And in just one tiny example of physician entrepreneurship, the LA Times reports on a new bill to close a loophole in California Workers’ Comp law. The Workers Comp problem is one of those perennial problems here in California, where we have too many doctors and too many lawyers, and they are able to hone their skills in separating the insurers from their money. It was "fixed" by Pete Wilson in the early 1990s, and then "fixed" again last year by Arnie. The latest round seems to have done some good, but one little loophole has been exploited allegedly to the tune of $250m.
The loophole is that pharmacy prices for drugs were capped in the law, but prices for those drugs dispensed directly by doctors were not. Well you know what’s coming next. Physicians were enticed by some wholesalers to start prescribing and dispensing drugs, and their mark-ups are a factor of three to ten what the pharmacies can charge. And it’s all paid for by the insurers. Here are some pricing examples from a Rand study quoted in the LA Times.
Pharmacy price vs. Doctor’s office priceSoma $44.68 vs $396.98Prozac $14.81 vs $131.82Darvocet $12.65 vs $58.31Acetaminophen/Hydrocodone $12.81 vs $58.31
Even the unions are opposed to this, as they correctly see this type of lilly-gilding as being the kind of thing that might lead to another round of attacks on employee benefits. The employers are of course siding with them.
But it does just show you that in American health care, if there’s a way to bill an extra buck or two, physicians are as quick as anyone else to figure out how. I don’t need to tell you the California Medical Association’s position on the bill…..