Bypassing the Middle Man: Should Texas Allow Physician Dispensing?
By Joey Berlin Texas Medicine February 2019


Just four states generally don’t allow medication dispensing out of a physician’s office. Texas is one of them.

But Austin family physician Chris Larson, DO, who provides direct primary care, gets a taste of what he and his patients are missing out on.

Dr. Larson communicates with other direct primary care physicians across the nation in a private Facebook group. As the odds would suggest, many of them hail from the 46 other states that allow doctors to dispense out of their offices.

For many of his interstate colleagues’ patients, the membership cost typically associated with a direct primary care practice pays for itself — because patients can get their medications straight from their doctor, instead of incurring extra costs when a pharmacy or a pharmacy benefit manager (PBM) takes its cut.

“When you mete it out, how much [patients] save versus how much they spend on the membership, many of them will get their direct primary care for free because they save so much on the medications,” Dr. Larson said.

The Texas Medical Association supports allowing physicians to dispense out of their offices, and TMA and the Texas Academy of Family Physicians (TAFP) are supporting business groups and other leaders as they mount a legislative effort to bring the practice to Texas. Proponents are wielding data that illustrates potential benefits like reduced medication costs and increased patient adherence to their drug regimens.

Texas’ ban is “a barrier to care that really doesn’t need to be there,” Dr. Larson said.

Support from medicine and business

Only Texas, Montana, New York, and Utah ban physicians from dispensing medications, according to TAFP. Texas law includes a few exceptions, including the “immediate need” exception, which allows a physician to dispense up to a 72-hour supply for proper treatment until a patient can access a pharmacy; an exception for dispensing in certain small-population rural areas; and an exemption allowing pharmaceutical manufacturers to distribute samples.

A 2014 survey published in the Annals of Internal Medicine examined more than 37,000 prescriptions for nearly 16,000 patients in a primary care network, and found 31 percent of those prescriptions weren’t filled. Other data show that physician dispensing may improve patient adherence significantly. (See “Prescriptions and Physician Dispensing: By the Numbers,” right.)

The ability to dispense would be a major step forward for the Houston-area onsite workplace clinics Next Level Urgent Care runs, says its CEO, family physician Juliet Breeze, MD. Next Level operates 12 urgent care facilities, with two more under construction. It also operates three free onsite workplace clinics for Houston-area county employees, including one that was scheduled to open Feb. 1.

“When you can’t give medicines out, then you take away some of the effectiveness of that,” Dr. Breeze said. “Because if a patient comes to us at an onsite clinic and they’re getting checked for diabetes, or if they’re getting their routine care, and we could simply provide the medications at the time of service that they were needing, there would be no extra stops.”

Also, she noted, Next Level facilities often get calls from patients who encounter problems filling their prescriptions, such as price or pharmacy hours.

“I would say about 65 percent of the calls that we receive all day long at my … urgent cares are regarding pharmacy issues or medication issues. And all that would go away if we were actually dispensing onsite, because those conversations would be able to be had right there and then. … This is just another step toward getting patients a better health care experience for less money,” she said

Tom Banning, TAFP’s executive director, says dispensing medications from a clinic or physician’s office ensures the patient is getting the right prescription at the right time.

“When you put in a middle man like a PBM that’s going to take a cut out of whatever that prescription drug cost is, it just adds cost to medications. By streamlining the supply chain where physicians can buy directly from wholesalers and dispense from their office with no markup on the cost of the pharmaceuticals, it can dramatically decrease patient cost on many medications, certainly for generics and commonly prescribed [medications for] chronic diseases,” Mr. Banning said.

Although bringing down pharmaceutical costs eventually could result in physicians earning back-end shared savings, Mr. Banning says, doctors aren’t looking to make money off physician dispensing; he doesn’t envision allowing for physicians to charge an upfront dispensing fee.

He says the drivers of the discussion around physician dispensing aren’t the doctors who would dispense as a result; instead, patients and employers are speaking up the loudest.

“More and more employers are moving to onsite/near-site clinics. And certainly for the self-insured employers that are either buying an insurance product and paying for prescription drug benefits that way, or [giving] pharmaceuticals directly to their employees and patients either for at-cost or free, there’s efficiency in that, and there’s cost savings for that.”

WeCare tlc, which develops and operates onsite and near-site health centers for employers, is one business that supports physician dispensing in Texas.

“For employers who invest in a worksite health solution for their employees and families, integrating [dispensing] into the health center is a huge opportunity to improve health outcomes and make access to medications more affordable for their members,” said Kevin Cooksey, managing director of sales for WeCare. “And it goes to support the entire medical home concept.” He says patients in states with more permissive physician dispensing laws than Texas are more likely to use an employer-sponsored health center.

Pharmacist objections

This isn’t the first time medicine has lobbied for physician dispensing in Texas. A previous TMA-supported push to allow physicians to dispense, Senate Bill 546 in 2011, met with opposition from pharmacists. That measure, authored by then-Sen. Bob Deuell, MD (R-Greenville), got through the Senate but died in the House.

