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Comments are automatically closed one year after article publication. Archived comments are below. Years ago I brought my kid to a functional medicine MD who sold supplements in his office. We were told that buying the same kind of supplement from Walmart would not get good results, it had to be this special brand. Which we obviously did. If you let doctors sell drugs, you will obviously see a rise in diagnosis of conditions that have treatments with a high profit margin. To the guy selling hammers. Drug dispensing machines make a doctor no different than a dope pusher. I go to a pharmacist for information on medications, such as contraindications with a medication that I may be taking. Science-medicine is a profit and power driven industry and corporation where the needs of patients come last, if considered at all. For too long doctors have waved a flag of altruism which does not exist in any profit-driven business and few are healers. The path to good health will never go through modern medicine. I am a DPC doctor. Only a few of my colleagues like Ayn Rand. Most have no opinion. I personally intensely dislike her work. And I do dispense medications, at cost, to members. It was important for me to remove the semblance of a profit motive. They administer vaccines, dispense contraceptives and lobby for more powers. Doctors would only be called upon when something goes wrong. The profit motive exists across professions and across all aspects of the healthcare industry. S ometime around or , Samantha Jefferies came to her brother Trent with a request: Could he help figure out an easier way for doctors to sell prescription drugs to their patients? But in the s, a rising number of physicians in the United States began bypassing pharmacies and selling certain drugs directly to their patients. Samantha Jefferies works in health care management in southern California. After reading an article about how this kind of in-office dispensing can generate new revenue for medical practices, she reached out to her brother for his thoughts. Trent Jefferies had served in the U. In , the group received a first round of investor funding and incorporated a company, VendRx. From the outside, the machine is a tall cabinet of off-white powder-coated steel, fitted with a large touchscreen. Inside, the system stocks up to packages of medication, each nestled in a v-shaped notch. When a doctor prescribes a drug, VendRx software routes a record of the prescription to the machine. On the way out the door, the patient can stop and tap their name and date of birth onto the touchscreen. This sends a mechanical arm whirring to the correct slot, where it grasps a pre-packaged, pre-counted bottle of medicine and shuttles it to a small printer for labeling. The machine then ferries the drug to a delivery slot. The whole process takes around 70 seconds — and the VendRx machine accepts credit cards. Even a small medical practice, the company says, can make five-figure profits through the machine each year. Advocates for in-office dispensing argue that it is both more convenient and cheaper for patients, and some say it can also bring in extra revenue to doctors. The arrangement, supporters argue, can also bypass the elaborate and opaque vagaries of retail drug pricing that often leave patients paying far more for drugs at the pharmacy than is necessary. And given that a significant percentage of patients, even with a prescription from a doctor in hand, never end up going to a pharmacy and getting it filled, supporters also say the convenience of getting drugs directly from doctors can help close a crucial compliance gap and improve overall patient health. They do. Not everybody buys these arguments — least of all pharmacists. Critics of physician dispensing also say that the arrangement involves an inherent conflict: Doctors who prescribe drugs ought not be in a position to profit off of them. And while supporters of in-office dispensing may argue that these outcomes have been driven by a minority of bad actors in an otherwise virtuous system that benefits patients, a small body of research from Europe and East Asia suggests that, given a profit motive, many doctors will prescribe drugs differently than their non-dispensing colleagues. Those concerns appear to have done little to dampen enthusiasm for the practice in the U. In the past several years, dispensing has also become popular among physicians in the direct primary care movement — a fast-growing clinical model that aims to offer low-cost care without involving insurance companies. This arrangement, some supporters say, has provided particular benefit to low-income communities lacking insurance, because their direct-care doctors can sell them their drugs at or near wholesale prices. Trent Jefferies explains how the VendRx system works in this promotional video. When