With medical services representing 60 percent or more of workers compensation claims costs, there are several fronts to target. Two of these that relate to prescription drugs are physician dispensing and compounded drugs.
Employers should consider working with their insurance brokers, claims administrators, and pharmacy benefit managers (PBMs) to understand the true cost of these practices and to manage their impact on workers’ compensation programs, according to a report by Marsh Risk Management Research.
“Advocates of physician dispensing argue that it increases the likelihood that a patient takes prescribed medication and ensures that treatment begins immediately because the patient can bypass the pharmacy,” says Tom Ryan, Market Research Leader in Marsh’s Workers’ Compensation Center of Excellence. “But the cost of physician dispensing can be high and the practice can contribute to poorer workers’ compensation claims outcomes.”
READ THE REPORT: Targeting Prescription Drugs to Decrease Workers’ Compensation Costs
Medications dispensed by physicians are typically purchased by repackaging companies that split bulk shipments from drug manufacturers into smaller packages to sell at a higher unit price. Under the Drug Listing Act of 1972, every commercially available drug is classified by a three-segment number, called its National Drug Code (NDC), which informs its average wholesale price (AWP).
When a drug is repackaged, it is assigned a new NDC and a new AWP that is typically several times the price of the same drug in its original packaging. Nearly all workers’ compensation state pharmacy fee schedules are based on these AWPs. This means that repackaged drugs dispensed by physicians can cost employers exorbitant sums.
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