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Physician dispensing

November 21, 2018 · Optum


Physician dispensing or non-traditional dispensing, is when an injured person obtains medications from sources other than a retail or home delivery pharmacy, such as a physician’s office, clinic, hospital pharmacy, rehab facility, or compounding pharmacy. Often the medications are presented in a repackaged form that is ready to dispense to patients, however, this may not be the case with compounded medications. Doctors may dispense medications to patients in most states, but the laws permitting this vary by state. In some situations, physician dispensing can offer convenience to the injured person, but there are tradeoffs to consider; notably patient safety and cost.  


While some cite physician dispensing as beneficial to medication adherence, several recent studies have shown that physician dispensing leads to higher costs and longer indemnity periods than pharmacy-dispensed medications. In fact, physician-dispensed medications can be three to four times higher than pharmacy-dispensed medications. An example from the Workers’ Compensation Research Institute (WCRI) study found that a single Percocet pill in Pennsylvania last year cost an average of $0.64 from a pharmacy versus $3.55 when dispensed by a physician.

Physician-dispensed medications also generally occur out-of-network, which adds costs, administrative inefficiencies, prohibits the application of utilization protocols, circumvents clinical controls, and reduces access to information. There is also risk of fraud, misuse, or abuse, and potentially negative health consequences since the medications are usually not subject to utilization reviews; patients may not think of these medications when reviewing their pharmaceutical treatment with healthcare providers since they didn’t get them at the pharmacy. This could lead to drug-drug interactions or unanticipated side effects.

Despite these concerns, physician dispensed medications are on the rise in the workers’ compensation industry. According to the WCRI study, physician dispensing accounted for 29% of workers’ compensation prescriptions and made up 48% of workers’ compensation drug spend in Pennsylvania in 2012. A significant increase from just four years ago when physician dispensing made up 17% of workers’ compensation prescriptions and spend. Physician dispensing is also growing in the auto no-fault market.


O​ur perspective

At Optum, we believe it is our responsibility to act as an influential voice for positive change and we advocate for greater cost control over physician dispensed and repackaged medications. Our government affairs team is working with stakeholders throughout the system, providing expert opinions and testimony. As changes occur, we keep our clients informed and work with them to assure new program requirements are implemented accurately and on time. To date, approximately 20 states have moved to restrict the practice, through either legislative or regulatory action. We are lending our voice with a seat at the table.

In order to gain control over utilization and ensure patient safety, we must have knowledge of the injured person’s medication therapy regimen. We offer a specialty network called PharmaComplete that provides “in-network” access to 500 occupational clinics and nearly 1,500 physician-dispensing locations nationwide. This network clears a path for valuable clinical oversight and utilization management. It also delivers greater cost savings as network discounts are applied and administrative inefficiencies reduced. Once captured, drug utilization review criteria, program business rules, medication plans, and formularies may be applied. Our statistical models contemplate the data and should a need for intervention be indicated, our clients are positioned to act.

The practice of physician dispensing continues to challenge the workers’ compensation industry. Fortunately, with each passing day, we become even better equipped to address those challenges. The industry is becoming better informed as research studies are released and the media continues its coverage of the issue. Legislative and regulatory reform is lending clarity by defining the circumstances under which physician dispensing is permitted. Such efforts are also lowering costs as fee schedules are established and the disparity between the cost of physician-dispensed medication and their pharmacy-dispensed counterparts narrows. Payers and injured workers alike are benefiting from advancements in our PBM programs. This progress is encouraging; as is the mounting evidence that proves thoughtful dialogue and the exchange of ideas can spark innovation and be a catalyst for artful compromise that makes a positive difference.

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