SACRAMENTO — The campaign to cut workers' compensation costs in California is being hampered by some doctors who are exploiting a legal loophole that allows them to sell prescription drugs directly to patients at markups that can surpass $500 on a single bottle of medication.
The practice is costing employers and insurers more than $250 million a year, according to a preliminary UC Berkeley study, at a time when most other areas of the state's program for providing benefits to victims of workplace injuries are showing significant cost savings and premiums paid by California businesses are falling.
Those savings stemmed from a recent overhaul of the workers' comp system that, among other cost-cutting measures, put tight limits on prescription drug prices. But the price caps apply only to drugs sold through pharmacies, leaving physicians and clinics free to continue selling so-called repackaged drugs directly to their patients, potentially pocketing big profits.
"This is just a gaping loophole we did not patch last year that allows repackagers of drugs to escape the fee schedule," said state Sen. Jackie Speier (D-Hillsborough), who is sponsoring a bill that would make it less lucrative for doctors to fill their own prescriptions.
Industry literature makes no secret of the financial potential for doctors. By selling drugs directly to patients rather than writing prescriptions to be filled at a drugstore, physicians can "generate from tens of thousands to hundreds of thousands of dollars annually in new revenues," boasts promotional material from DispenseXpress, a Burbank drug repackager that buys drugs in bulk and resells them in smaller lots to doctors for resale to patients.
According to a DispenseXpress price list, doctors can clear $65.50 every time they dispense a 90-tablet bottle of 800-milligram ibuprofen. They can buy the common painkiller from DispenseXpress for $9.19, but under current workers' comp rules, they can bill insurers at a rate of $74.69 per bottle.
On the same price list, a 90-tablet bottle of 350-milligram carisoprodol, the generic version of the muscle relaxant sold under the brand name Soma and the most commonly prescribed drug for workers' comp patients, lists for $7.99. It can be billed to insurers for $518.49 -- a potential profit of $510.50.