a doctor prescribes a drug, VendRx software sends a record of the prescription to the machine, which the patient can then pick up on their way out the door. The company says even small medical practices can make five-figure profits through the machine each year. Video: VendRx. Recently, some advocates of physician dispensing have sought to press their case in court. In , the Institute for Justice, a public interest law firm that backs libertarian causes, sued the state of Texas over its physician dispensing ban. The law currently allows for some exceptions, including for doctors in certain rural areas. A similar action in Montana, launched in June , ended this year after the state legislature and governor passed a law legalizing the practice. Doctors are experts at diagnosis, said Scott Knoer, the chief executive of the American Pharmacists Association, or APhA, but drug dispensing, he said, is different. P hysician dispensing advocates sometimes argue that they are hearkening back to an older way of doing medicine, when doctors would keep a medicine cabinet in the back and patients could leave the clinic with a tonic in hand. But the history is slightly more complicated — and rife with competition. Before , American physicians commonly sold drugs directly to their patients. But they also relied on local pharmacists to actually mix or compound some of the drugs they prescribed. Starting in , though, federal lawmakers began to tighten control of the drug market. The Pure Food and Drugs Act, passed in , set regulations for labeling medications. It also established the regulatory agency that would evolve into the U. Food and Drug Administration. In , legislators moved again, adding new labeling requirements, and mandating that new drugs receive approval before going on the market. They also introduced a requirement that certain dangerous medicines only be given to patients with a prescription from a medical provider. In the years that followed, some patients continued to buy certain drugs from their doctors, and some pharmacists continued to compound medications. But, as regulation increased, the diverse pharmaceutical market began to consolidate. By the middle of the decade, the now-familiar model had crystallized: A small number of pharmaceutical companies had come to dominate drug manufacturing, churning out nearly all medicines in centralized facilities, with oversight from the FDA. To access those drugs, patients would typically take that prescription to a pharmacy — as they still often do today — and buy the medication from a licensed pharmacist. By the s, some entrepreneurs had begun offering physicians the opportunity to get a cut of the growing market. The fast-growing industry alarmed some policymakers. Senator — sponsored legislation to limit physician dispensing. According to The Times, lobbyists descended on the Capitol. Meanwhile, pharmacy organizations supported Wyden. So did Arnold Relman, an M. In a sixth, Utah, legislators recently relaxed a dispensing prohibition, but the practice remains off-limits for most clinics. Even in those states where the practice is largely prohibited, exceptions are common. In Texas, for example, dispensing is permitted in rural clinics far from the nearest pharmacy. In the rest of the country, dispensing is fully legal. Some states do require physicians to apply for a simple license before dispensing, but most do not. Today, some companies specialize in repackaging drugs for physician dispensers. Getting a handle on the current size of the industry is difficult, particularly given that no single source tracks the number of doctors who do their own drug sales. One indication comes from MDScripts, a company that builds software for dispensing physicians, and that one industry source described as holding a dominant share of the market. MDScripts says that it serves more than 50, providers at more than 17, sites across the country. Last fall, the company president, Gary Mounce, suggested MDScripts had more than half the total market share — although, he noted, there are no reliable estimates of the total size of the market. While traditional insurance plans will reimburse for physician-dispensed medications, rates can vary widely, often making it impractical for clinics. Instead, dispensing tends to thrive outside the umbrella of traditional insurance. Reviews of advertisements and other marketing materials suggest that operations that serve dispensing physicians can come and go quickly. One person who has built a large and lasting business in the space is Brian Ward. Around , AstraZeneca — the pharmaceutical industry giant where he was then employed — was offering buyouts, so Ward began looking for new business opportunities. Ward said the answer came to him after his father got injured at work. Impressed, Ward said he got the company name off the label from his dad and started searching online. Shortly