August Update: This Month, Don’t Miss These 3 Key Updates in Workers’ Comp Pharmacy 

August 2026 

Three developments this month share a single subject: who gets to dispense the drug and at what price. Florida’s appellate ruling on physician dispensing is now headed for a legislative fight. Arizona released a fifth draft of its topical fee schedule, which, for the first time, moves away from the average wholesale price as the basis for paying for the most-abused category in comp pharmacy. And Michigan has proposed imposing a 42-day clock on physician-dispensed medications. Plus, brief notes on Ohio, Colorado, Connecticut, Alaska, and a webinar worth your time. 

Florida: Physician Dispensing Is Headed to the Legislature 

Six months after Florida’s First District Court of Appeal dramatically changed the rules on physician dispensing in workers’ comp, the dispute has moved from the courthouse to the statehouse.  

In Publix Super Markets, Inc. v. Department of Financial Services, decided February 25, 2026, the court held that an injured worker’s statutory right to choose a “pharmacy or pharmacist” does not extend to physicians, physician assistants, nurse practitioners, and other registered practitioners who dispense medications from the office. Dispensing practitioners, the court said, “are not pharmacists.” The two Department of Financial Services rules that had made it difficult for carriers to decline coverage for practitioner-dispensed medications were struck down as an invalid exercise of delegated legislative authority. 

The Division of Workers’ Compensation has responded by proposing to strip the reimbursement, authorization, and billing provisions for practitioner-dispensed medications out of Rules 69L-7.730 and 69L-7.740. A public hearing was held July 15, and stakeholder comments were under review through August. In other words, the regulatory framework that protected physician dispensing in Florida is being dismantled on two fronts at once—by the court and by the agency that wrote it. 

Now the real fight begins. As reported in early August, both camps are preparing for the 2027 legislative session. Dispensing practitioners and the companies that supply and bill for them want the statute amended to restore what the court took away, arguing that in-office dispensing speeds recovery by putting medication in the injured worker’s hand at the point of care. Insurers and employer groups want the current framework preserved, and they have cost data on their side: industry studies consistently show that physician-dispensed medications cost 60% to more than 300% above the identical drug dispensed at a retail pharmacy, and in states that permit the practice, physician dispensing can account for 20% to 45% of total comp drug spend. The court itself outlined the path forward, noting that “the Legislature could amend the statute to reach a different outcome.” We expect some dispensing physicians to explore obtaining pharmacy licenses in the interim. 

For carriers, TPAs, and PBMs with Florida exposure, this is the window to act on three things.  

• First, decide your policy on practitioner-dispensed medications now and apply it consistently—the ruling gives you the authority to direct injured workers to a pharmacy, and inconsistent application invites the next round of litigation.  

• Second, watch for the DWC’s final rule and ensure your bill review logic reflects the revised 69L-7 language on its effective date.  

• Third, build the data case. The 2027 session will hinge on cost evidence, and the carriers that can show, claim by claim, what practitioner-dispensed drugs cost their Florida book relative to retail will be the ones legislators listen to. I wrote about the economics of this loophole earlier this year in WorkersCompensation.com; Florida is now the test of whether a state can close it. 

Arizona’s Fifth Draft: Topicals Finally Get a Real Number 

Last month I noted that the Industrial Commission of Arizona had raised its compound topical cap to $240 and promised additional language on prescription topicals later this year. The language has now been through five informal drafts, and the fifth, released in late July, is the most consequential yet—because it changes not just the number but the basis for the number. 

Under the draft, a prescription topical would be reimbursed at the lesser of the standard AWP-based fee schedule or $300 for a 30-day supply, prorated, plus a single $7 dispensing fee. Where the pharmacy’s documented acquisition cost exceeds $300, reimbursement shifts to 120% of that documented cost plus the $7 fee. Any refill after the initial 30-day supply is held to the same cap unless the treating provider certifies a clinical rationale establishing both medical necessity and the absence of a less expensive alternative. Compound topicals are carved out and remain under the existing $240 cap. And the draft adds a definition of “actual acquisition cost” borrowed from federal Medicaid standards. 

That last provision is the story. Every $1,700 tube of lidocaine and menthol in this system is priced off an average wholesale price that a manufacturer or repackager set for exactly that purpose. AWP is not a cost; it is a list price, and in the topical category it bears no relationship to what anyone actually paid. By anchoring above-cap reimbursement to the documented acquisition cost, Arizona is doing what Medicaid did years ago and what the West Virginia NADAC ceiling I discussed last month attempts to do from a different direction: paying for the drug rather than for the label. A $300 ceiling with an acquisition-cost backstop and a clinical gate on refills is a fundamentally different fee schedule from one that simply discounts AWP. The Commission has done its homework here: a commissioned analysis of AWP variation in prescription topicals, prepared by Myers and Stauffer LC and published last August, documents exactly the variance the new draft is designed to eliminate. 

Five drafts also tell you something about the fight. Stakeholders who prefer a flat dollar cap without cost documentation have pushed back on the paperwork burden, and they have a point—a cap that requires invoices on every above-threshold fill creates its own administrative cost. The Commission has not yet opened formal rulemaking, so there is still time to weigh in. Payers and PBMs with Arizona claims should be modeling the draft against their actual topical utilization now, because whichever version is adopted, the reimbursement math for this category is about to change. 

