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Physician Dispensing: What Pharmacists Need to Know

Posted on November 6, 2019 by Jonathan Ni and Nicholas Benedict

Traditionally, doctors diagnosed patients and wrote prescriptions. Pharmacists dispensed prescribed medications, educated patients, and checked prescriptions for safety, abuse, and/or negative interaction effects. This has been changing in recent years and now nearly every state allows for doctors and other medical practitioners to dispense prescription medications directly to patients, from their office. This practice, known as physician drug dispensing or in-office dispensing has potentially profound implications for every stakeholder in the U.S. healthcare system. 

Implications of Physician Dispensing on Pharmacists

By cutting pharmacies and pharmacists out of the prescription drug dispensing process, prescriptions dispensed by a doctor at his or her clinic or office take patients and revenue away from pharmacies. As such, pharmacy organizations and advocates must be aware of the key arguments against and risks of this practice.

In-Office Dispensing of Medication and Patient Cost 

Medications dispensed in a doctor’s office often cost significantly more than at a pharmacy. In addition, many physicians who dispense prescription drugs will only do so on a cash and carry basis, not accepting insurance, which could further burden patients financially. 

State regulators have attempted to address this issue. For example, most states mandate dispensing physicians to proactively make their patients aware that they can use a traditional pharmacy as an alternative to the physician dispensing process. Some also set caps on prices that medical practitioners can charge. However, these efforts have not been fully successful. A 2016 report, “Physician Dispensing of Higher-Priced New Drug Strengths and Formulation,” noted that enterprising doctors and clinics have redefined or changed the dosages of their drugs to avoid or minimize the effects of such regulation.

Direct Doctor Dispensing and Patient Safety 

In the traditional medication dispensing model, pharmacists play a key role in protecting patient safety. They provide a second set of eyes to catch errors and/or abuse and they educate patients and screen for possible negative interactions between drugs. By eliminating pharmacists from this process, those functions need to be performed at the physician’s office, and it is not clear that most doctors’ and clinics’ staff have the capacity and training with which to do so. One physician dispensing company advertises that most prescriptions can be filled in “a couple minutes” — which might not always be enough time for these functions to be performed effectively.

Potential Conflict of Interest in Prescription Drug Dispensing

It has been proven multiple times that some doctors allow their personal economic incentives to influence the decisions they make around patient care, including (but not limited to) in prescribing medication. While there have not been any thorough studies to document the effect of in-office dispensing incentives on prescriptions written and filled by dispensing doctors, it stands to reason that this is a potential concern in that similar incentives have been shown to influence behavior in similar contexts. There is a serious risk of unnecessary prescriptions, over-prescribing medication, or preferring one medication to another based on economic incentives.

Physician Dispensing: What Can Pharmacists and Pharmacies Do?

If all that physician dispensing did was to increase patient cost and risk, pharmacists would have a very compelling regulatory argument to shut down the practice. However, in-office drug dispensing is legal in nearly every state. As such, pharmacists need to be aware of the perceived and actual benefits of physician dispensing so that they can review their own practices with a view to providing similar benefits.

Chief among these is patient convenience. Physician dispensing companies point to studies showing that 20-30% of prescriptions are never filled. By providing these prescription drugs during the visit to the doctor, this problem is (theoretically) eliminated. In other words, increased patient convenience has major potential benefits to the health care system. In addition, patients who know that they are paying more at the clinic vs. a pharmacy but do so anyway are effectively “voting with their wallet” and showing that they value convenience and time-savings over cost-savings in these cases.

Many pharmacies are already investing in patient convenience and patient experience through initiatives such as digital refills and drive-through services. Such offerings as well as further innovation need to be supported and expanded. Minimizing the convenience gap between physician dispensing and traditional pharmacy dispensing is key to retaining patients.

In addition, pharmacy organizations should be addressing state regulators to further study the impact of physician dispensing incentives on patient care, to enforce existing regulations, and to close down “loopholes” that allow doctors to charge an unforeseen premium on certain dosages of medication. 

In-office dispensing is not going away, but pharmacists can adapt and thrive in this new world.


While many arguments can be advanced for and against the practice of physician dispensing, the fundamental trade-off appears to be between patient compliance and convenience on one side vs. increased cost and the potential for distorted incentives or increased errors on the other. On balance, while there are significant potential advantages to patients and the health care system from in-office dispensing, it appears clear that a robust regulatory regime needs to be in place to minimize the potential downsides. It also appears clear that more data-driven studies of the impact of physician dispensing are needed.

About the Authors

Jonathan Ni is a Writer for Physician-Dispensing.com and a B.Sc. Economics Candidate at the Wharton School of the University of Pennsylvania.

Nicholas Benedict is Managing Director of King, Edward, specializing in pharmacy and health care. He has a B.A. from McGill University and an M.B.A. from the Wharton School of the University of Pennsylvania.

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