To lower drug costs, report says let doctors dispense

New report claims direct physician drug dispensing will save Mass. patients time and money

IN MASSACHUSETTS, a doctor who diagnoses someone with pneumonia has to send the patient off to a pharmacy to fill a prescription for antibiotics. In most other states, the doctor can dispense the prescription right in the office, saving the patient time and money.

“Part of the reason drugs cost so much is that middlemen — commercial pharmacies and pharmacy benefit managers—add substantial costs over wholesale prices,” according to a new report from the free-market think tank Pioneer Institute. “Allowing prescribers to dispense routine drugs — often at a fraction of the price — would give patients a more affordable option. As a policy matter, this is low-hanging fruit in Massachusetts’ quest to reduce prices and increase access to care.” 

All but five states (including Massachusetts) allow some form of direct dispensing. A few, like Utah, have very strict limitations on what kinds of drugs can be dispensed and sold by care providers. Most, like California, have regulations allowing dispensing only to a physician’s own patients and meeting state-imposed labeling and storage criteria. Others, like Tennessee, allow physician dispensing with no additional permitting requirements beyond federal and state safety regulations.

Physician dispensing of prescription drugs usually takes place in medical practices where doctors oversee smaller patient pools. Practitioners purchase drugs wholesale and provide them to patients at cost plus whatever overhead is needed to safely package and distribute the drugs.

A 2014 report commissioned by the state of Utah, which led to overturning the state’s general ban on direct dispensing, found that upwards of 90 percent of physicians who dispense drugs and about 80 percent of patients who purchase them through direct dispensing said their drug prices were the same as or lower than those available at a pharmacy.

It is a rare subject with some commonality between libertarian political interests and equity organizations concerned with increasing access and reducing drug costs. About 30 percent of adults do not take their prescribed drugs as directed due to high prices, the Pioneer report notes, citing a 2022 Kaiser Family Foundation survey. In Massachusetts, people with commercial insurance spent 8.6 percent more on drugs from 2019 to 2020, now averaging almost $1,000 annually, the report said. Especially in more rural areas, but also areas with fewer available pharmacies, the mere need to make multiple trips to acquire and fill a prescription can be a burden.

The advocacy group Health Care For All said it does not have a position on the direct dispensing question. “Changes that make care and medications more easily available also have to consider potential impacts on safety and costs,” the organization said in a statement. “What is needed more broadly is for stakeholders to come together to consider ways to make prescription medications more affordable by eliminating and reducing co-pays for widely used chronic condition medications, and reviewing and reining in the cost of the most expensive prescription drugs.”

The practice of integrating doctoring and dispensing has its detractors.

“In general, it’s not a great idea,” said Todd Brown, vice chair at Northeastern University School of Pharmacy and executive director of the Massachusetts Independent Pharmacists Association. “Our current system is set up with checks and balances. Physicians prescribe, pharmacists dispense.”

Because a patient might see a number of different physicians, pharmacy systems check prescriptions against a patient’s file to make sure there wouldn’t be complications associated with combining medications.

The separation offers a “huge benefit to patients because as our drugs get more potent and more effective, they also get more dangerous, too,” Brown said. “It’s important to have someone look at all of the patient’s medications.”

The 2014 report out of the University of Utah reviewing direct dispensing found that self-reported adverse effects from medication were about the same when patients were given their medication from doctors or pharmacies.

“Yes it’s obviously true that physicians are fallible and can make mistakes,” said Pioneer report co-author Josh Windham, who has litigated direct dispensing bans in Montana and Texas, but “on the other side of the coin, pharmacists can introduce errors into the process.”

Physicians aren’t entirely without options in Massachusetts, since they can dispense medication needed for “immediate” treatment before a patient could fill a prescription at a pharmacy or hand out 30 days of free “samples” of a low-risk schedule IV drug to a patient. They just can’t charge for it.

Dr. Jeff Gold, a family physician who co-authored the Pioneer report, opened his Salem primary care practice in 2014 knowing the limitations on dispensing in the state.

“The law is ridiculous and, truthfully, I don’t even know if I would want to deal with dispensing even if I could,” he said, because of uncertainty with the state regulations. “But the fact that we don’t even have the option to do that is absurd.”

Practitioners can’t dispense eye drops after surgery, topical creams for patients who show up with rashes, sleep aids for insomnia, anti-inflammatory or allergy medications, or other common drugs that they may prescribe multiple times a week.

The closer physician relationship means it is often easier to check in if a patient stops taking medication or needs an adjustment, Gold said. A 2016 report on Medicare patients with access to direct dispensing found that they were 17 to 29 percent more likely to take their prescribed medications, and without an increase in costs.

“I don’t think we’re trying to overstep any bounds here,” Gold said, “just trying to make it more holistic care out of our office and do it in the safest, most affordable way.”

He and the other report co-authors point to the rise in the “minute clinic” model in chain pharmacies like CVS, where someone could effectively get a diagnosis or medical recommendation and purchase the drug on the spot from the shelves. That, they say, is essentially direct dispensing.

The Pioneer Institute report lays out several factors for lawmakers to consider, including existing federal standards for labeling, storing, and recordkeeping around prescription drugs, which could either be incorporated directly at a state level or modified. Additionally, different state standards for physician registration, training for dispensing, and designating care providers for dispensing offer a range of options.

“Philosophically, we always like to support a lighter touch,” Josh Archambault, senior fellow at the think tank and report co-author. When it comes to implementing physician dispensing, he said, “there’s a lot of variation across the country and we do not see research saying outcomes are varied based on those guardrails. That says to us the guardrails probably should be lighter.”

Then there’s the money question.

Brown, the pharmacist, said the mass market is “very competitive. There’s not a lot of money in it, and if a physician wants to increase their revenue, they’re better off seeing more patients rather than trying to dispense medications.”

Gold and the practitioners Windham represented aren’t looking to become mass-scale pharmacists, they said, and there is still plenty of room for pharmacists in the field. It just isn’t sustainable for them to be handing out 30-day samples for free.

A practitioner in Kansas cited in the report keeps about 300 drugs stocked, but there would be no obligation for any physician to become a direct dispenser or stock particular drugs.

If the state were to consider price controlling drug dispensing, to allay concerns about a potential profit motive for doctors to direct dispense, the paper argues those price restraints should also apply to pharmacies.

A bill to allow direct physician dispensing in Massachusetts was proposed in the 2021-2022 legislative cycle by Republican state Rep. Nicholas Boldyga of Southwick and co-sponsored by a bipartisan handful of legislators. It was briefly discussed in a hearing of the joint Committee on Public Health.

“It’s time here in Massachusetts to join the mainstream,” Boldyga testified at the time. “We’ve done amazing things for public health access here in the Commonwealth, and I think it’s just common sense that we allow physician dispensing here in Massachusetts.”

Boldyga’s bill would let physicians dispense certain medications while allowing the Department of Public Health to regulate safe storage, labeling, recordkeeping, dosage, and quantity for certain drugs.

The committee sent the bill to study – effectively killing it. Boldyga has refiled the bill this cycle.