ANNAPOLIS—The Property Casualty Insurers Association of America (PCI) commends and strongly supports the Maryland Workers Compensation Commission’s proposal to adopt a pharmaceutical fee schedule. PCI testified in support of this proposal before that commission on April 14.
According to the National Council on Compensation Insurance (NCCI), prescription drug costs in the workers compensation system has increased from 6% of medical costs to approximately 18-19% of medical costs. The disparity in reimbursement rates between physician-dispensed drugs and pharmacy dispensed drugs is considered by many to be a major driver behind the increased cost and increased utilization of prescription drugs including dangerous narcotics.
“We have seen in other states and other lines that the implementation of a fee schedule has done much to control rising medical and pharmaceutical costs,” said Richard Stokes, PCI’s counsel for Maryland. “We strongly support the implementation of a fee schedule and its help for consumers.”
National Council on Compensation Insurance (NCCI) has estimated that adoption of the proposed Pharmaceutical Fee Schedule will lower overall Maryland workers compensation costs in the voluntary market by 2.4 percent (approximately $20 million). According to Workers Compensation Research Institute (WCRI), prescription drug costs in Maryland are 7percent higher than the research median. These higher costs are directly attributed to the practice of some Maryland physicians to dispense prescription medication to injured workers and charge much higher prices for those prescriptions that what would be charged by pharmacies. By way of example, the average price per pill paid of Carisoprodol was $2.59 when the prescription was filled at a physician’s office but only $0.67 per pill when filled at a retail pharmacy. Physicians fill approximately 24 percent of the Maryland workers compensation drug prescriptions. Physicians fill 62 percent of the prescriptions for Carisoprodol. According to WCRI, prescription costs in Maryland would be lower but for the higher priced physician dispensing. The proposed regulations should lower prescription costs for Maryland workers compensation claims.
The proposed regulations should have a positive health impact on injured workers. Carisoprodol is one of the most frequently prescribed drugs to Maryland injured workers even though it is considered to be a non-preferred medication for injured workers according to Appendix A of the Official Disability Guides. When California removed the disparity in reimbursement rates between physician dispensed Carisoprodol and pharmacy dispensed Carisoprodol, the number of prescriptions for Carisoprodol dropped dramatically. Similar change in treatment patterns may occur in Maryland. It is better for Maryland workers to receive appropriate evidence-based medical treatment than to receive non-preferred medication.
In addition, the WCRI Prescription Benchmarks for Maryland (March 2010) documents that the reimbursement disparities between physician dispensed medications and pharmacy dispensed medications lead to the higher utilization of prescription drugs including unnecessary prescription drugs. Ranitidine HCL is one of the most frequently prescribed drugs for Maryland injured workers even though it is rarely prescribed to injured workers outside of Maryland. Ninety-six percent of all Ranitidine HCL prescriptions were dispensed by physicians. The average price per pill for physician dispensed Ranitidine HCL is $2.78 even though the same medication is available over-the-counter at $0.35 per pill.
“By removing the reimbursement disparity, injured Maryland workers will likely receive a health benefit of consuming fewer drugs and being prescribed medically appropriate drugs,” Stokes said. “This will ensure that injured workers get right treatment for the right price, and that is the best solution for everyone.”
PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $180 billion in annual premium, 37.4 percent of the nation’s property casualty insurance. Member companies write 44 percent of the U.S. automobile insurance market, 30.7 percent of the homeowners market, 35.1 percent of the commercial property and liability market, and 41.7 percent of the private workers compensation market.