Defending Against the High Prescription Prices of Workers’ Compensation Pharmacies Without a Costly Expert

Workers’ compensation pharmacies such as the Injured Workers Pharmacy (tagged as the “Patient Advocate Pharmacy”) and Summit Pharmacy base their marketing platform on providing prescription medications to injured workers with quicker than usual delivery times.  In order to do this, such pharmacies may fill prescriptions unauthorized by workers’ compensation carriers.  When a carrier then refuses to pay the entire billed price, pharmacies like IWP and Summit will file an application with the Virginia Workers’ Commission for full reimbursement.  Defending against these applications either requires a contract between the pharmacy and the insurance company or employer, or it requires showing the prices for the pharmaceuticals exceed the prevailing community rate.  Typically, showing the prevailing community rate requires an expensive expert economist.  Such experts can prove to be cost-prohibitive for many claims.

In an unpublished case before the Virginia Workers’ Compensation Commission, Riggleman v. Riggleman, 05 WC UNP 1386610 (2005), an employer successfully defended against IWP’s pharmaceutical prices without using an expert.  To show the standard community rates, the employer compared the costs at five local pharmacies and “additional local pharmacies” with the cost at IWP.  The employer’s evidence showed that IWP’s charges “exceeded the prevailing community rate.”  The Full Commission further found that “in addition to prescription-filling services, the Injured Workers’ Pharmacy provided ancillary services, such as advocacy services in achieving reimbursement and the shifting of risk of non-payment away from the patient.” IWP’s charges “were not only for the filling of prescriptions, but also for these other charges, which are not provided by the Act.”  Therefore, the employer was not responsible for the full payment.  This case has not been appealed or otherwise cited unfavorably.

Riggleman v. Riggleman seems to suggest that there is an opportunity for employers and insurers to defend against a pharmacy provider’s application without the use of a costly expert.  It may simply require the commission of a data-gathering company to contact pharmacies at random within the appropriate community and inquire what an uninsured individual would pay for relevant prescription medications. This process would likely cost a fraction of what an expert economist would charge.  It is not certain, however, what the required number of pharmacies to survey might be.  Such a determination likely depends on how many total pharmacies are available in a given community.

As a side note, the advent of the new Virginia Workers’ Compensation Medical Fee Schedule has standardized most aspects of the cost for medical care.  However, notably absent from the fee schedule is prescription medications.  Therefore, it appears the fight against prescription prices set by workers’ compensation pharmacies will continue for the foreseeable future.

For more information about this article, please contact Ciara Malone at 571.612.5937 or cmalone@fandpnet.com.