Refusing to pay

While no study has determined the full extent of repackaging in Maryland, many employers — including local governments in the Baltimore region — say they've begun refusing to pay high prices for medication. Both Maryland's insurance provider and Anne Arundel County say they are saving more than $1 million a year with that tactic.

"Although no true 'fix' has been established, Anne Arundel County continues to deny payment of exorbitant markups," said Amy Lanham, safety and insurance manager for the county. She said doctors want to charge double for ibuprofen and four times what oxycodone should cost. "We pay only reasonable charges."

Lanham and risk managers for Baltimore City, Harford County and the Chesapeake Employers Insurance Co., which handles the state government's account, say they've begun sending bills back to doctors — refusing to pay any amount higher than a typical pharmacy's price. Though employers must pay for the drugs under the workers' compensation system, doctors typically agree to the lower price when the issue is pressed, officials said.

"We review all prescription bills prior to paying them — and we will not pay the huge markup," said Sherrie Johnson, a spokeswoman for Harford County.

Medical costs, including drugs, make up one of three major expenses of the workers' compensation system. The others are covering a worker's lost wages while her or she is unable to perform the job and "partial-permanency" payments that compensate for lasting injuries such as reduced function of an arm or leg.

The state commission that acts as a court system for workers' compensation cases ordered $15.6 million in medical payments from Baltimore City in 2013; $5.2 million from Baltimore County; $4.5 million from Anne Arundel County; $1.2 million from Howard County and $230,000 from Carroll County.

IntegrityRx recommends on its website that physicians target workers' compensation cases because "the reimbursement rules for workers' compensation and the nature of on-the-job injuries make workers' compensation prescriptions the easiest and most financially beneficial prescriptions for you to dispense." Under the workers' compensation system, patients make no co-pays on the cost of medical care or drugs.

IntegrityRx did not respond to a request for comment.

Six states have banned physician dispensing and 14 have placed limits on how much doctors can charge. Some of the laws have had immediate impact. For instance, in Georgia, which bans physician dispensing, the price of Soma dropped by 75 percent, from $2.54 per pill to 63 cents, according to the Workers Compensation Research Institute.

Political battle

Last year, bills requiring caps on the price of physician-dispensed drugs and limits on physician-dispensing both died in committee.

State Sen. Katherine Klausmeier, the sponsor of the latest bill to limit doctors' ability to dispense medication, wants to balance the needs of patients and the costs borne by municipalities and insurers.

"I want to make sure patients are getting treated fairly and the medication they need," said Klausmeier, a Baltimore County Democrat who co-chairs the legislature's workers' compensation oversight committee. "And the insurance companies shouldn't have to pay atrocious prices."

Klausmeier acknowledged that the legislation faces a tough road in Annapolis, given the lobbying clout of the state's doctors.

"The docs have a very powerful way," she said. "And it's not just lobbying, but patients start weighing in and they say, 'We like getting our drugs this way.' When you start getting those kinds of letters across your desk, you start thinking."

Klausmeier also supports new controls on how doctors prescribe narcotics such as Oxycontin.

"I'm deathly afraid of people being hooked on drugs," she said. "People come through my office like that all the time: 'I had an accident; I took these drugs and all of a sudden I can't get off of them.' It leads you down bad paths."

Lenna Israbian-Jamgochian, president of the Maryland Board of Pharmacy, said her organization supports both measures. She said physician dispensing — which cuts into pharmacies' revenue — made more sense decades ago in rural areas where there were few pharmacies. She also noted that pharmacies face annual inspections; dispensing facilities in doctors' offices do not.

"The board is concerned about safety with physician dispensing and a lack of oversight," she said. "There's more physician dispensing than ever."