Physician-dispensed prescription drugs comprise a significant portion of all pharmaceutical prescriptions dispensed in California’s workers’ compensation system. Because of limits on the reach of statute and regulations adopted under Senate Bill (SB) 228, physician-dispensed pharmaceuticals are also much more expensive than the same drugs dispensed through a pharmacy. This report, prepared for the Commission for Health and Safety for Workers’ Compensation, documents the extra costs placed on the workers’ compensation system by physician-dispensed drugs. The report also reviews research on both the positive and negative impacts of physician dispensing.