Study shows increasing frequency, costs of physician-dispensed meds

Medications dispensed by physicians often cost 60 to 300 percent more than the same drug purchased at a retail pharmacy, says a new study.

It's among the findings pointing to the increasing costs of physician-dispensed drugs to the workers' comp system. The study comes as several states are taking steps to address the problem.

The Boston-based Workers Compensation Research Institute looked at more than 750,000 claims from 23 states over a three-year period, from 2007/2008 to 2010/2011. The findings provide ammunition for those looking to control physician-dispensed medications and allay concerns among supporters.

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"The study finds that physician-dispensed drugs became increasingly common in most states that permit physician dispensing," the study says. "At the same time, the prices paid for physician-dispensed drugs were often substantially higher than if the same drugs were dispensed by a retail pharmacy. Moreover, the prices paid to dispensing physicians rose rapidly for medications that were commonly dispensed by physicians, while the prices paid to pharmacies for the same drugs changed little or fell."

Among the states studied, Illinois topped the list for the percentage of all drugs that were dispensed by physicians -- 43 percent. It was also highest on the list of the percentage of drug payments for physician-dispensed drugs at 63 percent.

While Illinois saw the fastest growth in physician dispensing over the study period, other states with rapid growth included Connecticut, Florida, South Carolina, and Georgia. In Pennsylvania, Tennessee, Maryland, and Wisconsin, the cost of physician dispensing grew rapidly even though the frequency of physician dispensing grew only moderately, indicating large increases in the prices of physician-dispensed drugs.

Several drugs were singled out as seeing large price increases when dispensed by physicians while the pharmacy prices for the same drugs remained stable or decreased. Hydrocodone-acetaminophen -- Vicodin, meloxicam -- Mobic, and Tramadol HCL -- Ultram were among them. In Connecticut, for example, the average price per pill for physician-dispensed hydrocodone-acetaminophen increased 54 percent while the prices paid to pharmacies decreased by 10 percent.

Medications available without a prescription were sometimes sold by physicians. Prilosec and Zantac were prescribed by some physicians in Florida, Georgia, Illinois, and Maryland at a considerable markup. While the Walgreens price for Prilosec OTC is approximately $0.64 per pill, the average price paid to physicians ranged from $5 to $8.

Debunking myths. California is among several states that have changed their fee schedules for reimbursements to physicians who dispense medications. The study addresses a couple of concerns among those who oppose such changes:

Contrary to the notion that physicians will stop dispensing if there is a large reduction in price and patient compliance will suffer, the study found that was not the case in the California post-reform experience. After reimbursement prices were lowered, "about half of all prescriptions in California were physician dispensed. Instead of dispensing more expensive repackaged drugs, many dispensed non-repackaged drugs and were paid the same prices as were paid to pharmacies for the same drug."
To the concern that costs could rise if physician-dispensing were eliminated or reduced because physicians typically dispense less expensive generic versions of drugs, the study found that "for the medications commonly dispensed by physicians, generics were almost always dispensed by both physicians and pharmacies. Moreover, when generic drugs were dispensed, physician-dispensers were paid much higher prices per pill than pharmacies for the same prescription."

Read more at the WorkersComp Forum homepage.

September 6, 2012

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