Our Positions | Physician Dispensing

Physicians across the country dispense pharmaceuticals to patients including claimants in workers’ compensation systems directly from their office. Some believe the practice is more timely and effective for claimants. However, the practice may have serious consequences including escalating pharmaceutical costs in an already inflationary commodity. Studies have shown that physician dispensing costs per pill are on average higher than those distributed by retail pharmacies.

Doctors who believe the endeavor is worth pursuing may learn that that have little room or time to store and manage pharmaceutical distribution. In turn, they may hire middle manager entities who handle the process for them but in turn drive costs above that of already dealing with a pharmaceutical dispensary or company. Repackaging firms may assist the physicians adding more cost to the system and leading to dramatic mark-ups. Claimants who have their claims paid directly in a workers’ compensation system have little incentive to shop for cost effective drugs.

Additionally, doctors may operate in a regulatory vacuum in this regard and not be subject to price parameters and market pressures that pharmaceutical companies currently operate under. There may be incentives to drive costs upward to cover other obligations of the clinical practice thereby exacerbating an already existing cost explosion. Additionally, this creates an inevitable conflict where the AMA requires the dispensing to be in the best interest of the patient yet there is a direct and tangible benefit to the physician as well. Additionally, drug prescriptions may ultimately replace timely physical therapy or other rehabilitative efforts and create long term dependence and its sequelae. Further, having the physician being both the prescriber and provider of the medications, thereby removing pharmaceutical companies from the equation, removes a necessary check and balance to the system by allowing another licensed and trained professional to review the situation before dispensing.

Physicians who perform this practice may not be sufficiently networked to enjoy the discount of large purchases that would otherwise be utilized in a traditional pharmacy arrangement. They additionally may not utilize pharmacy benefit managers or be subjected to any type of audits on their dispensing practice. They may not traditionally have pharmacy training or be directly subject to pharmacy boards. Labeling and other advice may be deficient. Further, the physicians may not offer cost-effective delivery options, such as mail order, necessitating the claimant return often to the physician’s office. Attempting to operate in this complex administrative arena may overwhelm physician offices and lead to indirect harm to claimants. Further, while physicians are required to keep up with the practice specialties through education and training, they may not have the time or resources to continually update the most recent pharmaceutical trends that pharmacists are charged with ascertaining.

Incurred loss costs put pressure on rates that are ultimately charged to employers through premiums after several adjustments are made in underwriting. Any unnecessary cost drivers must be included in the rate structures as those costs must ultimately be borne by the employer as rates charged must be prospectively adequate.


NAMIC opposes any legislation or any trend in the states to allow expansion of physicians to dispense pharmaceuticals to claimants especially for workers’ compensation claimants. The two professions should not merge for the safety of patients as well as to not exacerbate costs which only must be borne by employers operating in many areas under tight budgetary constraints.


Erin Collins
Senior Vice President - State and Policy Affairs