Burlington, VT – The Property Casualty Insurers Association of America (PCI) recently testified before the National Conference of Insurance Legislators (NCOIL) that the practice of physicians dispensing repackaged drugs should be more tightly regulated.
In its testimony to NCOIL’s Workers Compensation Insurance Committee, PCI expressed strong support for regulatory and legislative remedies to ensure physician dispensing of repackaged drugs does not evade workers compensation cost saving measures.
Repackaging is the practice of breaking up a large quantity of manufactured drugs and repackaging those drugs into smaller quantities, then assigning a new National Drug Code (NDC). For example, if an original manufacturer produces a pill and sets a price of 50 cents per pill, the repackager can simply repackage and relabel with a new NDC number and set a new price, which can exponentially increase the cost.
“PCI believes that physician dispensing of repackaged drugs injects cost in the system without any discernible benefits to injured workers and presents multiple issues with medication safety,” said Frank O’Brien, vice president state government relations for PCI. “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 gave increased to 18-19 percent of medical costs. Repackaging is a major cost driver, and 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.
O’Brien, in his testimony, thanked NCOIL for taking this issue under consideration and noted PCI’s concern that the profit potential from repackaging could be significant. This could cause the practice to spread and ultimately create much higher costs for employers and insurers with no demonstrated benefit to the injured worker or to the system.
“Physician dispensing of repackaged drugs appear to be solely a workers compensation issue,” O’Brien said. “One of the reasons why is that a patient covered under a health insurance policy typically is responsible for co-pays, but there are no co-pays for the injured worker in workers compensation, and there are a number of contractual and reimbursement terms that physicians must contend with in more traditional health plans.”