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Repackagers’ margins

Physicians and clinics are finding that dispensing drugs to patients can be a very profitable venture. Advocates are claiming that the practice improves the quality of care and ensures the patient receives the necessary scripts.
Let’s take the quality of care issue first. No question – an obstacle to compliance is the requirement that the injured worker has to get the script filled. Therefore, the dispensing of meds by docs makes sense. The right drug gets into the patient’s hands quickly.
OK. That’s a good thing. But at what price?
An analysis by Alex Swedlow (data provided by Alex to me) et al at the California Workers Compensation Research Institute on 2004 data indicates the price for repackaged drugs is from two times higher than the fee schedule (for ibuprofen) to twelve times higher (generic Zantac). (CWCI will publish the full study in the near future)
And, repackaged drugs accounted for less than a third of all scripts, but over half of all dollars paid. This is especially troubling when one considers the overwhelming majority of the top 20 drugs are generic.
Sources indicate that the problem grew even worse last year, with some payers indicating a majority of scripts were for repackaged drugs.
What does this mean for you?
Higher costs for WC payers, businesses, and taxpayers in California.

One thought on “Repackagers’ margins”

  1. There needs to be a compromise on this issue. There are certainly doctors in California that are price gouging on repackaged drugs. On the other hand, as you point out, there is value in keeping prices at a level where it makes sense for doctors to continue to dispense. There should be middle ground on this issue.

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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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