Outdated Policy, Modern Costs: Rethinking Pharmacy Choice in Workers’ Compensation

Why It Matters

Unrestricted pharmacy choice inflates workers' compensation expenses without improving care, burdening employers and taxpayers. Reforming the rule could align drug costs with modern, network‑based pricing structures.

Key Takeaways

• Workers' comp laws still require unrestricted pharmacy choice despite market changes
• Independent pharmacies have closed >30,000, shifting volume to chains and online providers
• Out‑of‑network comp pharmacies charge higher prices, inflating workers' compensation costs
• High‑cost branded topicals are overprescribed, often when cheaper OTC equivalents exist
• Policy reforms could limit choice to PBM networks or cap pricing

Pulse Analysis

The legacy of unrestricted pharmacy choice in workers' compensation dates back to an era when local druggists crafted individualized remedies. At that time, personal relationships between patients and pharmacists were essential to safe dispensing. Today, electronic prescribing, automated dispensing, and nationwide PBM networks have rendered that model obsolete. The shift has been accompanied by a dramatic decline in independent pharmacies—over 30,000 closures—while large chains and online platforms dominate the market, fundamentally changing how injured workers obtain medication.

Modern cost dynamics are driven by out‑of‑network workers' compensation pharmacies that operate outside PBM-negotiated discounts. These entities often assume financial risk by dispensing drugs before claim approval, recouping losses through markedly higher prices. The disparity is most pronounced with branded topical creams, gels, and patches that are clinically comparable to inexpensive over‑the‑counter options. Such pricing practices not only inflate settlement amounts but also create incentives for lawyers and prescribers to steer patients toward costly providers, eroding the efficiency of the compensation system.

Policymakers face a clear choice: preserve a nostalgic notion of patient choice or align pharmacy selection with contemporary cost‑control mechanisms. Options include restricting injured workers to PBM‑network pharmacies, which still offer broad geographic coverage, or imposing a "usual and customary" pricing ceiling to prevent excessive charges. Either approach promises to reduce unnecessary expenditures, protect taxpayers, and ensure that workers' compensation fulfills its purpose—delivering timely, affordable care—without subsidizing outdated assumptions or opportunistic pricing strategies.