August 1, 2012

Physician-Dispensed Drugs Much More Expensive Than
Pharmacy Versions

Cambridge, MA—Physicians in practices providing workers compensation service often dispense medications at much higher prices than pharmacies, and several states have sought to do something about that.

New regulations have been strongly opposed by supporters of physician-dispensed drugs who warn that convenience and access for patients could be reduced.

A new study, however, finds that those types of regulations don't reduce access to pharmaceuticals and also calls into question any advantages to having drugs directly dispensed by doctors, as opposed to prescriptions being filled at pharmacies.

The study "Physician Dispensing in Workers' Compensation," issued by the Workers Compensation Research Institute (WCRI), examines the results of a change to a California statute that has become a model for many other states.

Before the 2007 statutory change, workers compensation physicians typically charged much higher prices than pharmacies for the same medication, according to the WCRI study, which cited examples such as charging $0.85 per pill for Vicodin in physician offices compared to $0.43 for pharmacies.

The price was still higher after the reform, pushed down to $0.52 per pill, but the difference was smaller, the study notes.

"There is a great discrepancy between what doctors and pharmacies charge for dispensing the same drug," observed Richard Victor, JD, PhD, WCRI's executive director. "One question for policymakers is whether the large price difference paid when physicians dispense is justified by the benefits of physician dispensing. Policymakers can learn from the California experience."

Researchers looked at nearly 5.7 million prescriptions paid under workers' compensation for approximately 758,000 claims from 23 states over a period from 2007/2008 to 2010/2011. The 23 states in this study represent over two-thirds of the workers' compensation benefits paid in the U.S., according to the study.

Several of the states providing data—Arizona, Georgia, South Carolina, and Tennessee as well as California—recently have adopted reforms aimed at reducing the prices of physician-dispensed drugs

While supporters of physician dispensing have argued that drugs would be less likely to be offered if their profitability was decreased, researchers found that physicians continued to dispense prescriptions, even when the prices paid were lower. Before the reforms, 55% of workers' compensation prescriptions were dispensed at California physician offices while, 3 years after the reforms, 53% of those prescriptions were physician-dispensed.

Supporters of physician dispensing also have claimed that, since physicians almost always provide generic drugs, costs would go up if pharmacies, which offer both generic and brand-name drugs, were used for dispensing. The study finds that, for the medications most commonly provided by physicians, generics were also available at pharmacies and, in fact, were cheaper than at physician offices.

U.S. Pharmacist Social Connect