By Joe Paduda

CompPharma and Health Strategy Associates

One big reason physician dispensing of repackaged drugs.

Two stories, seemingly unrelated, appeared in the last week or so that, when read together, clearly lay out the problem.

One described the costs borne by Florida's employers, costs much higher than necessary due to inflated costs from drugs dispensed by physicians. A loophole in the law allows doctors to dispense drugs at prices far above those for the same pills dispensed in a retail pharmacy. More on this in a minute.

So, why is this happening. In a word money. Specifically, political connections fueled by large campaign donations from companies profiting from the current Florida fee schedule, a fee schedule that has added tens of millions in costs to Florida's employers and tax payers.

Here's an excerpt from the article:

"Employees of one influential health care company, Miramar-based Automated Healthcare Solutions, accounted for $55,200, the second-highest amount of contributions to (state Senate President Mike) Haridopolos.

With Haridopolos' backing, the firm was active in pushing a bill tightening reporting requirements for a prescription-drug monitoring database (PDMP). The firm, along with Haridopolos, also unsuccessfully fought a provision restricting many doctors from dispensing painkillers in their offices."

Now at first blush this is good news and I'd say at second blush too. AHCS appears to be promoting a PDMP, a long- and desparately-needed tool that would enable much better tracking of narcotic prescribers, dispensers, and users by physicians, pharmacists, and, when appropriate, law enforcement. Doctors would be able to see if their patient was getting multiple scripts from other doctors; pharmacists would see if their customer was getting similar scripts filled at other pharmacies, and law enforcement's ability to identify potentially criminal behavior would be greatly enhanced.

So far, so good.

What's less good much less is AHCS' actual business. AHCS enables physician dispensing in Florida and many other states. Which leads to the next article.

WCRI's recent report indicates Florida's drug costs are 45% higher than the median state, largely due to physician dispensing - not of narcotics, but the run-of-the-mill generics that make up the vast majority of work comp prescriptions. Here are some of the study's conclusions.

The average payment per claim for prescription drugs in Florida's workers' compensation system was $536 - 45% higher than the median of the states in the study.

Over a two year period (2005/2006 and 2007/2008), the average cost per claim for prescription drugs in Florida increased 14%. By contrast, prescription costs per claim were fairly stable in most study states over the same period.

Higher and growing costs of prescription drugs in Florida were largely due to more frequent and higher-priced physician dispensing.

Physician-dispensing in Florida's workers' compensation system has been taking an increasingly larger share of prescription payments. The percentage of prescription payments for physician-dispensed prescriptions in Florida increased from 17% to 46% over a four-year period (2004/2005 and 2007/2008)...

I'd note that the Workers' Compensation Research Institute's most recent data are from 2008 three years ago. If physician dispensing continued to grow at the same rate, we're looking at drug costs in Florida that are probably twice as high as other states...

Here's the net. AHCS has contributed close to two million dollars to various politicians, political campaigns, PACs, and other entities. Sure, some of their activity appears to be focused on controlling narcotics in workers' comp. But most of their donations occurred back when Florida's legislature was intent on closing the loophole that has generated millions in revenue for AHCS, AHCS' affiliates, and AHCS' dispensing physicians.

Nationally, physician dispensing of repackaged drugs adds more than a half-billion dollars to employers' costs. These added costs are passed on to taxpayers, customers, stockholders, and employees.

All at a time when employers and taxpayers are struggling to get though a horrendous recession.