Chicago, IL – The Property Casualty Insurers Association of America (PCI) is pleased that the Illinois Workers’ Compensation Commission has moved forward on a rule change addressing significant markups on physician dispensed, repackaged prescription drugs.
From a countrywide perspective, prescription drug costs represent approximately 19% of all medical costs. Repackaging of drugs is one of the major cost drivers in some states including Illinois.
The commission recently advanced consideration of the draft rule. The next step is to begin the Joint Committee on Administrative Rules (JCAR) process. The action followed the commission’s discovery that prescription drugs dispensed outside of licensed pharmacies are being significantly marked up over the original National Drug Code (NDC) price. It occurs when companies repackaging drugs marketed for physician dispensing obtain a new NDC number with a higher unit price. The Workers’ Compensation Commission cited a study by Coventry, a workers’ compensation payer, demonstrating that the averaged repackaged drug costs $115, a 236 percent increase over the average non-repacked drug price of $48.65.
“Physician dispensing of repackaged drugs injects costs into the system without any discernible benefits to injured workers, and it also presents multiple issues with medication safety,” said Deirdre Manna, PCI’s vice president of industry, regulatory and political affairs. “Physician dispensing of repackaged drugs, though not violating any laws, clearly evades workers compensation cost savings measures such as fee schedules and treatment guidelines.”
According to the National Council on Compensation Insurance (NCCI), prescription drug costs in the workers compensation system have increased to 18-19% of medical costs. Repackaging is a major cost driver. Physician dispensing is on the rise in most states. The disparity in reimbursement rates between physician-dispensed drugs and pharmacy dispensed drugs is considered by NCCI and the Workers Compensation Research Institute (WCRI) to be a major driver behind the increased cost and increased utilization of prescription drugs.
Currently, three states (Texas, New York and Massachusetts) do not allow physician dispensing of repackaged drugs. The suggested rule change in Illinois would mandate that prescriptions filled and dispensed outside of a licensed pharmacy be billed at the average wholesale price for the underlying drug product, plus a dispensing fee of $4.18.
“We are pleased that the Workers’ Compensation Commission has recognized that this issue needs to be addressed,” Manna said. “We believe the draft rule will protect workers’ compensation claimants from the safety and cost concerns created by existing practices.”