after, he and his wife, Jennifer, launched a company from their home in Mobile, Alabama, selling physician dispensing services to clinics. The company, DocRx, essentially acts as middleman: They market the idea of dispensing to physicians, manage billing, and comply with regulations. They furnish physicians with software and help connect practices with existing repackagers. DocRx itself does not itself repackage drugs. Ward saw an opportunity. Working a sales beat in Alabama, Mississippi, and Louisiana, Ward said, the company signed up doctors to start dispensing drugs from their offices. Later, they hired the competing salesman. Over time, DocRx branched out into other services. Today, along with their dispensing business, they offer diagnostic tests to clinics, sell medical supplies, and even supply products to some pharmacies. Like others in the industry, the company cites research suggesting that as many as one-third of prescriptions are never even filled. The increased convenience of in-office dispensing, Ward and other advocates argue, boosts compliance and improves care. Ward won, and the latter company appears to no longer exist. Asked about the video in a phone interview, Ward sounded confused. Later, after viewing it on the website, he said his web manager may have mistakenly posted it. T he rise of in-office dispensing in the U. Some pharmacy schools also require a specialized admissions test, and leaders of the field have pushed for new pharmacists to do post-graduation residencies, as well. Pharmacists must also pass the North American Pharmacist Licensure Examination, as well as a pharmacy jurisprudence exam, before being able to dispense medications. So we really have a unique value in the system. Not every pharmacy advocate is staunchly opposed to physician dispensing, and some leaders in the field say they see a place for it. During the Covid pandemic, Horton said, she has seen physicians in the state advocating for expanded dispensing. For example, early in the pandemic, after then-President Donald Trump began advocating for an unproven Covid treatment, hydroxychloroquine, many doctors rushed to prescribe it for themselves, family, and friends. Subsequent studies have failed to show the drug treats Covid As Undark reported in March , the spike in prescriptions led to shortages of the drug for patients who needed it to manage lupus and other unrelated, chronic conditions. In some cases, pharmacies stepped in to push back against the wanton prescribing, and Horton said pharmacists also intervened with doctors who had never dealt with the drug before, and who were unknowingly trying to obtain inappropriately high doses. Some dispensing advocates counter such arguments by pointing to recent reports suggesting that overworked pharmacists at chains like CVS are making more errors , potentially endangering patients themselves. A two-year long investigation by The Chicago Tribune , published in , enlisted the help of drug interaction experts and a cooperating physician to send reporters to pharmacies throughout Illinois — Walgreens, CVS, Costco, and other chains, as well as independent pharmacies — seeking to obtain two contraindicated, prescription-only medications. In some cases, the drug combinations arranged would be deadly if a patient were to take them together. In the end, 52 percent of the pharmacies visited filled the prescriptions without ever mentioning any possible interactions. Still, such errors in the real world would begin with doctors, pharmacy experts caution, and Knoer argued that most physicians, at one time or another, have had pharmacists call and alert them to major potential errors. His colleague Daniel Zlott, formerly a specialist in oncology pharmacy at the U. National Institutes of Health and now an executive at the APhA, echoed the point, suggesting that more than 10 percent of handwritten prescriptions contain some kind of error. I n , Geoffrey Joyce , a health policy scholar at the University of Southern California, sent students to pharmacies around Los Angeles with prescriptions for the same set of generic drugs. Indeed, while common wisdom holds that generic drugs ought to represent cost savings for American consumers, the millions of patients who buy their drugs in cash — because they are uninsured or underinsured — are particularly vulnerable to erratic pricing for generics. Meanwhile, physicians have found ways to sell generic drugs directly to patients, sometimes at far lower prices than pharmacies offer. The lifecycle for most generic drugs begins in China and India, where a vast network of factories produce the base chemicals that feed the global pharmaceutical chain. They then sell those chemicals to other manufacturers — again, often in China and India, but also Europe and the U. For generics sold in the U. For many generics, the manufacturers set the average wholesale price, or AWP — but that figure is largely a placeholder. Instead, the price that consumers encounter at the pharmacy has a lot to do with a middleman called a pharmacy benefit manager, or PBM. In theory, the PBM exists to help health insurance providers bargain for lower prices. But in practice, according to a growing chorus of experts, advocates, and policymakers, a handful of PBMs now dominate the pharmaceuticals market, raking in enormous profits while driving up prices. By the time a drug arrives at the pharmacy, various players in the chain have taken a large share. Consider cyclobenzaprine. First synthesized by a pair of chemists — one a Merck employee and the other a consultant for the company — in , the drug reached pharmacies in the s as a muscle relaxant and pain reliever, under the brand name Flexeril. Today, any FDA-registered drugmaker can apply for approval to manufacture and sell generic cyclobenzaprine. The final drug, according to federal pricing data, tends to be pretty cheap when pharmacies purchase it directly from a generic drug wholesaler — around 2. Pharmacies have little control over the final pricing, Ciaccia said. But dispensing physicians operate outside that system, and they have access to low wholesale prices. For example, an internal pricing sheet from a dispensing clinic in Wichita shows a large drug distributor selling cyclobenzaprine directly to the clinic for less than 2 cents per pill in August Chris Lupold, a family physician in Ronks, Pennsylvania, has been dispensing since During visits, Lupold often walks patients through drug pricing, showing them the wholesale rates for their regular prescriptions. Some patients find those conversations upsetting. What are you talking about? N ot all dispensing doctors sell their drugs at such low rates, however. Some experts, echoing concerns expressed in the s, worry that physician dispensing could open the door for unscrupulous practices — and warp the decision-making of even well-meaning physicians. McCoy studies conflict of interest in health care, and he points out that just because a conflict of interest is present does not mean that a physician necessarily acts on it. McCoy acknowledges that conflicts of interest exist in other realms. At least one medical association has expressed similar concerns. In the U. There has been virtually no research in the U. The great laboratory for physician dispensing research is Switzerland. Sometimes, circumstances give those researchers a perfect case-study. The law went into effect in , after an unsuccessful legal challenge from pharmacists. Physicians who had spent years referring their patients to pharmacies could suddenly begin selling some drugs themselves. Schmid, the Swiss economist, and two colleagues recently began combing through prescription data from before and after the policy change. They wanted to see if the physicians started prescribing differently once they had profits on the line. The data, Schmid says, is clear: They did. The team found that, after , physicians prescribed more expensive drugs. They also appeared to favor smaller packages of drugs, which, under the Swiss health care system, generate more revenue per pill. The team has presented their data at conferences, and they released a working draft of the paper in July ; it has not yet been published in a peer reviewed journal. That finding reflects the conclusions of peer-reviewed research Schmid did as a graduate student, as well as studies from several other economists in Switzerland. Researchers are now scrutinizing dispensing practices in England, too. According to one study , around one in eight practices do so. The researchers selected dispensing practices, and then tried to match them up with non-dispensing practices that were similar in almost every way — size, patient demographics, physician age, and many other variables — except that they do not dispense. Then, they compared the matched-up practices to see if their prescribing patterns differed. As in Switzerland, the data suggests that English doctors act differently when they sell drugs. They prescribe more drugs than their non-dispensing colleagues, including more opioids and antidepressants. They also prescribe smaller packages of drugs, which allow physicians to rack up larger fees. C omparable statistics are not available in the United States. But, as in the s, advertising targeted to doctors suggests that profit is an important motive for many dispensing doctors — and that those earnings can be substantial. Jeff Coulter, the owner of PharmaLink, which provides software to several hundred dispensing practices, said interest from potential customers tends to ebb and flow. There are also cases of outright abuse, especially when physicians peddle opioids. In the s, in an attempt to map the phenomenon, Rigg and colleagues would stand outside shady south Florida pain clinics, interviewing users. In , according to Drug Enforcement Administration data, the top 90 physician-dispensers of oxycodone in the United States were all in Florida. That year, the state passed new regulations on pain clinics, followed in by limits on physician dispensing of opioid painkillers. Overdose death rates dropped. Today, Rigg said, prescriptions are no longer a major driver of opioid addictions and deaths. But in many states, some physicians continue to sell pain pills directly to patients. Christopher Jones, the acting director of the National Center for Injury and Control at the Centers for Disease Control and Prevention, has studied the role of physician dispensing in opioid use. Rigg is skeptical of dispensing. Those kinds of incentives, he warned, shape physician behavior. Rigg noted that some doctors say that dispensing is principally about convenience, or about improving patient access to drugs. Physician dispensing, Paduda and other analysts say, has been one way those providers make money. He and his colleagues found some physicians were dispensing cheap generics drugs for 10 or 11 times the price available at pharmacies. In response, legislators in California, Illinois, and other states passed laws trying to keep physician-dispensed drugs tied to the market prices for drugs. But, in , the policy analyst Vennela Thumula and her colleagues at the Workers Compensation Research Institute, a not-for-profit research firm in Massachusetts that receives some insurance-industry funding , noticed more unusual activity. Dispensing physicians in California and Illinois were selling new dosages of cyclobenzaprine and several other common, cheap generic drugs: 7. What differed were the prices: In California, physicians were dispensing a bottle of 7. So some manufacturers had come up with new dosage products — with new, inflated list prices — for physicians to dispense. The constant game of whac-a-mole has infuriated some industry analysts. In the past, Paduda has worked as a consultant for PBMs, a role that included talking with policymakers about physician dispensing. He has also personally clashed with some people in the industry: A few years ago, a software company that serves dispensing physicians sued him for libel, based on his blog posts. The case was thrown out. Today, Paduda says, many insurers have simply given up on fighting against inflated physician dispensing costs, seeing them as a relatively minor drain on the U. Paduda does not believe the argument that physician dispensing, by allowing patients more convenient medication access, helps them get better faster. One study of injured workers in Illinois found that those who received care from a dispensing physician were out of work longer and received more drugs. T hose concerns have not stopped a new generation of advocates from arguing that physician dispensing can be done responsibly — and that it could be one way to help patients get more convenient, lower-cost access to drugs. Among them is Michael Garrett, a family physician in Texas. About a decade ago, Garrett moved from Indiana to Austin, Texas. In , he opened a direct-primary care, or DPC, practice in the western suburbs of Austin. At DPC practices, patients pay a flat fee for easy access to a physician, along with wholesale prices on lab tests and other medical services — including, in states that allow physician dispensing, drugs. Hundreds of DPC practices have popped up around the country in the past decade. The model is popular among doctors who are frustrated with insurance companies. According to DPC doctors, their patients gravitate to the model for all sorts of reasons. Others are insured but want more access to a physician than they would get in a typical practice. Since he opened the practice, his roster of patients has grown to people. Physician Michael Garrett opened a direct-primary care practice, where patients pay a flat fee and wholesale prices on some medical services — including prescription drugs. In most states, one service DPC doctors offer is access to wholesale medications, dispensed directly to patients, typically with little or no markup. The regulation upset Garrett, who, like Lupold in Pennsylvania, said he often sits down with patients to help them review their medication costs. Several years ago, Garrett joined a few colleagues, many of them fellow DPC doctors, who were lobbying the Texas state legislature to repeal the dispensing ban. The pro-dispensing push did win supporters, including Rep. Tom Oliverson, a Republican from Cypress, a Houston suburb. Oliverson, a practicing anesthesiologist, has received widespread praise for piloting bipartisan legislation that aims to reduce prescription drug prices. Texas Monthly, a left-leaning outlet, named him to its list of the best legislators of based on that work. A group of pro-dispensing doctors, he recalled, showed him data comparing the costs of diabetes