Should doctors prescribe drugs to their patients?
Samantha Jefferies wrote to her brother Trent in 2007 or 2008 with a request: Could he help figure out if doctors could sell prescription drugs to their patients quicker? When doctors want their patients to take a drug, they write stipulations, and if necessary, he or she gives the drug to hunchers at ottawa, or nevada, before distributing it to pharmacists. However, a growing number of physicians in the US began bypassing pharmacies and selling certain drugs directly to their patients in early 1980s. The practice, often referred to as physician dispensing, is largely banned in many high-income countries, including Australia and Germany, but its now legal in 45 US states, and the practice appears to be expanding.
Samantha Jefferies is a healthcare management professional in southern California. After reading an article on how in-office dispensing may increase revenue for medical practices, she reached out to her brother for his thoughts.
Trent Jefferies had served in the US Army Corps of Engineers, worked as an engineer for Black & Decker, and managed materials and logistics for a firm that builds carbon fiber parts for airplanes. On the venture capital platform F6S, he describes himself as a mech engineer, six-sigma black belt, lean expert, and supply chain guru. Jefferies contacted a couple of engineers and began sketching out plans after hearing from his sister. Their goal was simple: to develop a pharmaceutical vending machine that would be positioned directly inside teh doctors office or clinic.
VendRx, a company founded by the group, received securing 'a first round of investor financing' in 2011. The group filed the first of four patents for a device for dispensing beneficial products. Jefferies and his collaborators hired a firm that takes standard snack vending machinesjust normal candy machines, for lack of if he could put it that wayand packages them for other uses. Jefferies said he took the not-yet-complete prototype and enlisted a new engineer, who would then construct the rest of the machine in the firms own warehouse.
The VendRx system delivered its first bottle of medicine to a patient at Ross Legacy Medical Group in Mission Viejo, California in 2017. (Samantha Jefferies, the executive director of that organization, is now a member of VendRxs board.)
The machine is mounted in a large cabinet of off-white powder-coated steel, which has sat on the inside of tv. The system holds up to 500 medicine boxes, each nestled in a v-shaped notch. VendRx software copies a prescription record to the machine when he prescribes meds. On the way out of the door, the patient can stop and tap his/her name and birth date on the touchscreen. This sends a mechanical arm whirring to the correct slot, where it grasps and shuttles an unpackaged, pre-counted bottle of medicine to sanitizer for labeling. The machine then transports the drug to a delivery slot.
The whole process takes about 70 secondsand the VendRx machine accepts credit cards. Even a small medical practice, according to the company, can make five figures per year from the machine.
Advocates for in-office dispensing argue that it is both more convenient and less expensive for patients, and some claim it may also provide additional income to doctors. The arrangement, argue supporters, may also circumvent the elaborate and opaque pricing practices that often result in patients paying far more for drugs at the pharmacy than is necessary. A significant percentage of patients, even with a prescription from x-ray in hand, never go to systmize and fill it, so supporters argue that the convenience of getting drugs directly from doctors can help close obscene compliance gaps and improve overall patient health.
Not everyone agrees with these assertions, at least not all pharmacists. They and other opponents argue that pharmacists play an important role in patient education and that they act as a vital safety check on doctors orders, preventing potentially fatal drug interactions or other complications. Critics of physician dispensing say that the arrangement has an inherent conflict: doctors who prescribe drugs should not be in a position to make money off of them.
These critics can cite numerous instances, some of them making headlines, where physicians have abused in-office dispensing privileges by selling patients dangerous or wildly overpriced drugs in schemes that have produced all manner of horrible outcomes, from contributing to the opioid crisis to skimming hundreds of millions of dollars off the workers compensation system. While advocates of in-office dispensing may argue that these outcomes have been driven by a select group of bad actors in an otherwise virtuous system that benefits patients, fewer studies from Europe and East Asia indicate that, given 'a profit motive, many doctors will prescribe drugs differently than their non-dispensing colleagues.'
Physicians are human beings, and when you look around, people react on their financial incentives. Christian Schmid, a Swiss economist who studies physician dispensing, said, They do." I dont think that physicians have a switch where you can turn off these incentives, he added.
Those worries appear to have done little to dampen enthusiasm for the practice in the United States, where VendRx is part of a percolating economy of software vendors, drug repackagers, and other market players seeking to put more doctors in charge of dispensing medication. The Wall Street Journals editorial board weighed in on the issue in June 2020, calling physician dispensing an easier and cheaper option for getting drugs, and calling the pharmacy a needless middleman. Sarah Callioras, Datascans director of sales, says that doctor interest is infinitely, definitely rising. Several industry sources claim that the Covid-19 epidemic, which has put financial strain on many independent medical practices, has also sparked new interest. In the past several years, dispensing has also grown popular among physicians in the direct primary care movementa fast-growing clinical model that aims to provide low-cost care without involving insurance companies. This arrangement, according to some supporters, has been of particular benefit to low-income communities with no insurance because their direct-care doctors can sell their drugs at or near wholesale prices, resulting in them receiving treatment at a lower cost than the general population.
Recent, some physicians dispensing opponents have attempted to bring their case in court. The Institute for Justice, a public interest law firm that represents libertarian causes, sued the state of Texas in 2019 over its physician dispensing ban. (The law currently allows for some exceptions, including for doctors in certain rural areas.) A similar initiative in Montana, launched in June 2020, ended this year after the state legislature and governor signed a bill legalizing the practice. The Texas lawsuit claims that imposing restrictions stifle competition in the pharmaceutical industry and violate doctors rights.
