With Psi, we can't right click drops with their CAD (tool). For mods using right clicking drops with specific items in hand as part of gameplay, it'd be a shame to disable the wonderful right click picking experience for this kind of situation.

Can you tell me which mod adds this "CAD" (tool). Haven't heard of it before.

PSI: https://www.curseforge.com/minecraft/mc-mods/psi
I thought the issue is not related to any specific mod but a more general problem of handling PlayerInteractEvent, but I don't really familiar with Minecraft modding... So it's a compatibility issue? (Just small talk for maybe I'll try making mod soem days)

Does it happen without ItemPhysic installed?

The problem here is that the mod expect players right click item drops with the tool, then the item will be transformed into something else, but with ItemPhysics installed and custom pickup enabled, items will be picked up right away.

Which version are you using 1.12 or 1.16? You could set a pickup key in controls (so itemphysic will not use right click).

It works! I did not realize the key binding is a override. Thank you!