FOR RELEASE ON RECEIPT
July 12, 2012
PCI Testifies In Support of Stronger Regulations
For Physician Dispensing of Repackaged Drugs
BURLINGTON, Vt.—The Property Casualty Insurers Association
of America (PCI) testified today before the National Conference of Insurance
Legislators (NCOIL) that the practice of physicians dispensing repackaged drugs
should be more tightly regulated.
In its testimony to NCOIL’s Workers Compensation Insurance
Committee, PCI expressed strong support for regulatory and legislative remedies
to ensure physician dispensing of repackaged drugs does not evade workers
compensation cost saving measures.
Repackaging is the practice of breaking up a large quantity
of manufactured drugs and repackaging those drugs into smaller quantities, then
assigning a new National Drug Code (NDC). For example, if an original
manufacturer produces a pill and sets a price of 50 cents per pill, the
repackager can simply repackage and relabel with a new NDC number and set a new
price, which can exponentially increase the cost.
“PCI believes that physician dispensing of repackaged drugs
injects cost in the system without any discernible benefits to injured workers
and presents multiple issues with medication safety,” said Frank O’Brien, vice
president state government relations for PCI. “Physician dispensing of
repackaged drugs, though not violating any laws, clearly evades workers
compensation cost savings measures such as fee schedules and treatment
According to the National
Council on Compensation Insurance (NCCI), prescription drug costs in the
workers compensation system gave increased to 18-19 percent of medical costs.
Repackaging is a major cost driver, and physician dispensing is on the rise in
most states. The disparity in reimbursement rates between physician-dispensed
drugs and pharmacy-dispensed drugs is considered by NCCI and the Workers
Compensation Research Institute (WCRI) to be a major driver behind the
increased cost and increased utilization of prescription drugs.
O’Brien, in his testimony,
thanked NCOIL for taking this issue under consideration and noted PCI’s concern
that the profit potential from repackaging could be significant. This could
cause the practice to spread and ultimately create much higher costs for
employers and insurers with no demonstrated benefit to the injured worker or to
of repackaged drugs appear to be solely a workers compensation issue,"
O'Brien said. "One of the reasons why is that a patient covered under a
health insurance policy typically is responsible for co-pays, but there are no
co-pays for the injured worker in workers compensation, and there are a number
of contractual and reimbursement terms that physicians must contend with in
more traditional health plans.”
PCI is composed of more
than 1,000 member companies, representing the broadest cross-section of insurers
of any national trade association. PCI members write over $189 billion in
annual premium, 39.2 percent of the nation's property casualty insurance.
Member companies write 45.5 percent of the U.S. automobile insurance market, 32
percent of the homeowners market, 37.3 percent of the commercial property and
liability market, and 40.6 percent of the private workers compensation market.