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

June 2026 

Three developments in June demand attention from anyone managing pharmacy programs in workers' compensation. One is a fresh Pennsylvania Supreme Court ruling that reshapes how physician self-referrals to pharmacies can be challenged. A second is a structural problem that has been building for years but is now impossible to ignore — the cost gap between out-of-network and in-network pharmacy is widening, and half the country has no mechanism to close it. The third is Mississippi, which quietly enacted one of the more significant pharmacy fee schedule updates of the year. 

The Pennsylvania Supreme Court's 700 Pharmacy Decision — Not What It Looks Like 

On June 16, 2026, a divided Pennsylvania Supreme Court issued its decision in 700 Pharmacy v. Bureau of Workers' Compensation Fee Review Hearing Office, and within days, some were characterizing it as judicial authorization for physician self-referrals to pharmacies. The self-referral fight in Pennsylvania is not over — the Court closed one door, but payers that stop there are leaving significant remedies on the table. 

The case turned on a narrow question of statutory grammar. Pennsylvania's Workers' Compensation Act contains an anti-self-referral provision prohibiting physician referrals in eight enumerated categories — laboratory, physical therapy, rehabilitation, chiropractic, radiation oncology, psychometric, home infusion therapy, and diagnostic imaging — followed by the phrase "goods or services." The majority held that "goods or services" modified only those eight categories. Pharmacies were not on the list. The dissent argued the comma placement meant "goods or services" stood independently and covered all physician referrals. The majority disagreed. Pharmacies are now outside the Act's self-referral prohibition. 

What the Court did not do is authorize the practice. It decided a narrow question of statutory construction, in a case where, as the opinion notes in a significant footnote, no party raised the Pennsylvania Insurance Fraud Prevention Act, presented data on the pricing differentials between physician-linked pharmacies and arm's-length retail, or challenged the standing of the billing company to use the fee review process at all. 

Those gaps matter enormously, because the pricing data is striking. In a review of prescriptions from physician-linked pharmacies, charges for common generics — celecoxib, pregabalin, cyclobenzaprine, lidocaine ointment — ran 1,932% above normal retail prices at CVS and Walgreens. The same generic drugs, the same clinical outcome, a price difference that can only be explained by the financial relationship between the referring physician and the dispensing pharmacy. 

The available responses now shift away from the fee review process and toward four tracks: lobbying to amend the Act to add pharmacies to the enumerated categories; pursuing civil or criminal investigation under the Insurance Fraud Prevention Act, which provides for treble damages and attorney's fees; filing complaints with the Pennsylvania Board of Medicine and Board of Pharmacy; and challenging the standing of billing companies to use the fee review mechanism at all. The 700 decision closed one door. Several others remain open to carriers and payers in Pennsylvania. 

Out-of-Network Pharmacy Costs: A Structural Problem That Isn't Fixing Itself 

Workers' compensation is the only major insurance system in the United States where many states have explicitly prohibited employers and insurers from directing injured employees to contracted pharmacy networks. Medicare does it. Medicaid does it. Commercial health insurance does it. Workers' comp — in roughly half the states — cannot. 

The consequences are not theoretical. Workers' comp is the only large private insurance system in the country where many states have explicitly prohibited employers and insurers from requiring injured employees to use contracted pharmacy networks. The injured employee bears zero financial responsibility for prescription costs — no copay, no deductible, no cost-sharing — so the person making the buying decision has no visibility into or responsibility for the cost. Out-of-network dispensers, which are often out-of-state mail-order operations or boutique pharmacies that specialize in workers' comp, face no competitive pressure. 

NCCI data shows that costs per workers' comp claim for topical medications grew by an extraordinary 96% from 2012 to 2023. That figure is not a pricing anomaly — it is the predictable output of a system with no network gate. Government and commercial health plans rarely encounter these products because their beneficiaries fill prescriptions through network pharmacies, where formulary controls and contractual provisions block medications that lack clinical justification or cost-effectiveness. Workers' comp lacks that network gate.  

The federal PBM reform wave described in last month's column — CAA 2026 rebate pass-through mandates, DOL fee disclosure rules, the FTC consent orders — will do nothing to address this. Federal reforms around drug pricing, most notably enabling Medicare to negotiate on a growing list of drugs, most-favored-nation pricing agreements, and direct-to-consumer discount programs, have done nothing to address the workers' comp marketplace, because those tools weren't designed for this system. The same logic applies to PBM transparency legislation, which arose from commercial health practice concerns.  

The solution is direction-of-care authority — the ability to place injured employees in contracted pharmacy networks, as every other insurance system does. Employers in states that currently prohibit this lack an equivalent tool, and the cost gap between states with direction-of-care authority and those without continues to widen. Payers in employee-choice states should document the cost gap internally because the legislative argument for reform requires data — and the data, right now, is favorable. 

Mississippi Updates Its Pharmacy Fee Schedule — Effective June 1 

Mississippi's Workers' Compensation Commission adopted material updates to its medical fee schedule, including pharmacy, effective June 1, 2026. The updates include decreased base fee schedule rates for both brand and generic medications (AWP -10% +$5 and AWP -15% +$5 for brands and generics), plus new limitations on coverage and reimbursement for physician-dispensed medications, and modified reimbursement caps and authorization requirements for certain compounds and topicals. 

For payers with Mississippi exposure, this requires confirmation that payment systems reflect the revised rates effective June 1. The reimbursement changes for physician-dispensed drugs and topical compounds are particularly significant — these categories have historically been a source of cost leakage in WC pharmacy programs, and Mississippi's adjustments align with the direction that several other states have taken in addressing compound and topical pricing. System updates that lag the effective date create both payment accuracy exposure and audit risk. 

The Pennsylvania ruling, the OON cost problem, and the Mississippi fee schedule update have different time horizons — one requires an immediate reassessment of litigation strategy, one requires long-term advocacy engagement, and one requires an immediate system check. All three require action. 

Dennis M. Sponer, J.D., LL.M., MBA, is the founder of SRX Advisors, a firm specializing in regulatory intelligence and fractional general counsel services focused on pharmacy and PBM regulation in workers' compensation. 

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