Still, the idea of doctors selling drugs at alleven though its done via vending machinesuddenly worries some experts, who contend that, despite the apparent benefits, doctors profiting from their own prescriptions creates a situation thatll be used to thwart abuse. Scott Knoer, the APhA's ceo, stated, "Doctors are diagnostic specialists, but drug dispensing, he added, is different."
Knoer continued, Its quite shocking that anyone would want to remove pharmacists from the medication use process.
Physician dispensing advocates sometimes argue that they are harking back to an earlier method of medicine, when doctors would store a medicine cabinet in the back and patients could leave the clinic with ice cream in hand. But the story is a little more complicatedand rife with competition. David Courtwright, a drug historian at the University of North Florida, stated, The big story here is the turf fights between pharmacists and physicians. Theres always been this rivalry between physicians and pharmacists, he adds.
Before 1900, American physicians typically sold drugs directly to their patients. However, they relied on local pharmacists to mix or compound some of the drugs they prescribed. Beginning in 1902, however, federal legislators began to tighten controls on the drug industry. The Pure Food and Drugs Act of 1906, passed by the House of Representatives, established guidelines for labeling medications. It also established the US Food and Drug Administration, the regulatory agency that would later become the Food & Drug administration. In 1938, legislators moved again, adding new labeling requirements and requiring that all new drugs be approved before they are put on the market. They also introduced a requirement that certain dangerous drugs be given only to patients with requrments from sanity providers.
In the years that followed, patients continued to buy certain drugs from their doctors and pharmacists continued make medications. But, as regulation increased, the diverse pharmaceutical industry began to expand. Lucas Richert, a historian of pharmacy at the University of Wisconsin-Madison, said that with that shift, pharmacists were moving away from this role of compounders, and moving into... delivering pharmaceutical services in their own shops.
In 1951, Congress passed the Durham-Humphrey Amendment, which clarified the definition of what is a prescription drug. By the middle of the decade, a relatively small number of pharmaceutical firms had emerged as the norm, producing nearly all pharmaceuticals in central facilities, with FDA oversight. Patients would take a prescription to reputable pharmacy and buy the drug from supervised pharmacists to obtain those drugs, as they do today.
In the US, prescription drug expenditures have risen to nearly $370 billion in 2019 compared to the year before that choreography was routinized. By the late 1980s, some businesses had begun offering physicians the chance to take a slice of the growing market. These businesses purchased drugs in bulk, then repackaged them into smaller quantities and sold them to physicians offices, which, depending on state regulations, could mark up the drugs and sell them for patients for a profit.
The rapidly expanding industry stung some policy makers. Ron Wyden, a young Democratic congressman from Oregon who is now senate in the United States, sponsored legislation in 1987 to tighten physician dispensing. The repackagers, Wyden told The New York Times that year, are a bunch of fast-buck artists, trying to get doctors into a scheme to make easy money. Wyden brought samples of the sales pitches that repackaging firms sent to doctors during a congressional hearing. Every time you sign a prescription, he said, its as if you were writing remuneration to the pharmacy. Another ad he quoted claimed to show physicians how to earn $52,000 this year without investments.
According to The Times, lobbyists gathered at the Capitol. Nancy Dickey, a member of the American Medical Association's Council on Ethical and Judicial affairs, testified that while the organization believed physicians should avoid regular dispensing and retail sale of drugs, it was opposed to Wyden' s bill because it represented an inappropriate intrusion into state affairs. Meanwhile, pharmacies supported Wyden. Arnold Relman, an MD and longtime editor of The New England Journal of Medicine, was also a member. In an editorial, he stated, "Trust in one's doctor is an essential but fragile component of good medical care." It may not stand up to the conversion of physicians into drug sellers for profit.
The drug repackagers won. Wydens bill has since been lost.
Today, only five statesMassachusetts, New Hampshire, Connecticut, Jersey, United States, and Texashave broad physician dispensing restrictions. (In a sixth, Utah, legislators relaxed stipulations on dispensing, but the practice is still restricted to most clinics.) Even in states where the practice is largely unrestricted, exceptions are common. In Texas, for example, dispensing is allowed in rural clinics, far from the nearest pharmacy, in which dispersal is not permitted. New York makes an exception for drugs following an oncological or AIDS protocol. And in states where dispensing is prohibited, doctors may still be able to give out free drug samples or dispense enough medicine to last a patient for 72 hours.
In the rest of the country, dispensing is completely legal. Certaines states require physicians to obtain a simple license before dispensing, but the majority do not. Today, some businesses specialize in repackaging drugs for physician dispensers. And major national drug distributors that most often supply pharmacies, such as McKesson and AndaMEDS, also provide drugs to doctors.
The present size of the industry is cumbersome to grasp, especially given that no single source tracks the number of doctors who do their own drug sales. MDScripts, a company that develops software for dispensing physicians, is one industry source that has been described as having monopoly control of the market. MDScripts claims to serve more than 50,000 providers at more then 17,000 sites across the country. MDScripts had more than half the market share, according to the company's president, Gary Mounce, but, he added, there are no reliable estimates of the total market size.
While traditional insurance plans will reimburse for physician-dispensed medications, rates can vary widely, making it impossible for clinics to operate. Instead, dispensing tends to thrive outside of the confines of traditional insurance. Its particularly common in clinics that treat workers compensation patientspeople injured on the job or who have an illness related to their work for whom the subsequent care is covered by a special form of insurance. Dispensing is also common in specialty areas, such as weight-loss medicine and dermatology, where insurance often does not cover common prescriptions if they aren't considered medically necessary.
