Filed Under:Markets, Regulation/Legislation

Insurers, Lawmakers, Regulators Take On Repackaged Drugs

Physician dispensing of repackaged drugs, especially for patients receiving workers compensation benefits, is drawing the scrutiny of insurers, legislators and regulators.

The issue is a major cost driver for workers compensation insurers, and the Property Casualty Insurers Association of America fears it will grow because of the “aggressive efforts of the repackagers and other related entities.”

A new study released this week by the Workers Compensation Research Institute on new regulations in Georgia found reforms enacted in April 2011 reduced prices paid for physician-dispensed drugs by 22-36 percent.

The Georgia study also found many physicians continued to dispense prescriptions to injured workers.

The Georgia report follows up on a 2012 WCCI study, which found that from 2007/2008 to 2010/2011, the frequency and cost of physician-dispensed drugs grew rapidly.

The study of 23 states found that the fastest growth was in Illinois, where physicians’ share of all prescriptions jumped from 23 to 43 percent, and the dollar share increased even more, from 23 to 63 percent of all prescription payments.

“In many states across the country, policymakers are debating whether doctors should be paid significantly more than pharmacies for dispensing the same drug,” said Dr. Richard Victor, WCRI’s executive director. “Policymakers in Georgia adopted new rules to narrow the price difference. The results of this study show that the new regulations achieved their objective, and did not discourage many physicians from continuing to dispense these drugs at lower prices.”

Trey Gillespie, senior workers compensation director for PCI said the trade group believes physician dispensing of repackaged drugs injects cost in the system without any discernible benefits to injured workers and presents multiple issues with medication safety.

“Physician dispensing of repackaged drugs, though not violating any laws, clearly evades workers compensation cost savings measures such as fee schedules and treatment guidelines,” he said. 

“These repackaged drugs are billed to the workers compensation insurer at a very high mark-up," he said, noting that the repackaging industry is a highly specialized market, which focuses on marketing to physicians

Besides cost, there is also concern in the states that it will lead to increase use of opiods because people provided such drugs as part of their treatment for an injury that occurred while they were working, they will become addicted.

The issue is becoming so important that the National Council of Insurance Legislators proposed at their March meeting a model law that would tie reimbursement rates for repackaged drugs dispensed by physicians to workers compensation patients to the original manufacturer’s average wholesale price.


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