In-office pharmacies drive up drug costs for insurers

When doctors prescribe and dispense drugs directly to patients, they often inflate the price significantly, causing insurers to pay hundreds of millions of dollars unnecessarily, The New York Times reported.

For example, acid reflux drug Zantac costs about 35 cents per pill in a pharmacy, but physicians dispensing the same drug in their offices have charged $3.25 a pill--almost 10 times the price--and muscle relaxant Soma's per-pill price at a pharmacy is 60 cents but jumps to $3.33 when sold by a doctor.

This practice occurs primarily among doctors treating injured workers because many states' worker-compensation rules include loopholes, allowing doctors to sell drugs at large markups through their own in-office pharmacies. Some states, including California and Oklahoma, have changed legislation to prohibit the practice, but many other states like Florida, Hawaii and Maryland have attempted to stop it unsuccessfully.

"I consider the fees that these people are charging to be immoral," Florida state Sen. Alan Hays, who introduced a bill to prevent doctors from dispensing pills, told the Times. "They're legal under the current law, but they're immoral."

In a similar practice, hospitals often charge patients huge markups, sometimes in multiples of their normal retail price, for relatively commonplace drugs while patients are placed in observation care, FierceHealthFinance previously reported.

To learn more:
- read the New York Times article