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How physician dispensing companies promote their product

Why do physicians dispense drugs to workers comp patients?
To hear them tell it, it’s all about convenience, better outcomes, lower cost, faster return to work – all assertions made without a shred of evidence.
The reality is rather less noble, but best to use their own words to show how they pitch their programs to docs…
MedX Sales
“Workers Compensation (Incredibly Profitable)
Physicians that work in occupational medicine and pain management typically handle workers compensation cases and therefore submit claims to workers compensation insurance. Unlike the other scenario where the physician collects cash for prescriptions, in the case of workers comp, the physician would submit claims to the insurance company for payment of the drugs. Here the physician’s payment reimbursement is based upon Average Wholesale Pricing or (AWP). Each repackager creates their own AWP for each drug that is sold by the physician. Each state also has different reimbursement policies relating to AWP but rest assured the potential profitability is staggering. A physician paying $6.00 for a prescription could be reimbursed as much as $100.00 or more based on AWP.
also from MedX
You could be losing $50,000 or more each year by not dispensing today!

Physician Dispensing Solutions

Learn how to generate over $100,000 annually with our physician dispensing program.
Do you treat workers compensation patients? Unlike regular patients, dispensing medication to workers compensation patients requires submitting a claim to insurance in order to get paid. Physicians that dispense medication to their workers compensation patients earn revenue base [sic] upon the state’s insurance reimbursements schedule and the Average Wholesale Pricing (AWP) for that drug. It is not unusual for a physician to earn over $100,000 or more every year by dispensing medications to workers compensation patients.
Clinical Rx Solutions

A physician who dispenses medication to their workers compensation patients earns revenue based upon the state’s reimbursement schedule and the average wholesale pricing (AWP) of that medication. It is not unusual for a practice to earn over $100,000 or more in additional income per year by dispensing to workers compensation patients.
[check out the income calculator, a tab pops up when you hover your mouse on the “Workers Compensation Dispensing Program” button top left]
Physician Partner
Benefits to the Practice
Maximize Profitability
Reduced Claims Processing Workload
Increase Monthly Cash Flow
Can I really earn $50,000 or more each year by dispensing? Yes but that all depends on the size and type of practice as well as the number of patients seen each day. Based upon averages, the average physician will see 100 patients and write 100 prescriptions or more each week. Asking yourself simple questions such as how many patients you see per day or per week will quickly give you an idea how much money you could be earning by dispensing. Wholesale cost per drug and what you charge the patient is the final determining factor on calculating potential earnings. Most of the generic drugs will cost you about $5.00.
A-S Meds
7. What is the profit potential for my practice?
The new revenue source can be very significant. As with any program, utilization is the key. We provide you with a personalized Proforma based on your customized formulary, number of daily patients and number of prescriptions per patient. This will more accurately predict your potential profit. We have clients ranging from $1,000 to $50,000+ profits per month, with an ‘average’ profit of around $7 per script.
The practice earns all of the cash profit, the workman’s compensation profit and the managed care profit.
[emphases added]

3 thoughts on “How physician dispensing companies promote their product”

  1. Re-packagers clearly are using the system for maxium profits. This is no different then PBM’s reimbursing pharmacys below cost, to increase insurance carriers profits.

  2. Jeff – thanks for the note.
    My sense is you aren’t aware of the markups on repackaged drugs as identified by NCCI, WCRI, and CWCI and reported here and in many other places.
    Markups are typically 50% to 700% above the retail drug’s AWP, and profits are undoubtedly higher than that.
    In contrast, WC insurers are operating at negative profit margins. As I noted in my keynote speech in Orlando, profits in the physician dispensing business took $1 billion out of the WC system; without physician dispensing of repackaged drugs WC would have been profitable.

  3. Hi Joe: “A physician paying $6.00 for a prescription could be reimbursed as much as $100.00 or more based on AWP” is an understatement. For example, the physician purchases Omeprazole 20mg #60 for $11, dispenses it to a City and County WC claimant, and bills the City and County $734 for same…what a waste of tax-payers money! BTW, one can pick up the same medication over-the-counter at CVS for under $30.

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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