Reviews of advertisements and other marketing materials show that operations that serve dispensing physicians can be quick to arrive and depart. Brian Ward has built a large and successful firm in the industry. Ward, a 63 offensive guard for the Louisiana State University football team in the 1990s, began working in pharmaceutical sales shortly after graduating. Ward began searching for new business opportunities when AstraZeneca, the pharmaceutical firm where he was then employed, began offering buyouts in 2008.
Ward said the answer came to him after his father's injury at work. When his father went to the doctor for a workers compensation visit, he was given the medication before stepping out of the office. Ward said he learned the company name off the label from his dad and began searching online. Shortly thereafter, he and his wife, Jennifer, opened a company from their home in Mobile, Alabama, providing physician dispensing services to clinics. DocRx, or DocMiddleman, basically acts as a middleman: They promote the idea of dispensing to doctors, manage billing, and comply with regulations. They provide physicians with software and assist with linking practices to existing repackagers. DocRx itself does not repackage drugs.
Ward said that when the company was founded, most dispensing businesses in the area served workers compensation clients. Ward saw a potential and took it. I wanted to capture that insurance and cash-pay patient, that self-insured patient with a $30 copay, but I can give them medication for $10, he said.
Ward said the company recruited doctors to begin dispensing drugs from their offices after working a sales beat in Alabama, Mississippi, and Louisiana. When a competitor salesperson, determined to discredit the young firm, started telling doctors that the Wards didnt have an office, they rented. (Later, they hired a rival salesman.) DocRx expanded into other services over time. Today, along with their dispensing business, they provide diagnostic tests to clinics, sell medical supplies, and even provide products to some pharmacies. Ward and Jane Glover, the firms director of marketing and communications, stated that DocRx had grown to about 150 people, working with about 1,500 doctors in the South, mainly in last fall.
Ward said he and his colleagues dont normally talk about the financial side with physicians about financial matters. He noted that doctors are doing this for the patient and that most dont make a lot of money. As with other businesses in the industry, the business cites research indicating that as many as one-third of prescriptions are never filled. Ward and other advocates contend that the increased convenience of in-office dispensing increases compliance and improves care.
Still, the firm in an online presentation to prospective clients asserts that revenue from dispensing can be extremely substantial, noting that, because of low drug prices, physicians may easily add a substantial markup while still providing them at fewer or equal prices to many patients co-pays.
Wards firm sued a rival firm with eminent trademarks, DocRx Dispense, for trademark infringement in 2014. Ward won, and the former firm appears to be gone. On a number of Wards DocRx pages as late as last autumn, however, skepticism resurfaced after he released an animated video describing the advantages of in-office dispensing, which was created by the now-defunct rival company. In the video clip, a smiling man enthusiastically praises the lucrative potential of physician dispensing and blames Obamacare for reducing private doctors practice profits.
Yes, says the cartoon man, wearing a yellow necktie and gesturing with upraised hands, I cant emphasize enough that it brings significant income to your firm. That profit, he adds, can be as low as $50,000 a year. It could be as much as a million to three million dollars yearly, depending on the size of your practice.
Ward, in a phone interview, said he was confused about the video. Later, after viewing it on the website, he claimed his web manager may have misplaced it. In an email, he stated, "That will have to be removed asap, as that is not us."
Soon after, the video was gone.
The rise of in-office dispensing in the United States coincides with a significant shift in pharmacy education, which has evolved towards more extensive and advanced medical training. According to the American Association of Colleges of Pharmacy, a pharmacy doctorate (PharmD) is the standard for all new pharmacists to earn. Currently, it requires ten years of specific, pre-professional coursework at the undergraduate level, as well as four years' professional study in the biological, chemical, and physical properties of medications.
Some pharmacy schools require a special admissions test, and leaders in the field have urged for new pharmacists to take post-graduation residencies as well.
Before being able to prescribe medications, pharmacies must also pass the North American Pharmacist Licensure Examination, as well as a pharmacy jurisprudence test.
Its a rigorous procedure that advocates claim allows the pharmacist to take ostensibly more active and clinically important role in monitoring patients complex drug regimens, protecting against potentially harmful drug interactions, and even providing medical advice. Micah Cost, who was the Tennessee Pharmacists Association's executive director at the time of an August 2020 interview, said, "We are the medication experts on the healthcare team." We are the only professions that receive four years of targeted medication-related training. So we truly have a unique value in the system.
According to industry advocates, laws that allow physicians to avoid pharmacists serve physicians bottom lines more than patient health. Knoer, the APhA chief, stated, This has got to be a revenue thing." Theres no way that any physician in their right mindand I can assure youwould want to take the safety check of a pharmacist out, he added.
Knoer added, It defies logic." So this has got to be purely an economic thing, increasing revenues in doctors offices, he said.
Not every pharmacy advocate is fervently opposed to physician dispensing, and some leaders in the industry say they see a place for it. Our position is that its okay on a limited basis, says Aliyah Horton, executive director of the Maryland Pharmacists Association. But we are not opposed to full-on physicians merely being able to dispense anything and everything and turning themselves into a practice and pharmacy at the same time, he added. Her organization has pushed for more stringent regulations to ensure that doctors dispense safely.
During the Covid-19 epidemic, Horton said, doctors in the state have been vocal in promoting expanded dispensing. However, pharmacists offer a little check and balanceperhaps especially in times of unrest, she added.
