Fix Medication Loophole
A sure way the Legislature could quickly give Florida businesses a boost is by eliminating a legal loophole that needlessly drives up worker’s compensation insurance premiums.
Some authorities say closing the prescription drug loophole would save employers $62 million a year. Physician groups discount that claim, but regardless of the amount of the savings, the current situation gouges businesses.
Lawmakers should stop the unjust pricing.
As we have outlined before, under Florida’s workers compensation law, the reimbursement for prescription drugs is set at the average wholesale price, plus a $4.18 dispensing fee.
But the price standards don’t apply when drugs are purchased in bulk by a wholesaler and then repackaged into individual prescription sizes for distribution by physicians, and the practice unquestionably drives up costs.
According to the Florida Department of Management Services, over the last four years the price of physician-dispensed prescriptions increased 62.1 percent while pharmacy-dispensed prescriptions increased 13.1 percent.
The insurance industry’s National Council on Compensation Insurance reports the repackaged drugs accounted for 2.5 percent of the 8.9 percent rate increase in 2012.
The Florida Medical Association disputes the findings and says the repackaged drugs are being made a scapegoat for higher rates by the insurance industry. It blames a number of medical costs for the increase in workers’ comp and says physicians are far more likely to be underpaid than overcompensated.
Perhaps, but it is difficult to discount the Workers’ Compensation Research Institute study that found Florida’s average payment per workers’ compensation claim — $536 — for prescription drugs was the second highest of the 17 states it studied and 45 percent higher than the median of those states.
The National Council on Compensation Insurance compared commonly dispensed drugs and found repackaged drugs can be as much as 679 percent higher than pharmacy drugs.
Nevertheless, the state has failed to address the problem. Lawmakers did pass a reform measure in 2010, but it was vetoed by Gov. Charlie Crist.
A legislative remedy remains a priority for the Florida Chamber of Commerce.
Mark Wilson, the chamber’s president and CEO, says employers are so frustrated they are now disputing claims payments with their workers’ comp carriers, with 12,000 cases being contested in Tallahassee.
Lawmakers needn’t get bogged down in the number to recognize that simply repackaging a drug should not eliminate reasonable controls on the drug’s costs.
This year, the Legislature should finally eliminate the prescription drug reimbursement loophole.