Cutting Prices of Drugs Dispensed

A new study from the Workers Compensation Research Institute (WCRI) showed that Georgia’s changes to the reimbursement rules for physician-dispensed drugs reduced the average price per pill paid by 25% to 40% for most of the drugs commonly dispensed by physicians. However, the post-reform prices paid for physician-dispensed drugs were still 20% to 40% higher than the prices paid to pharmacies for the same drug. “In many states across the country, policymakers are debating whether doctors should be paid significantly more than pharmacies for dispensing the same drug,” said Dr. Richard Victor, WCRI’s executive director. “Policymakers in Georgia adopted new rules to narrow the price difference, and the research continues to show the new regulations did not discourage physicians from continuing to dispense these drugs at lower prices, which was a concern.” The study, Impact of Physician Dispensing Reform in Georgia, 2nd Edition, is an update to the 2013 WCRI study that examined the early results of Georgia’s reform using pre- and post-reform data. With an additional year of data, the study found that there was little change in the prevalence of physician dispensing in the second post-reform period after an initial drop (from 36% pre-reform to 28% in the first post-reform period and 27% in the second post-reform period) while the share of drug costs for physician-dispensed prescriptions had a further five-percentage-point decrease (from 49% to 34% and now 29%). Georgia’s rule changes, effective in April 2011, capped the reimbursement amount for physician-dispensed prescriptions to the average wholesale price (AWP) of the original drug product used in the repackaging process if a repackaged drug is dispensed. The reform did not limit physicians’ ability to dispense prescription drugs. Georgia is one of the 16 states that have made legislative or regulatory changes to address cost issues related to physician dispensing. Before the rule change, for example, a prescription for hydrocodone-acetaminophen was paid at $0.48 per pill when filled at a pharmacy, but $1.06 per pill when filled at the doctor's office—a price difference of 121%. In the two post-reform periods, the price difference for the same drug was significantly reduced but still at 34% to 39%. The data used in this analysis of Georgia’s pharmacy fee schedule reform came from payers in Georgia that represented 46% of the claims in the state workers’ compensation system. The pre-reform data consist of claims from 3,851 injured workers with more than one week of lost time. These claims arose between April 1, 2010, and Sept. 30, 2010, with 24,672 prescriptions filled through March 31, 2011. The data for the first post-reform period consist of 3,960 claims that arose between April 1, 2011, and Sept. 30, 2011, with 24,925 prescriptions filled through March 31, 2012. The data for the second post-reform period consist of 4,164 claims that arose between April 1, 2012, and Sept. 30, 2012, with 25,325 prescriptions filled through March 31, 2013.