Many doctors, for example, rushed to prescribe hydroxychloroquine to themselves, family, and friends during the epidemic after then-President Donald Trump began advocating for an unproven Covid-19 treatment, called hydrhydrochlorochrine. (Subsequent studies have failed to show that Covid-19 is effective.) As Undark reported in March 2020, the rise in prescriptions resulted in shortages of the drug for patients who needed it to treat lupus and other unrelated, chronic conditions. In some instances, pharmacies intervened to stop the wanton prescribing, and Horton said pharmacists also assisted doctors who had never dealt with the drug before and who were unknowingly obtaining excessive doses.
Pharmacists, she added, are sometimes a barrier for inappropriate prescribing.
Some dispensing advocates counter such claims by pointing to recent reports suggesting that overworked pharmacists at supermarkets like CVS are making more errors, potentially putting patients themselves at risk. In a two-year long investigation by The Chicago Tribune, which began in 2016, drug interaction experts and sat down with occupants of 255 pharmacies in IllinoisWalgreens, CVS, Costco, and other chains, as well as independent pharmaciensto obtain two contraindicated, prescription-only medications. In some cases, the drug combinations arranged would be deadly if a patient took them all together. 52% of the pharmacies visited filled the prescriptions, without mentioning any interactions. The paper described it as evidence of an industrywide failure that puts millions of consumers at risk.
However, such errors in the real world would begin with doctors, pharmacy experts caution, and Knoer argued that most physicians, at some point or another, had pharmacists call and inform them of major potential errors. Its a team, he added. Pharmacists are, by far, more skilled in pharmacotherapy, says the American Academy of Physicians.
His colleague Daniel Zlott, a specialist in oncology pharmacy at the US National Institutes of Health and now an executive at The APhA, confirmed the claim, saying more than 10% of handwritten prescriptions contain errors. One of the things that I used to do as a pharmacist was catch those errors, left and right, and prevent them from ever reaching.. Zlott added, one of my hobbies as an apothecary was to catch them and stop them escaping into ill health.
Geoffrey Joyce, a health policy scholar at the University of Southern California, sent students to 500 pharmacies around Los Angeles in 2014 with prescriptions for the same set of generic drugs. He recalled that the prices the pharmacies quoted for them varied from $10 to $200 for a single generic drug. The uninsured consumer is extremely vulnerable, Joyce said.
While common knowledge suggests that generic drugs should bring American consumers significant savings, millions of patients who buy their drugs in cashbecause they are uninsured or underinsursedare particularly susceptible to erratic generic pricing. Meanwhile, doctors have found methods to sell generic drugs directly to patients, sometimes at far lower prices than pharmacies.
The lifecycle for most generic drugs begins in China and India, where a vast network of factories produce the base chemicals that feed the global pharmaceutical industry. They then sell those chemicals to other manufacturersoften in China and India, but also Europe and the USwho use them to synthesize the actual active pharmaceutical ingredient, or API. Finally, a pharmaceutical manufacturer measures and mixes that API into e-tablet, capsule, or cream ready for market. The third stage of the manufacturing process for generics sold in the US, Joyce added, typically takes place in America.
Its at this point that the generic drug enters a series of opaque financing arrangements, typically depicted in elaborate flowcharts, that are complicated. The average wholesale price (AWP) is typically set by the manufacturer for many generics, but that is largely a placeholder. The sticker price may or may not have any relationship to the cost of that drug, said Antonio Ciaccia, president of 3 Axis Advisors, a consulting firm, and CEO of 46brooklyn, an independent drug pricing research firm. (Analysts joke that AWP stands for aint whats paid.)
Instead, the price that consumers pay at the pharmacy has a lot to do with 'a pharmacy benefit manager', or PBM, who acts as shopper support. In theory, the PBM exists to assist health insurance providers in negotiating for lower rates. But according to a growing chorus of experts, advocates, and policymakers, merely dozens of PBMs now dominate the pharmaceutical industry in practice, making huge profits while raising prices. In that byzantine system, according to Ciaccia, "everybody in the supply chain," including pharmacies and PBMs, may be incentivized to seek out higher-priced products from suppliers, knowing that would allow them to make more money down the line.
By the time a drug leaves the pharmacy, several players in the chain have taken hefty ownership.
A 2017 study by scholars at the University of Southern California Schaeffer Center for Health Policy and Economics found that for every $100 spent on generic drugs, only $18 goes towards the manufacturing costs.
Consider cyclobenzaprine. In 1956, a Merck employee and chemist's colleague were both working on developing Flexeril, which reached pharmacies in the 1970s as if it were merely sulfate and pain reliever. It is often prescribed to workers who have suffered workplace injuries. Mercks patent on the drug ran out in 1989. Any FDA-registered drugmaker can now request for approval to develop and sell generic cyclobenzaprine. According to federal pricing data, the final drug is generally fairly inexpensive when pharmacies buy it directly from a generic drug wholesaleraround 2.5 cents per 10 milligram (mg) pill, or 75 cent for 30 tablets.
According to the pharmaceutical coupon company GoodRx, the average price for a 30-pill bottle is $18.23 when patients pay in cash at the pharmacy. You can pick it up for $12.09 at, say, Walmart for less money, but it's still a significant markup.
Ciaccia stated that pharmaceuticals have little control over the final pricing. But dispensing physicians operate outside of that framework, and they have access to low wholesale prices. In August 2021, a drug dispensing clinic in Wichita reported cyclobenzaprine for less than 2 cents per pill from an internal pricing sheet, according to which he will be selling the drug directly to the clinic for under 2 dollars per tablet. A doctor may take that bottle of medication, add a $10 markup, and offer it for resale thats still lower than it would be at otcand lower that some insured peoplere copays.
