Chapter 4.5. Division of Workers' Compensation
Subchapter 1. Administrative Director -Administrative Rules
Article 5.3. Official Medical Fee Schedule

§9789.40.6. Pharmaceuticals Dispensed By a Physician on or after July 1, 2025.

(a) The maximum reasonable fee payable for a legend drug dispensed by a physician is the lower of the drug's ingredient cost, calculated on a per unit basis, times the number of units dispensed, plus the dispensing fee, or the physician's usual and customary charge to patients under the physician's care, based on the date the drug is dispensed.

(1) The drug ingredient cost means the “lowest cost” as set forth on the Pharmaceutical Fee Data File unless subdivision (a)(2) or subdivision (a)(3)(B) is applicable.

(2) When a physician dispenses a legend brand name drug and has fulfilled the requirements in sections 9792.27.7 and 9792.27.8, the drug ingredient cost means the “no substitution cost” as set forth on the Pharmaceutical Fee Data File.

(3)(A) When a physician dispenses a repackaged drug, the drug ingredient cost means the “lowest cost” for the National Drug Code of the underlying drug product from the original labeler as set forth on the Pharmaceutical Fee Data File, or

(B) When a physician dispenses a repackaged brand name drug, and has fulfilled the requirements in sections 9792.27.7 and 9792.27.8, the drug ingredient cost means the “no substitution cost” for the National Drug Code of the underlying drug product from the original labeler as set forth on the Pharmaceutical Fee Data File, or

(C) When a physician dispenses a repackaged drug and the National Drug Code for the underlying drug product from the original labeler is not listed in the Pharmaceutical Fee Data File, the drug ingredient cost means the “lowest cost” of the lowest priced therapeutically equivalent drug as set forth on the Pharmaceutical Fee Data File.

(b) The maximum reasonable fee for a non-legend drug, including a non-legend repackaged drug, dispensed by a physician, is the lower of the physician's usual and customary charge to patients under the physician's care or the fee as determined as follows:

The lowest of:

(1) The drug's ingredient cost as defined in subdivision (a), plus the dispensing fee, or

(2) One hundred twenty percent of the documented paid cost to the physician, or

(3) One hundred percent of the documented paid cost to the physician plus two hundred fifty dollars ($250.00).

(c) “Documented paid cost” means the price paid by the physician for the drug product(s), net of discounts and rebates, evidenced by documentation of the price actually paid by the physician for the drug products. Documentation shall consist of invoices, proof of payment, and inventory records as applicable. The physician must submit documentation of paid costs together with the bill.

(d) For a repackaged drug, the National Drug Code of the dispensed repackaged drug and the National Drug Code of the underlying drug product shall both be identified on the bill, in accordance with the billing regulations for paper and electronic billing set forth in section 9792.5.1 et seq.

(e) For purposes of this section:

(1) “Therapeutically equivalent drugs” means drugs that have been assigned the same Therapeutic Equivalence Code starting with the letter “A” in the Food and Drug Administration's publication “Approved Drug Products with Therapeutic Equivalence Evaluations” (“Orange Book”.) The Orange Book may be accessed through the Food and Drug Administration's website.

(2) “National Drug Code for the underlying drug product from the original labeler” means the National Drug Code of the drug product actually utilized by the repackager in producing the repackaged product.

(f) The maximum reasonable fee for any pharmacy good dispensed by a physician that does not fall within sections 9789.40.1, 9789.40.4, 9789.40.6, 9789.40.7 applicable to physicians shall be the fee determined in accordance with the formula in subdivision (b).

(g) A maximum dispensing fee of $10.05 is payable to a physician dispensing a drug to their patient in accordance with Business and Professions Code section 4170.

(h) The physician shall not bill for a drug he/she dispenses to a patient that was obtained for free, such as a sample, or which was otherwise obtained by the physician without payment.

Credits

Note: Authority cited: Sections 133, 4603.5, 5307.1 and 5307.3, Labor Code. Reference: Sections 4600, 4603.2 and 5307.1, Labor Code.

History

1. New section filed 12-11-2024; operative 7-1-2025. Submitted to OAL for filing and printing only pursuant to Government Code section 11340.9(g) (Register 2024, No. >50).