Texas, meanwhile, closed the comment window for its topical analgesic plan-based audit on August 6. The Division of Workers’ Compensation now moves to designing the audit—time frame, sample size, and case selection—with results informing whether Texas changes its reimbursement rules for the category. Alaska’s Medical Services Review Committee continued its review of physician dispensing, compounds, and topicals at its August 7 meeting. Mississippi’s reinstated $30-per-30-day cap on manufactured topicals takes effect September 1. Four states, one drug category, four different tools. 

Michigan Proposes a 42-Day Clock on Physician Dispensing 

Michigan’s Workers’ Disability Compensation Agency has proposed updating its Health Care Services rules to limit reimbursement for medications dispensed by a practitioner in an office or clinic to the first 42 days after the inception of medical care under Section 315 of the Workers’ Disability Compensation Act. After that window, prescriptions would have to be filled at a licensed pharmacy. The proposal was the subject of a public hearing on July 24, and comments were under review through August. 

The 42-day approach deserves attention because it concedes the one argument physician dispensing has going for it while cutting off everything else. The case for in-office dispensing has always been convenience at the front end of a claim: the injured worker leaves the first visit with the anti-inflammatory and the muscle relaxant in hand rather than with a slip of paper. Nobody seriously argues that an injured worker needs the physician to keep dispensing in month four. But that is where the money is. The profit in physician dispensing is in the chronic tail—repackaged generics, high-margin topicals, and refills that never see a pharmacy counter or a formulary edit. A time limit preserves the first-fill convenience and eliminates the tail. 

Michigan’s proposal is narrower than Florida’s court-driven result, but it may prove more durable precisely because it is a regulatory design choice rather than a statutory interpretation. It also gives bill review something clean to work with: a date of service more than 42 days after the initial treatment date, an NDC dispensed by a practitioner, and a reimbursement rule that says no. If adopted, payers with Michigan exposure will need the initial-treatment date captured reliably at the claim level, and they will need their PBM and bill review vendors aligned on who is enforcing the limit. That is worth sorting out before the final rule, not after. 

Bonus: Ohio, Colorado, Connecticut, and a Webinar on the PBM Reform Ripple Effect 

The Ohio Bureau of Workers’ Compensation adopted updates to its drug formulary and first-fill list effective August 1, including additions, removals, and coverage modifications. The lists apply to state-funded claims administered by BWC and its PBM; self-insuring employers may adopt them but are not required to do so. Colorado’s Division of Workers’ Compensation holds a hearing on proposed revisions to Rule 16 (utilization standards) and Rule 18 (the medical fee schedule) on August 27; comments go to the Division in advance of the hearing. Connecticut’s updated Practitioner Fee Schedule took effect July 15 with significant reductions in base pharmacy reimbursement rates—a change that may have slipped past payers focused on the larger-state headlines. And on August 20, the IAIABC hosted a webinar titled “PBM Reform Ripple Effect,” on the increasingly familiar problem I wrote about last month: commercial-market PBM legislation landing on workers’ comp systems it was never designed for. If you missed it, it is worth the replay. 

The Common Denominator: It’s the Channel, Not the Drug 

If we step back from the individual developments, the pattern is unmistakable. Florida, Arizona, and Michigan are regulating the same problem—medications that reach the injured worker through a channel that bypasses the pharmacy network, the formulary, and the utilization review touchpoint—and they are using three different tools to do it.  

• Florida is using the courts and, next year, the statute.  

• Arizona is using price, specifically a shift from list price to acquisition cost. Michigan is using time.  

• Texas is using an audit.  

• Mississippi is using a cap.  

None of these states is targeting a particular molecule; lidocaine is a perfectly good drug. They are targeting the dispensing channel that turns a nine-dollar tube into a seventeen-hundred-dollar bill. 

Drug wholesalers and predatory mail order pharmacies have taken note – advertising their products not as clinically superior, but as manipulative of the average wholesale pricing scheme: 

That is consistent with what I continue to see in the out-of-network pharmacy bill reviews I have been conducting with colleagues on the clinical and pharmacy sides this year. Pricing on practitioner-dispensed and out-of-network bills rarely complies with the dispensing state’s fee schedule, and most payers pay them anyway because the bills arrive outside the systems built to examine them. Each of the August developments above narrows that gap a little—Florida by removing the reimbursement protection, Arizona by removing the AWP pricing basis, and Michigan by removing the time horizon. The states are converging on the answer. The remaining question for payers is whether their own bill review catches what the state now permits them to deny. 

Florida’s legislative session is months away, Arizona’s rule is still informal, and Michigan’s is still proposed. That is the point. All three are at the stage where data from payers shapes the outcome. Bring it. 

Dennis M. Sponer, J.D., LL.M., MBA, is the founder of SRX Advisors, a regulatory intelligence and consulting firm that helps PBMs and payers control pharmacy costs in workers’ compensation. Dennis founded and served as CEO of two PBMs, one of which, ScripNet, focused exclusively on managing workers’ comp pharmacy costs across all fifty states. He also serves as Of Counsel at Goldsand Friedberg, a health care regulatory law firm. He presented on workers’ comp pharmacy cost issues at the RIMS Texas Regional Conference in San Antonio in August and will be speaking at the Elevate Work Comp Conference in San Diego (September 21-23) and National Comp in Las Vegas (September 29-October 1). 

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