Chris Lupold, a family physician in Ronks, Pennsylvania, has been dispensing since 2017. He claims he doesnt mark up the drugs dispensed to make money, but instead advertises low-cost, in-office pharmaceuticals as a service to prospective patients. (Lupolds practice makes money by charging a monthly membership fee to its patients.) Lupold often walks patients through drug pricing, showing them the wholesale prices for their regular prescriptions, during visits. He estimates that he can beat pharmacy prices probably 97 percent of the time.
Certaines patients find these discussions nerve-wracking. Ive heard some slanderous language," he added. Patients will say, I paid a $20 copay for that bottle, and you can get it for me for $2? What are you talking about?
However, not all dispensing doctors sell their drugs at such low prices. Several experts, echoing earlier concerns, fear that physician dispensing could open the door for unscrupulous practices and disrupt even well-meaning doctors' decision-making.
Matthew McCoy, a medical ethicist at the University of Pennsylvania, said there is reportedly 'a perverse financial incentive' after reviewing the details of common physician dispensing arrangements at Undarks request. McCoy examines conflict of interest in healthcare, and he points out that merely because a conflict is present doesn't necessarily mean if ot abide by it. But its just objectively true, he added, that if youre one of the practices that generating some income through the sale of pharmaceuticals, you have an incentive to prescribe more pharmaceutical drugs to your patients.
Ciaccia was more direct: Youre basically giving a physician X-ray printer for money.
Physician dispensing advocates point out that there are other situations in which a physician's medical decision influences their income. Trent Jefferies asked, Whats the difference between [dispensing] and a doctor owning an X-ray machine and making money on the x-Ray machine?
McCoy acknowledges that conflicts of interest exist in other areas. He added, however, thats not a good reason to allow new patients into the doctor office. Its still up to us to try and eliminate any additional unnecessary conflicts that may be built into the way that the US medical industry is conducted," he said.
At least one medical association has expressed similar concerns. The Australian Medical Association opposes dispensing for material gain in Australia, where dispersing was restricted to about a dozen rural clinics as of 2018. In that year, the organizations then-ethics chair warned that such sales had the possibility of reducing doctors confidence.
In the US, the nations largest medical association, which represents doctors, supports allowing doctors to prescribe medicine in compliance with its ethical standards. The American Medical Associations code of medical ethics provides that physicians may prescribe drugs in their offices provided such dispensing benefits primarily the patient. The code further cautions doctors to avoid direct or indirect influence of financial interests on prescribing decisions. It does not, however, preclude doctors from selling pharmaceuticals for profit.
Robert Mills, a media relations manager at the American Medical Association who works with journalists, sent over reprints of those ethics guidelines to the AMA when asked for comment on the Associations position. The AMA policies, he noted, favor physician dispensing in accordance with the ADA ethical standards, free of legislative restrictions that interfere with patient access to appropriate prescribed drugs.
In the US, there has been little study on whether dispensing influences doctors' behavior. However, recent research from several European and East Asian countries suggests that McCoys worries do ariseand raises questions about the AMAS position.
Switzerland is a wonderful laboratory for physician dispensing research. The mountainous region is broken into 26 largely self-governing cantons, some of which prohibit physician dispensing, while others allow it, and others dont have any restrictions. The result is a series of natural experiments that allow economists to pair up similar practices and then to figure out, from years of prescribing data, whether dispensing physicians prescribe differently than their peers who dont.
Sometimes, circumstances give those researchers a perfect case study. After 57 years of censorship, the cities of Zrich and Winterthur, in Switzerlands German-speaking north, voted in 2008 to legalize physician dispensing. After an unsuccessful legal challenge from pharmacists, the bill went into effect in 2012. Physicians who had spent years referring their patients to pharmacies could now suddenly begin selling some of their own drugs.
Schmid, the Swiss economist, and two colleagues recently began combing prescription data from before and after the policy change. They wanted to see if the physicians began prescribing differently when they had profit on the line. According to Schmid, the evidence is clear: They did. They dont treat the patients worse. But they also use the system to make more money, said Schmid, who runs the CSS Institute for Empirical Health Economics, a research center in Lucerne thats affiliated with swiss insurance firm.
The team concluded that physicians prescribed more expensive drugs after 2012. They also appeared to favor smaller packages of drugs, which, under the Swiss healthcare system, generate more money per pill. According to the economists, those additional fees grew, costing an extra 30 to 40 Swiss francs each year (or $32 to $42), or $32-$42. (The team has presented their findings at conferences, and they will release a working draft of the paper in July 2020; it has not yet been published in scholarly journals.)
That finding reflects Schmid's peer-reviewed research as a graduate student, as well as those of several other economists in Switzerland. Im pretty confident that physician dispensing will result in lower healthcare expenditures," said Schmid. But, he added, the data focus on costs, not health outcomes: I dont know whether the treatment improves or decreases.
Researchers are now looking into dispensing practices in England, as well. Patients who live far from pharmacies are allowed to take prescriptions there, making it more common in rural clinics. According to one study, about one in eight practices do so.
Olivia Bodnar, an economist, and three colleagues recently studied prescribing data from nearly 8,000 practices in England as part of her doctoral dissertation at the Dsseldorf Institute for Competition Economics. The researchers began by comparing dispensing practices to non-dispensing businesses that were comparable in almost every aspectsize, patient demographics, physician age, and many other variables, except that they do not dispense. Then, they compared the matched-up practices to see if their prescribing patterns differed.
