The practice of physician repackaging prescription drugs and selling to their patients has become an issue in a number of states (e.g. Florida) and now is the subject of reform legislation broadly supported by the business community in Pennsylvania. A recent study by the Workers Compensation Research Institute (WCRI) found that physician-dispensed medications account for 29% of all prescriptions in workers comp in Pennsylvania, but 48% of all prescription costs.
WCRI found that physicians in Pennsylvania often dispensed and billed for repackaged drugs, which were paid at higher prices than what pharmacies were paid for the original products of the same drugs. There are two primary reasons for the disparity: (1) the Average Wholesale Price (AWP) of a repackaged drug is almost always higher than the AWP of the original drug used in the repackaging process, and (2) pharmacy dispensed drugs were often paid at a price below the fee schedule reimbursement amount, primarily due to pharmacy benefit managers (PBMs) contracting with retail pharmacies for discounted prices below the AWP.
The bottom line for employers in Pennsylvania is that the current physician dispensing practice is significantly increasing workers’ compensation costs. A front page article from the Sept. 24 Philadelphia Inquirer reported on the high costs and problems associated with this practice.
A legislative solution
H.B. 1846 provides meaningful savings to Pennsylvania employers without undercutting injured workers’ access to quality care and prescription drugs. The bill establishes reasonable limitations on the new but growing practice of physicians dispensing the drugs they prescribe to injured workers. The bill limits dispensing to 20 days, or seven days for more serious drugs, from an injured worker’s first treatment with a healthcare provider. This may be necessary if, for example, a patient sought pain relief that very moment after the injury or a physician believed medication treatment should begin immediately. This limit is much longer than the period allowed in neighboring states – for example, New York is three days, New Jersey is seven day – where physician dispensing still occurs.
The legislation is supported by the PA Chamber, NFIB, PA Retailers’ Association, PA Manufacturers’ Association, Pennsylvania Food Merchants’ Association, PA Business Council, PA Medical Society, State Police, Chiefs of Police, Department of Drug and Alcohol Programs, Department of Labor & Industry, PA Pharmacists Association, PA Association of Chain Drug Stores, CompPharma Pharmacy Benefit Managers, Philadelphia Association of Retail Druggists, Insurance Federation of PA, American Insurance Association, National Association of Mutual Insurance Companies, Property Casualty Insurance Association of America, the PA Workers’ Compensation Advisory Council (which includes a claimants’ attorney and representatives from several unions), local chambers and countless employers throughout the Commonwealth.
The business coalition is seeking support for enactment of this legislation this week before the Pennsylvania legislative session ends.
