Physician dispensing of repackaged drugs, especially forpatients receiving workers compensation benefits, is drawing thescrutiny of insurers, legislators and regulators.

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

A new study released this week by the Workers CompensationResearch Institute on new regulations in Georgiafound reforms enacted in April 2011 reduced prices paidfor physician-dispensed drugs by 22-36 percent.

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

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

The study of 23 states found that the fastest growth was inIllinois, where physicians' share of all prescriptions jumped from23 to 43 percent, and the dollar share increased even more, from 23to 63 percent of all prescription payments.

“In many states across the country, policymakers are debatingwhether doctors should be paid significantly more than pharmaciesfor dispensing the same drug,” said Dr. Richard Victor, WCRI'sexecutive director. “Policymakers in Georgia adopted new rules tonarrow the price difference. The results of this study show thatthe new regulations achieved their objective, and did notdiscourage many physicians from continuing to dispense these drugsat lower prices.”

Trey Gillespie, senior workers compensation director for PCIsaid the trade group believes physician dispensing ofrepackaged drugs injects cost in the system without any discerniblebenefits to injured workers and presents multiple issues withmedication safety.

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

“These repackaged drugs are billed to the workers compensationinsurer at a very high mark-up,” he said, noting that therepackaging industry is a highly specialized market, which focuseson marketing to physicians

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

The issue is becoming so important that the National Council ofInsurance Legislators proposed at their March meeting a model lawthat would tie reimbursement rates for repackaged drugs dispensedby physicians to workers compensation patients to the originalmanufacturer's average wholesale price.