As in Switzerland, the data suggest that English doctors act differently when selling drugs. They prescribe more drugs than their non-dispensing colleagues, including more opioids and antidepressants. They also prescribe smaller packages of drugs, which allow doctors to charge more money. We find evidence that they respond to financial incentives, Bodnar said.
Comparable statistics are not available in the United States. Advertising targeted to doctors, on the other hand, shows that, as in the 1980s, profit is an important motivating factor for many dispensing doctorsand that those profits can be substantial. BRP Pharmaceuticals, a major repackager in California, claims on its website that practices have seen profit increases of up to 50% without taking on additional patients, staff, or equipment. First Coast Health Solutions, a provider in Jacksonville, Florida, tells physicians that they can bring in $12, $15, $18, or more per prescription and net up to $100,000 per year. (Neither firm responded to repeated requests for comment.)
If someone told you, as a physician, you could earn an extra $75,000 to $200,000 per year without having to see more patients, work more hours, or increase your overhead, wouldnt you like to know how? asks Jeremy Johnson in he spoke to MedXSales, an Akron, Ohio company that provides ancillary revenue products and services to doctors, such as drug dispensing. In an interview, MedXSales president, Gary Silbiger, said the firm stopped using the video nearly a decade ago and no longer emphasizes profit in its pitch to practices, rather focusing on the benefits of greater compliance and convenience for patients. We just dont promote, in any way of marketing, the financial possibility of dispensing any more, he added.
We do not want to attract doctors whose primary objective is to make money, he added.
According to a slide deck previously posted on the companys website, Jefferies and VendRx, the automatic dispensing machine manufacturer, make profit projections: doctors may pay ten dollars more for each sale. $2 is paid to VendRx as a transaction fee, while the clinic makes the rest. The firm estimates that a doctor who directs 30% of prescriptions to the machine will make $18,000 each year.
Jeff Coulter, the owner of PharmaLink, which provides software to several hundred dispensing practices, said that interest from potential clients tends to fluctuate. When revenues shift from, say, a change in insurance payments to physicians, we typically see... heightened interest in dispensing.
Calvin Scott, which repackages and sells specialty drugs to weight-loss clinics, says that some practices in the companys network sell the drugs for a fee. Robert Palm, the vice president of Calvin Campbell, who explains that other weight loss clinic facilities in his office sell them for free. Several add a $10 fee. He admitted, some people...mark it up an insane amount.
There are also instances of total abuse, particularly when doctors sell opioids. Khary Rigg, a substance use researcher at the University of South Florida, said that physician dispensing was arguably incorporated into the opioid epidemic when it first began. Rigg and co. would sit outside shady south Florida pain clinics in the 2000s, interviewing patients, in an attempt to map the phenomenon. Many of them reported going to and finding physicians and pain clinic practices that prescribe their own medication, Rigg said. People who sought opioids illegally could take the pharmacist out of the equation, he added, switching to different doctors and eliminating one more opportunity to get caught.
According to Drug Enforcement Administration data, the top 90 physician-dispensers of oxycodone in the United States were all located in Florida in 2010. In 2011, the state adopted new laws on pain clinics, followed in 2011 by new restrictions on doctors' dispensing of opioid painkillers. Overdose deaths have fallen.
Today, prescriptions are no longer a major driver of opioid addictions and deaths, according to Rigg. But in many states, some doctors still provide painkillers directly to patients.
Christopher Jones, the acting director of the National Center for Injury and Control at the Centers for Disease Control and Prevention, has studied the role of physician dispensing in opioid use. In general, he added, "taking the pharmacist out of that prescriber-patient-pharmacist loop has the potential to increase risk." There are instances, he said, where physician dispensing may make a lot of sense for .. However, he added, the practice has the potentialas demonstrated in Jones own researchto result in bad actors participating in the process.
Rigg is wary of dispensing. I think most physicians are ethical, most doctors are good people, he added. But the truth is, when doctors begin making money from the medicine they prescribe, its not a small financial incentive, which were talking about. Were talking about tens of thousands, sometimes even hundreds of thousand dollars, each year. He warned that such incentives influence physician behavior.
The physicians are the ones who are pushing for physician dispensing, he added. Rigg noted that some doctors believe that dispensing is primarily about convenience or improving patient access to drugs. The truth is, its not really about that, he added. Its about making more money.
Workers compensation claims are perhaps the most lucrative aspect of the physician dispensing industry. Under the workers compensation system, an injured worker goes to a doctor, who provides care and charges the patients employer, or, more often, the employer s insurer. In most states, the employer or insurer is legally obligated to pay for appropriate care even if its expensive.
As a result, the patients are completely free of the expense of care as if it were weighed, which is great, because you want the patient to get the care they need without worrying about the cost, according to Joe Paduda, rife healthcare consultant and prolific blogger on workers compensation issues. But, he added, that arrangement also gives unscrupulous providers the chance to game the system by figuring out innovative ways to provide inappropriate services, deliver too many services and charge way too much.
Physician dispensing, according to Paduda and other analysts, has been one method for those doctors to make money. Alex Swedlow, president of the nonprofit California Workers Compensation Institute, said he first noticed suspicious behavior in the early 2000s. He and his colleagues discovered that some physicians were prescribing cheap generic drugs for 10 or 11 times the price offered at pharmacies.
