August 29, 2014

Health Care Trends

Pharmaceuticals - Bitter Pills?

Physician-dispensing of prescriptions works well except when it comes to medications prescribed in workers' comp cases.

Amy Keller | 9/11/2012

The National Council on Compensation Insurance (NCCI), a firm that provides data to workers’ comp insurers and analyzes trends in the industry, found that doctors were marking up repackaged drugs in workers’ comp cases from 45% to 679% for 15 most frequently dispensed medications. Under the state’s workers’ compensation statute, the reimbursement amounts for prescription medication in workers’ comp cases is supposed to be capped at what’s known as the average wholesale price (AWP), usually the wholesaler’s suggested price, plus a $4.18 dispensing fee.

There’s a loophole, however: When drug repackagers remove the pills from their original containers and repackage them, there are no limits on the markup. The repackagers are allowed to create an entirely new AWP, which is often higher than the manufacturers’ suggested retail price. The doctors who then buy the repackaged drugs add their own margin and pass the cost along to the workers’ comp insurer.

Pricing Loophole
Medications commonly prescribed in workers’ comp cases (2009)
Medication Repackaged
Price
Per Pill
Pharmacy
Price
Per Pill
Percent
Difference
Carisoprodol (muscle relaxant) $4.21 54 cents 679.6%
Meloxicam (pain reliever) $5.70 $3.04 87.5%
Ranitidine HCL (heartburn relief) $3.77 $1.32 185.6%
Tramadol HCL (pain reliever) $1.63 78 cents 109.0%
Cephalexin (antibiotic) $3.01 66 cents 356.1%
Source: National Council on Compensation Insurance


A wrinkle in state law allows doctors to charge significantly higher prices for medications dispensed in workers’ compensation cases.

One example of the results: Carisoprodol, a commonly prescribed muscle relaxant, costs 54 cents a pill from a pharmacy that purchases the drug in bulk but about $4.21 per pill on average when repackaged and dispensed by a workers’ comp physician, according to 2009 council data.

Business trade groups like the Florida Chamber of Commerce, the NFIB and Associated Industries of Florida say the loophole is driving up workers’ comp premiums — and they’ve been pushing lawmakers to impose caps on what physicians can charge in workers’ comp cases.

“We fully support doctors being able to dispense ... but we also support them doing so at a reasonable cost,” says David Hart, Florida Chamber’s chief lobbyist and executive vice president. “They ought to have to dispense at the same rate that everyone else is required to under the state law, with an additional dispensing fee, since they can’t buy in bulk.”

Thus far, the chamber and its allies have been unsuccessful. In 2010, the Legislature approved a bill that would have put price caps on drugs repackaged for workers’ comp patients, but Gov. Charlie Crist vetoed the law. In the most recent legislative session, Senate President Mike Haridopolos blocked similar legislation. One important player, the Florida Medical Association, supports physician dispensing but hasn’t taken a position on capping markups on workers’ comp-related prescriptions.

Tags: Healthcare

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