NCCI: Physician-dispensed prescription drugs rising sharply

Workers' comp medical providers are increasingly dispensing prescription drugs out of their offices. The latest Workers Compensation Prescription Drug Study from the National Council on Compensation Insurance points to that as a major cost driver in the workers' comp system, as of 2008.

"WC drug costs have always included some cost for physician-dispensed drugs," according to the study. "Recently, we have seen a sharp increase in these costs in almost every state."

Physicians dispense drugs out of their offices for a number of reasons, according to the study. These may include:

To allow the patient to start taking the drug immediately.
To determine the most appropriate medication and dosage.
To assist a patient for whom it is inconvenient to go to a pharmacy.
To increase revenue for the physician.

Use of Schedule II narcotics decreases among California injured workers (08/13/12)
IAIABC, ACOEM target state workers' comp agencies with opioid message (10/24/11)
Study shows increasing frequency, costs of physician-dispensed meds (09/06/12)
Opioids, physician dispensing continue to concern practitioners (02/25/13)
Opioids, physician dispensing are major concerns among WC payers (02/11/13)

The cost of a physician-dispensed medication is typically more than it would be from a pharmacy.

The percentage of workers' comp drug dollars due to physician dispensing rose from less than 15 percent in 2007 to more than 20 percent in 2008. The trend can be seen in nearly all states.

"We are seeing an increase in all states but two, California and Oregon," said John Robertson, NCCI's director and senior actuary. Both states have taken actions that have effectively allowed them to buck the trend of increasing physician-dispensed workers' comp drugs.

The figures for Oregon showed a decline in the share of costs due to physician-dispensed repackaged drugs as well as in the share arising from physician-dispensed non-repackaged drugs. In July 2008, the state reduced the reimbursement rate for drugs in workers' comp from 88 percent of average wholesale price with a dispensing fee of $8.70 to 83.5 percent of average wholesale price with a $2 dispensing fee.

"The force of the change was really cost-containment for pharmacy," said Nancy Johnston, medical policy analyst for the Oregon Division of Workers' Compensation. "Our rules do say it can only be done for 10 days."

The change in the pharmacy fee schedule has also resulted in a rise in the use of generic medications, which Johnston says was the desired result. The state is also looking at a new proposal to change the pharmacy fee schedule to 110 percent of the wholesale acquisition cost rather than based on average wholesale price.

California changed its policy on drug reimbursement in March 2007, specifically targeting repackaged drugs dispensed by physicians. While the reform did result in an overall decrease in physician-dispensed drugs, that was mainly due to a combination of a reduction in repackaged drugs and an almost offsetting increase in physician dispensing of non-repackaged drugs.

Additional findings. NCCI's study also included:

Three-fourths of workers' comp repackaged drug costs originate from physicians.
A lower than expected emergence of drug costs has prompted NCCI to lower its projected ultimate drug share of total medical from 19 percent to 18 percent.
After two seemingly abnormal years in which price change was the dominant factor affecting per claim workers' comp drug cost increases, utilization change has once again taken its historically dominant role.
OxyContin® has become the top prescribed workers' comp drug in terms of paid dollars. A successful patent defense, which resulted in the removal of the extended release generic version of OxyContin from the market, is likely the major contributing factor.

Read more at the WorkersComp Forum homepage.

January 24, 2011

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