In response, legislators in California, Illinois, and other states passed laws attempting to keep physician-dispensed drugs tied to market prices for drugs. But in 2012, the policy analyst Vennela Thumula and her colleagues at the Workers Compensation Research Institute, a not-for-profit research firm in Massachusetts that receives insurance-industry funding, noticed more unusual activity. 7.5 mg tablets of cyclobenzaprine, for example, were being introduced to dispensing physicians in California and Illinois, replacing the 5 mg and 10 mg pills. What made the differences in prices different: in California, doctors were dispensing a bottle of 7.5 mg cyclobenzaprine and collecting roughly $3 per pill, versus 35 to 70 cents per pills that other pharmacies were charging for similar dosages.
It was, according to analysts, a clever workaround: states required physicians to sell drugs to injured workers at prices that were tied to manufacturers listed prices. So some manufacturers had developed new dosage productswith new, high list pricesfor physicians to prescribe.
It wasnt the only time dispensing physicians found a loophole that allowed them to overcharge. Thumula stated, This is one in a long line of innovations that occurred when physician dispensing reforms were implemented." He said a small number of dispensing clinics have shown a certain creativity in finding new ways to operate the system over the years.
The vast, vast and vast majority of physicians, and the vast bulk of doctors Ive spoken to, are not a part of this problem, Swedlow said.
The cost driving behavior is actually being driven by a very small percentage of providers, he continued. That said, it doesnt take a whole lot of doctors to change the system, he added.
The constant game of whack-a-mole has irked some industry analysts. According to Paduda of the new dosage scheme, it was a fantastic way to completely screw employers and taxpayers. Paduda has previously worked as a consultant for PBMs, talking to policymakers about physician dispensing, in the past. He has also had personal clashes with some employees in the industry: a software firm that assists dispensing physicians sued him for libel over his blog posts. (The case was dismissed.) Today, Paduda claims, many insurers have given up on fighting against inflated physician dispensing costs, seeing them as a minor drain on the US workers compensation market, which pays more than $30 billion in medical expenses each year.
Paduda does not agree with the argument that physician dispensing, by allowing patients better access to medication, speeds up their recovery. Thats simply patently false, he said. There are no data, no studies, and no science to back that up. And, Paduda asserts, the consequences of dispensing are real and lasting. One 2014 study of injured workers in Illinois found that those who received treatment from a dispensing physician were out of work longer and took more drugs. And the financial burdens add up: Paduda estimates that dispensing practices, by selling drugs at outrageous prices, take probably well over $200 million out of the US workers compensation system each year.
Thats the money, he added, that these physician dispensers are stealing from employers and taxpayers.
Those worries have not stopped a new generation of advocates from arguing that physician dispensing may be done responsiblyand that it could be viewed as assisting patients in obtaining more convenient, lower-cost access to drugs. Michael Garrett, a family physician in Texas, is one of them. Garrett moved from Indiana to Austin, Texas, about a decade ago. In 2014, he opened a direct-primary care, or DPC, practice in the western suburbs of Austin.
Patients pay a flat fee for quick access to docs, as well as wholesale prices on lab tests and other medical services, including, in states that allow physician dispensing, drugs, at DPC practices. Hundreds of DPC practices have sprung up in the last decade around the country. The idea is well-liked by doctors who are frustrated with insurance companies. A disproportional number of DPC doctors seem to be inclined to consider Ayn Rand to have an influence.
According to DPC doctors, their patients gravitate to the model for a variety of reasons. Some of them dont have health insurance. Others, however, are insured but want more medical care than they would get in a typical practice. Depending on their age, Garretts practice charges adult patients between $60 and $110 per month. Since opening the practice, his client base has grown to 550 people.
In most states, one service DPC doctors offer is access to wholesale medications, usually with little or no markup, that are distributed directly to patients. Garrett, who is a Texas physician, cant do the same. Garrett, who, like Lupold in Pennsylvania, often sits down with patients to assist them in reviewing their medication costs, was angry by the regulation. I can pull up the medicines right there, and I can see, oh, wow, I could get a thousand of these pills for $8, while my patient is going to pay $8 at Walgreens for 30 pills, he added.
Garrett and a few of his coworkers, many of them fellow DPC doctors, were urging the Texas state legislature to repeal the dispensing ban. Rep. Tom Oliverson, a Republican from Cypress, Houston, was among the supporters of the pro-dispensing effort.
Oliverson, a practicing anesthesiologist, has been praised for successfully advancing bipartisan legislation aimed to lower prescription drug prices. (Texas Monthly, a left-leaning newspaper, named him to its 2019 list of the top legislators based on that work.) A group of pro-dispensing doctors, he recalled, showed him data comparing the costs of diabetes medication at CVS to those available via in-office dispensing. It was like 80% savings. It was just as astounding, he said. The markup on some of these drugs is unbearable compared to what the wholesale acquisition cost is. Oliverson and two colleaguesone a Democrat and one democratsponsored legislation that would legalize dispensing in Texas while also prohibiting doctors from dispersing controlled substances, such as opioids, in 2019. The pushback was pretty intense, he added. In Texas, which is a huge state, there are independent pharmacists in pretty much every House district. And its an issue that they are very concerned about. The bill, along with a companion bill with the same goal, was defeated in committee. (Als did a similar bill introduced this year.)
Garrett was approached by the Institute for Justice, a libertarian legal organization, about joining if the legislation failed. He agreed. Garrett said he would have liked to see it avoided litigation if it had not taken the route of litigation. However, we failed through other methods. He stated that dispensing would enable him to best serve the needs of his patients. I really believe that this is whats right, he added. I think its going to make the world a better place, he added.