medication at CVS to the rates available via in-office dispensing. And this an issue that they very much dislike. So did another bill introduced this year. As the legislation floundered, the Institute for Justice, the libertarian legal organization, approached Garrett about joining a lawsuit. He agreed. The Institute for Justice has pursued anti-regulatory cases in many states, and it has received funding from the Koch family, the DeVos family, and other major conservative donors. In a press release, the Institute for Justice said it will appeal the decision. IJ dismissed the Montana case in May, when Gov. Amat is from Mexico, and her patients are mostly Spanish speakers, working in the factories and farms of western Michigan. Around 70 to 80 percent of them, she estimates, are uninsured. Some are undocumented. Physician Belen Amat estimates that a large majority of her patients, most of whom are Spanish speakers working in factories and farms, are uninsured. She dispenses cheap generic drugs to patients at cost, which she says helps with compliance. Amat only stocks cheap generic drugs, and she sells them to her patients at cost. You can afford it, you can take it. Lupold, the dispensing doctor in Pennsylvania, also runs a DPC practice. Like Amat, he said that dispensing has helped him learn more about when his patients do — or do not — take their medicines. Asked about the possibility of physician error during a conversation last fall, Lupold paused. They are racing to deal with a high volume of prescriptions. Occasionally, he said, pharmacists will call him to double check a detail. But catching a serious prescription error? The clinics offer basic health screenings, vaccinations, and other services. Other major national chain pharmacies launched similar programs. Those clinics received a boost in August , when the U. Department of Health and Human Services began permitting pharmacies to administer routine childhood immunizations. Physicians have resisted many of those changes, which they see as an incursion on their own area of practice. But, for some physician-dispensing proponents, the fact of pharmacies opening clinics should give clinics leeway to act a bit more like pharmacies. Garnet Coleman, a Houston Democrat, explaining why he co-sponsored a physician dispensing bill with Oliverson. Brick-and-mortar pharmacies face stiff competition from new models for getting drugs to patients. Mail-order pharmacy services in particular have long alarmed their traditional counterparts. Many experienced a surge in new orders at the beginning of the Covid pandemic. In November , the online retail giant Amazon opened a mail-order pharmacy, promising discounts and free two-day delivery to Amazon Prime members. Stock prices for CVS and other pharmacy chains plunged. For Trent Jefferies and VendRx, the upheaval in pharmacy has not yet translated into much business. Only 10 of the fully automated vending systems are operating. Recently, the company launched a leaner product, resembling an airport check-in kiosk, that processes medication sales but does not actually dispense the drugs. In that world, he argues, brick-and-mortar pharmacies will mostly have disappeared. The ones that remain will help physicians manage new or unusual medications, and they will act as hubs, servicing a network of automated dispensing stations. Jefferies compares the VendRx to Redbox — the ubiquitous automated DVD-rental kiosks that squat outside grocery stores and gas stations across the U. Why, he asked, did Redbox help kill the brick-and-mortar rental company Blockbuster? Because people want convenience. Michael Schulson is a contributing editor for Undark. November 26, at pm. October 16, at am. Roslyn Ross. October 15, at pm. Dino William Ramzi, MD. October 13, at am. This field is for validation purposes and should be left unchanged. The Latest. Measuring the Public Health Toll of War. Is Depression Contagious? The Science Is Unclear. Critics of physician dispensing cite numerous instances, some of them garnering headlines, where physicians have sold patients dangerous or wildly overpriced drugs in schemes that have yielded all manner of bad outcomes. Yet advocates of the practice argue that it is both more convenient and cheaper for patients, and may bring in extra revenue to doctors. Visual: Undark. In , legislation to limit physician dispensing was sponsored by then-congressman Ron Wyden, who criticized the drug repackaging companies and their ads aimed at physicians. But the bill died, and dispensing is currently fully legal in all but five states. Wyden is pictured here in Get Our Newsletter Sent Weekly. Doctors can find themselves bombarded with online advertisements extolling the profit advantages of in-office and physician dispensing. Visual: Courtesy of Michael Garrett. Visual: Courtesy of Belen Amat. We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.