California has one of the highest levels of physician dispensingof repackaged medications in the U.S., a practice that a new studyshows may raise treatment costs and lengthen return-to-worktime.

A decade-long study by the California Worker's CompensationInstitute (CWCI) shows that between 2002 and 2011,physician-dispensed drugs made up 55 percent of all outpatientprescriptions and nearly 60 percent of total prescription drugpayments; and an independent multi-state survey showed that, as of2011, California still had the highest level of physiciandispensing across the 16 reviewed regions.

In physician dispensing, a qualified doctor gives a patient theinitial doses of a prescription drug during an office visit.Physicians say this improves access to prescription services andencourages compliance with prescription schedules, leading tobetter medical and disability outcomes.

However, the CWCI study shows that cases involvingphysician-dispensed repackaged drugs had 17 percent highermedical-benefit costs, 13 percent higher indemnity costs and 9percent more lost-time days than similar claims that did notutilize the practice.

Meanwhile, the use of physician-dispensed drugs to treat injuredworkers grew between 2002 and 2006, when a loophole in stateregulations allowed doctors who dispensed drugs in-office to obtainhigher payments for the same medications that the price paid forthem in a pharmacy.

According to the CWCI, injured workers in California have achoice of up to five pharmacies within 2.2 miles of the dispensingphysician's office, offering evidence that injured workers are notprecluded from easily obtaining their medications if not takenduring a doctor's visit.

In February 2007, the state Division of Worker's Compensationtried to counter the effects of the loophole by revising thepharmacy-fee schedule in a way that would eliminate the pricingdifferential between pharmacy-obtained drugs and those administeredby the physician.

Almost immediately, says the CWCI, both the amount ofprescriptions and the price paid for them decreased, declining bymore than 90 percent by 2011.

Overall, paid medical benefits on 2002 to 2011 claims withphysician-dispensed repackaged drugs averaged $6,017 ($5,524pre-reform, $7,297 post-reform), or 17 percent more than the $5,145average for claims without these types of prescriptions ($4,747pre-reform, $5,316 post-reform).

Indemnity payments for claims with physician-dispensedrepackaged drugs averaged $4,229 prior to the reform and $5,039after March 2007, for a 10-year average of $4,455 — 13.1 percentmore than the $3,937 10-year average for claims without theseprescriptions.

The claims with physician-dispensed repackaged drugs alsoinvolved longer periods of disability, averaging 37.6 paid dayspre-reform, and 50.3 paid TD days post-reform, for a 10-yearaverage of 44.1 paid days off. That is 8.9 percent more than theaverage of 40.5 days (36.3 days pre-reform, 46.2 post-reform) forclaims without physician-dispensed repackaged drugs.

Additionally, among 2002 through 2011 claims with the presencephysician-dispensed repackaged drugs, each prescription added $482to the average amount paid in medical benefits per claim.

More research needs to be done in order to monitor the effectsof physician dispensing upon patient care and compliance withtreatment, CWCI says.