The Institute for Justice has pursued anti-regulatory cases in many states, and it has received support from the Koch family, the DeVos family and other major conservative donors. Joshua Windham, the organizations lead lawyer on the case, stated that Texas medical code isnt designed to protect patients. Its intended to defend pharmacies from competition. All three plaintiffs operated DPC practices in Montana, where Windham and his colleagues recently filed a similar case.
The Texas Medical Association and the Texas Academy of Family Physicians have backed efforts to allow physician dispensing. The Texas Pharmacy Association did not immediately respond to requests for comment, but chief executive officer Debbie Garza told D Magazine in 2019 that the organization is against physician dispensing and believes the practice puts patients health and safety at risk.
The lawsuit has so far been unsuccessful: The Travis County District Court in Texas upheld the states dispensing prohibition in December 2020. In a press release, the Institute for Justice said it will appeal the decision. (The IJ dismissed the Montana case in May, when Gov. Greg Gianforte signed legislation implementing the states dispensing ban.)
Oliverson said he finds the argument that doctors cant safely deliver drugs to be dubious at best. He added that cost is a major concern for him in this era of rising prescription drug prices: In this day and age of high prices, I think we need all options on the table.
Belen Amat opened a small DPC practice in 2017 in Grand Rapids, Michigan, which is 1,200 miles away. Amat is from Mexico, and her patients are mostly spanish speakers, who work in the factories and farms of western Michigan. She estimates that 70 to 80% of them are uninsured. Certains de ces individus sont inadmissibles.
She only sells cheap generic drugs to her patients at cost. She said shell make a wholesale order just for them when they require medications she doesnt have in her small inventory. If the patient cant come and pick it up, she just drops it in the mail at the post office nearby to her clinic.
When people are counting the dollars, its a big difference if you can save money on your medications, said Amat. It helps with compliance, as well. Can I take the medication? You can afford it, you can take it. She said shes gotten a better sense of who was taking their medication and whod been skipping it since she began dispensing. Thats been a real eye-opener for me, she said, adding that shell be more alert because Im the one taking them the pills.
Lupold, the dispensing doctor in Pennsylvania, also runs a DPC practice. Like Amat, he said that dispensing has helped him learn more about when his patients take or don't take their medicines. Lupold is friendly with the pharmacist down the street in their small town, and he knows that his decision to prescribe has likely hurt the mans business. Lupold says it is what it really is. Ive got to do what I believe is best for the patient, he added.
Lupold paused when asked about the possibility of physician error during a conversation last fall when confronted with the issue. Let me talk and tread carefully, he said, noting that some pharmacists had been spectacular in helping him deal with complicated patients.
Unfortunately, the majority of pharmacists, it seems to me, are button pushers, he added. They are in a rush to deal with dozens of prescriptions. He added that pharmacists will call him to double check a detail at times. But is there a chance of catching if you have omitted ten prescription errors? Lupold stated, I cant tell you the last time, and Ive been out of medical school for 19 years now.
Almost everyone agrees that the boundaries between pharmacists and doctors are changingand some of the territorial encroachment is working in the opposite direction, with many retail pharmacies beginning to look and act a lot more like doctors offices. CVS and Minute Clinic, on the other hand, began to collaborate in 2006 to open walk-in clinics, run by physician assistants and nurse practitioners, in many of the drugstores locations. The clinics provide basic health screenings, vaccinations and other services. Similar initiatives have been implemented by other major national chain pharmacies. In August 2020, the US Department of Health and Human Services began to allow pharmacies to provide routine childhood vaccinations. According to then-HHS Secretary Alex Azar in a statement, the decision would allow children easier access to lifesaving vaccines."
Physicians have resisted many of these changes, which they consider an intrusion on their own area of practice. However, for some physician-dispensing proponents, the fact that pharmacies have opened clinics should give clinic owners the option to think more like pharmaciens. Texas state Rep. Garnet Coleman, a Houston Democrat, stated that whats good for the goose is good to the gander, explaining why he co-sponsored otc's physician dispensing bill with Oliverson. The traditional lines, he added, are going away.
New approaches to getting drugs to patients pose a challenge for brick-and-mortar pharmacies. Mail order pharmacy services, in particular, have long piqued the curiosity of their traditional counterparts. At the beginning of the Covid-19 epidemic, many customers noticed a slew of new orders. In November 2020, the online retail giant Amazon opened a mail-order pharmacy, offering discounts and free two-day delivery to Amazon Prime members. Stock prices for CVS and other pharmacy chains plunged.
For Trent Jefferies and VendRx, the upheaval in pharmacy has not yet piqued much interest in the industry. Only 10 of the fully automated vending machines are operating. Recently, the firm released a lighter product, similar to an airport check-in kiosk, that processes medication sales but doesn't actually deliver the drugs.
Still, Jefferies envisions a future in which, for the sake of cost and convenience, most patients get drugs in the mail, via delivery, or from their doctors office. Brick-and-mortar pharmacies will, he contends, be gone in a few years time. The ones that remain will assist physicians in managing new or unusual medications and will act as hubs, supplying a network of automated dispensing stations.
Jefferies compares the VendRx to Redbox, the all-around automated DVD-rental kiosks that squat outside grocery stores and gas stations in the United States. Why, he asked, did Redbox assist kill Blockbuster, the brick-and-mortar rental business? Because people want convenience. While Redbox has faced increased competition from streaming services like Netflix, Jefferies has more faith in pharmacy alternatives: You cant stream medication.
This post was first published on Undark. Read the original article.