In a 2015 article in the journal Pharmacy and Therapeutics, registered pharmacist Matthew Grissinger of the Institute for Safe Medication Practices, examined some of the pharmacist community’s misgivings about physician dispensing. His article, “Good Intentions, Uncertain Outcomes: Physician Dispensing in Offices and Clinics,” notes opponents of physician dispensing cite “serious medication safety concerns, particularly the loss of a crucial second check by a pharmacist and use of software to detect prescribing errors, and lack of regulatory oversight, which may lead to lax procedures for medication labeling, record-keeping, storage, and supervision of the dispenser.”

Those safety concerns “cannot be dismissed easily, and the proper regulatory oversight of this practice needs to be well thought out and funded if physician dispensing trends continue,” he wrote. “Otherwise, the potential harm from physician dispensing is too great, and the medication dispensing process should continue to be managed by a licensed pharmacist and state regulatory agencies that aggressively enforce standards of care in dispensing pharmacies.”

Fredericksburg family physician Jason Peet, MD, says he supports physician office dispensing and, if he had the option, would probably dispense such drugs as antibiotics, anti-inflammatories, and blood pressure medication. But he acknowledges doctors would have to take care to do it right.

“Physicians would have to be very diligent about doing it well and trying to have safeguards in place for dispensing errors and so forth. That would be the downside I would see,” he said. “A pharmacy, in theory, should do a better job, because that’s all they do. I think a physician’s office would have to work pretty hard to keep a similar rate of dispensing errors and so forth down. That’d be my concern implementing it in my office, just because physician staff have so many different things they have to learn and be competent in, that every time you add something like that, you really have to have a different staff that can own that and do it well.”

Mr. Banning, the TAFP executive director, says TAFP has met with pharmacists and heard their concerns regarding storage, labeling, and physicians needing to follow the same requirements pharmacies do. He says for TAFP, the focus is about patient empowerment.

“If we’re moving into a consumer-directed model and trying to empower patients and provide transparency to patients in terms of what they’re buying — I don’t want to say it’s common sense, but it is a conversation that needs to occur,” he said. “Whether we’re able to address all the pharmacy concerns or issues, we’ll try. But we’re more concerned about giving patients a choice and access to lower-cost pharmaceuticals.”

An innovative workaround

In the absence of a physician dispensing option, Dr. Larson is trying something else to keep costs down on the medications he prescribes most often.

When he spoke to Texas Medicine, Dr. Larson was preparing to launch a prescription plan he worked out with the pharmacy benefit manager Southern Scripts. For $8 per month and no copay, his patients will have access to up to 12 prescriptions for medications on the Southern Scripts formulary list, with up to a 90-day supply for each.

The prescriptions will be dispensed at CVS pharmacies.

“In order to make the price free to the patient, there’s a cost to meet,” he said. “And in a different scenario, where I could buy the medication wholesale, just pass the cost on through to the patient — I mean, some of these medications that I’m selling for $0 I could probably sell for $4, and the cost wouldn’t rest with me. Even the ones that I could sell for $4, the PBM is charging me more than that. But this is a benefit that I feel like our patients deserve.”

Most of the medications on the formulary are “going to be for those diseases that are in my wheelhouse as a primary care physician,” Dr. Larson said. That generally means drugs for chronic diseases such as hypertension, diabetes, and high cholesterol.

“None of us is interested in dispensing controlled medications from our office. None of us is interested in dispensing medications that are not in our wheelhouse. I’m not interested in dispensing chemotherapeutics,” Dr. Larson said. “It’s just the basic stuff that your normal family doctor would normally prescribe.”

Rather than seeing the drug membership plan as a true solution, though, Dr. Larson calls it a “workaround” for the inability to dispense out of his office.

But in the attempt to persuade lawmakers to finally allow it, Mr. Banning says TAFP is pushing for a “competitive marketplace” just as pharmacy groups attempt to move more into clinical care delivery. That is, “if they want to do certain tests and provide medical advice, then certainly from an efficiency standpoint and access standpoint, the doctors ought to be able to compete in that space.”


Prescriptions and Physician Dispensing: By the Numbers  


Share of primary care prescriptions that aren’t filled

(Source: Annals of Internal Medicine study, April 2014)


Percentage of people who didn’t fill their prescription who said cost was the reason

(Source: Truven Health Analytics/NPR health poll, June 2017)


Increase in adherence to cholesterol medications for Medicare Advantage patients with physician-led point-of-care medication delivery

(Source: American Journal of Managed Care study, July 2016)


Percentage of  Medicare Advantage patients surveyed who found the point-of-care dispensing system more convenient than filling at a retail pharmacy; 87 percent said it improved their ability to take
the medications

(Source: American Journal of Managed Care study, July 2016)

$337 billion

Avoidable medical and pharmacy expenses in U.S. as a result of medication nonadherence

(Source: Express Scripts Drug Trend Report, 2013)


Tex Med. 2019;115(2):28-31
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Last Updated On

February 11, 2019

Originally Published On

January 24, 2019