session set to end Friday, industry experts are hopeful the legislation will pass and help curb steeply rising prescription costs in Florida, said Ken Stoller, Washington-based senior counsel with the American Insurance Assn.

“Nobody's saying that physicians shouldn't dispense medications, just that they should dispense medications at the same price that they were dispensed at a pharmacy,” he said.

Senate Bill 668, another bill that aims to limit drug repackaging costs, has been moving simultaneously through the Florida Senate. However, the bill would not limit drug prices to the original manufacturer's average wholesale price. Instead, the Senate bill would require providers to issue a $15 credit to insurers for each repackaged or relabeled prescription that costs more than $25.

A version of the bill approved by a Senate subcommittee last month also would require Florida's Office of Insurance Regulation to cut workers comp rates by 2.5%.

It includes a separate possible 2.5% rate reduction, based on a review of whether repackaged drug costs accounted for 2.5% of last year's workers comp rate filing.

NCCI estimates the Senate bill would result in a 1.4% increase in Florida workers comp system costs if passed, partly because it would not cap average wholesale pricing, Ms. Lovgren said.

The Florida Chamber of Commerce is optimistic that state legislators will move forward with one of the drug repackaging bills before the legislative session expires, a spokeswoman said. The House bill would save Florida employers $62 million in workers comp costs per year, according to the Tallahassee, Fla.-based organization.

“We look forward to seeing how the House progresses with their bill, and also continue to watch and see where things may go with this issue in the Senate,” she said.

Physician-dispensed prescriptions represented 28% of all workers comp prescription costs in 2009, up from 23% in 2008 and 19% in 2007, according to an August report from NCCI.

In a separate report, NCCI noted that Florida had the highest rate of physician dispensing nationwide in 2009, with 36% of workers comp drug costs in the state coming from physician-repackaged prescriptions.

Additional efforts to curb drug pricing in Florida have fallen through in recent years. Former Florida Gov. Charlie Crist vetoed a bill in 2010 that would have limited prices for repackaged prescription drugs, and a similar Senate bill died in a budget committee last year.

PCI's Mr. Gillespie said insurance industry advocates are keeping their fingers crossed that Florida can move forward this year with repackaging price limits.

“From a public policy standpoint, there's no question about what the right thing is to do in order to control costs in workers compensation and to provide a reasonable profit to the health care provider,” he said.