Physician dispensing—also known as in-house dispensing—is the practice of providing prescription drugs directly to patients from your office or clinic instead of writing a prescription and sending them to a pharmacy.

It’s a growing trend and promises to provide patients with improved prescription compliance and doctors with an additional income stream. But before you dive in, here are seven things you need to know.

The Bottom Line

Failure to fill prescriptions accounts for half of medication non-adherence. Physician dispensing is one way to support adherence. Dispensing benefits patients and can help to grow a practice. Practices must be sure to adhere to regulations and establish practices to support success.

1 You Will Improve But Not Eliminate Medication Non-Adherence

Patient prescription compliance is a major issue. According to the World Health Organization, nearly 50 percent of patients fail to adhere to prescription instructions, contributing to 125,000 unnecessary deaths and 10 percent of hospitalizations every year.

One of the major drivers of non-adherence is that many patients do not get their prescriptions filled. A review of recent studies on physician dispensing puts this figure at between 20-30 percent. That implies that approximately half of non-compliance is driven by patients not obtaining their medication (also called primary non-adherence). While physician dispensing is a significant benefit with regards to this failure to fill prescriptions, it does not address the other half of non-adhering patients, and the review cautions that the type of patients who do not fill their prescriptions may also be less likely to comply with instructions, even if they have their medications.

As such, even dispensing physicians need to educate their patients and encourage overall medication compliance.

2 Consider Focusing on Cash & Carry Drugs First

Generally, physicians find it easy to dispense, but some decisions can add an administrative burden, so it’s important to think through some of their implications. For example, in most cases, you can bill a patient’s insurance company for the medications you prescribe, but this increases complexity, especially if your practice accepts patients from multiple insurance companies. For example, insurance providers often have specific (and contradictory) processes and/or mandate patients to purchase drugs from specific providers. You might find yourself having to stock similar drugs from different providers, further adding complexity. This is one reason some doctors and clinics prefer to focus in-office dispensing programs on low-cost generic drugs that they sell on a cash and carry basis and why in-office dispensing is especially popular for urgent care clinics, which often work on this basis.

3 You Probably Won’t Stock Every Drug You Prescribe

Usually, doctors will only keep medications in stock that they prescribe often, to simplify operations and monitoring for drugs that are past their expiry date. As such, unless you only prescribe a small number of medications—and prescribe them frequently—you will still occasionally need to write prescriptions to be filled at a pharmacy.

4 Regulations Vary by State and Can Change Frequently

Most state laws permit physicians to purchase and dispense drugs in their clinics, though the practice is heavily restricted and/or prohibited in some states (e.g., Texas, Massachusetts, New York, Utah, and others).

Varying levels of restrictions and regulations exist in other states. For example, some states only allow doctors to dispense. Others allow nurses, physician assistants, and other medical practitioners to do so. States also vary in labeling requirements and in the type and quantity of medication that can be provided to patients. Some allow doctors to dispense with their medical licenses; others require additional certifications. Regulations change; doctors and clinics must stay up to date.

Other compliance issues are more common between states. For example, most states mandate that the dispensing doctor explicitly inform patients that they have a right to bypass the in-office dispensing process and instead receive a prescription and have it filled at a pharmacy in the traditional manner. Drugs must also be stored in a safe place to prevent abuse, accurate records must be kept, and so on.

While these requirements are not usually burdensome, and suppliers of drugs for physician dispensing can usually help keep you up to date, these regulations are important and must be complied with. Your State Board of Pharmacy is another source of authoritative information. (See nabp.pharmacy/boards-of-pharmacy/)

5 You Will Need to Train Your Staff

In-office dispensing is fairly straightforward, but it’s not like turning a switch. You and your staff will need to set up procedures that are compliant with your state regulations (see above). That said, one physician dispensing company advertises that it takes approximately two minutes to dispense a prescription, while another says its clients do not need to take on additional staff, hours, or equipment. As such, this should not be a major disruption, but you should count on at least a small learning curve and initial training time.

6 There Might Be Impacts on Your Insurance

Some insurers mandate additional insurance and higher premiums for dispensing doctors to cover additional liability.

7 You Probably Won’t Need Extra Equipment. But Check!

Most of the time, you can use your regular office printer, and as long as you have a place to securely store medications—which your clinic probably does anyway—you should not need to acquire any additional equipment (let alone staff) in order to dispense drugs. That said, your physician dispensing medication supplier will be able to help you think through exactly what you might need.