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Impact of doctor-dispensed drugs on comp costs drives new legislative efforts

Practice viewed as big driver of comp costs


A renewed focus on how physician-dispensed prescription drugs affect workers compensation claims outcomes is driving legislation that would restrict the costly practice.

The workers comp industry has much at stake as more states move legislation, because an industry survey last year showed that physician dispensing of marked-up repackaged drugs was the second-biggest problem in workers comp pharmacy management.

Hawaii, Indiana, Louisiana, Maryland and Pennsylvania are among states that are moving or have recently passed bills to cap the price of repackaged medications, limit physician dispensing, or ban the practice entirely.

With some doctors charging 300% more than what retail pharmacies charge for the same medications, the argument against repackaging historically has been about cost, experts say. And the same workers comp industry survey last year showed that prescriptions doctors dispensed directly to injured workers totaled slightly more than a third of total workers comp drug costs.

Additional factors such as claimant safety and disability duration have become top considerations in the push against drug repackaging, said Brian Allen, vice president of government affairs at Westerville, Ohio-based Progressive Medical Inc. and Tampa, Fla.-based PMSI Inc., two pharmacy benefit managers that merged in October.

“A wave is kind of sweeping right now because we broke the logjam in Florida,” when the state passed drug repackaging legislation in 2013, Mr. Allen said. “When Florida tipped, it gave other states a little bit of courage to push forward and see if they could come to an agreement” as well regarding physician-dispensed drugs.

More than 15 states have addressed the cost associated with physician-dispensed repackaged drugs in the past few years. Earlier this year, Indiana passed Senate Bill 294, which limits doctor dispensing and drug repackaging. In Hawaii, Senate Bill 2365 would limit the reimbursement payments of repackaged, relabeled and compound prescription drugs. The bill has been sent to Hawaii Gov. Neil Abercrombie for signing.

States like California and Arizona that previously capped the price of repackaged drugs are now starting to take a look at “the practice of physician dispensing altogether in workers comp and trying to do something to rein that back a little bit,” Mr. Allen said.

States that don't have a big problem with physician-dispensed repackaged drugs, which is an issue that's specific to workers comp, shouldn't ignore the issue, said Bruce Wood, workers compensation director at the American Insurance Association in Washington.

The percentage of physician-dispensed prescriptions was higher in California, Florida, Illinois and Maryland than in most states for claims with injuries occurring from Oct. 1, 2010, to Sept. 30, 2011, the most recent data available, according to a 2013 study by the Workers Compensation Research Institute. Florida and Illinois have passed legislation aimed at reducing the cost of physician-dispensed prescriptions since the data was collected, while Maryland is in the process of moving a bill.

“Almost any state has some measure of this,” Mr. Wood said. “If a state is not going to get ahead of the curve on this, more adverse results will soon come to it as the practice spreads.”

Studies that show the effect of drug repackaging on comp claims are guiding some of the recent discussion, experts say.

For instance, the 2013 “Prescription Drug Management in Workers' Compensation” survey by CompPharma L.L.C. showed that physician dispensing accounted for more than 35% of drug costs in 2012. While CompPharma survey respondents said opioid use was the biggest problem they face in workers comp pharmacy management, physician dispensing of marked-up repackaged drugs was a close second.

Claimants who use repackaged drugs typically are out of work longer and have more medical expenses, said Jeffrey Austin White, director of medical management practices and strategy corporate claims at Accident Fund Holdings Inc. in Lansing, Michigan.

Mr. White co-authored “The Effect of Physician Dispensed Medication on Workers' Compensation Claim Outcomes in the State of Illinois,” a study released in May, on the effect of physician-dispensed medications on workers comp claim outcomes in Illinois. Injured workers are less likely to fill prescriptions they don't need if they go to a pharmacy, Mr. White said. He added that data shows injured workers receive three times the amount of drugs when prescriptions are dispensed by doctors instead of pharmacies.

Doctors aren't the only source of repackaged drugs, sources say. There has been a recent influx of nurse practitioners and physician assistants writing opioid prescriptions for injured workers, according to the “2014 Drug Trend Report” by Progressive Medical and PMSI.

Claims for prescriptions written by nurse practitioners have an 8% higher long-term pharmacy cost than those written by other medical professionals, the study said.

Additionally, if a physician isn't familiar with a claimant's other health issues, they might suggest medications that could cause adverse reactions, or injured workers might be reluctant to tell treating physicians about health issues out of fear that it will jeopardize their claims, Mr. Allen said.

“If we put injured workers into better-managed environments, they're going to do better and ... the cost will take care of itself,” Mr. Allen said.

Experts disagree with most arguments that proponents offer in favor of physician dispensing, such as that the practice helps claimants adhere to prescription treatments. However, the practice can be beneficial when certain drugs, such as intravenous medications or sedatives, are prescribed, said Candy Raphan, director medical management services at third-party administrator Broadspire Services Inc. in Sunrise, Florida.

Still, physician repackaging and dispensing has few, if any, benefits when it comes to narcotics or over-the-counter medications, such as Prilosec, a heartburn treatment that often gets marked up, Ms. Raphan said.

“Not all doctor dispensing is abusive or egregious, but there's enough of it that we have to take a hard look at it and find out where the line is,” said Progressive Medical's Mr. Allen, adding that if it's really difficult for an injured worker to make it to the pharmacy, it might make sense for physicians to dispense the initial fill.

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