This report found evidence of frequent physician dispensing of new drug strengths and a new formulation at much higher prices. This phenomenon was observed in several states with recent reforms aimed at reducing prices paid for physician-dispensed prescriptions. Frequent dispensing of higher-priced new drug products led to substantial increases in average prices paid for some common physician-dispensed drugs.

This report is part of a series of WCRI studies that examine the effects of regulatory or legislative changes to the rules governing reimbursement for physician-dispensed prescriptions. In the past decade, many states in the U.S. have enacted reforms to cap prices paid to physicians by tying the maximum reimbursement amount to the average wholesale price (AWP) set by the original manufacturer of the drug. However, these new strengths and formulations are labeled as drugs made by generic manufacturers, not repackagers, and therefore, are not subject to the new reimbursement rules targeting physician-dispensed repackaged drugs.

The data used for this report came from payors that represented 31–70 percent of all medical claims across 22 states studied and comprised detailed prescriptions based on calendar quarter from the first quarter of 2012 though the first quarter of 2014. The 22 states in the study are Arizona, California, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Missouri, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Virginia, and Wisconsin.  

Physician Dispensing of Higher-Priced New Drug Strengths and Formulation. Dongchun Wang, Vennela Thumula, and Te-Chun Liu.  April 2016. WC-16-18.

Copyright: WCRI