Hospital Data Show Skyrocketing Drug Prices

http://www.aha.org/content/16/aha-fah-rx-report.pdf

 

Washington, DC, October 11, 2016––A new analysis of drug pricing data finds that inpatient hospital drug costs increased more than 38% per admission between 2013 and 2015. This report is based on inpatient drug pricing data, as analyzed by the University of Chicago’s NORC, an independent research institution.

“The women and men who work in America’s hospitals recognize the value of truly innovative, life–saving medicines as much as anyone. But a drug priced beyond a patient’s reach will not save anyone’s life,” said the American Hospital Association (AHA) President and CEO Rick Pollack.

“This analysis is a real wakeup call on health care spending. It confirms what local hospital administrators recognize as a serious and growing problem for their patients. Rapidly rising drug costs combined with unsustainable Medicare and Medicaid cuts put hospitals in an impossible bind,” said Federation of American Hospitals (FAH) President and CEO Chip Kahn.

The analysis examines trends in inpatient drug spending and prices, and the impact these increases have on hospitals and their patients. The report also looks at the unit purchase price for a subset of drugs identified by expert pharmacist and hospital workgroups as “high spend” – due to volume, price or both. Many of the drugs identified experienced significant price increases in recent years. Data were collected from 712 community hospitals. Additional data were contributed by group purchasing organizations (GPOs) representing more than 1,400 community hospitals.

Specifically, the NORC analysis found that:

  • The amount hospitals spent on inpatient drugs per admission rose by an average of 38.7% between 2013 and 2015.
  • Price increases appear to be random, inconsistent and unpredictable: large unit price increases occurred for both low– and high–volume drugs and for both branded and generic drugs. About half of the drugs evaluated had no generic competition.
  • For example, in 2013 the two GPOs spent roughly $2 million for calcitonin–salmon, a drug used to treat bone pain related to osteoporosis and other diseases. In 2015, they spent $55 million, mainly because the price per unit increased more than 3,000%. (See chart below for additional examples.)
  • Due to delays in refreshing the pharmaceutical price index, Medicare reimbursement cannot keep pace with rapidly increasing drug prices in the inpatient setting.
  • More than 90% of hospitals surveyed reported that changes in drug prices had a moderate to severe impact on their ability to manage hospital budgets.

The NORC report, sponsored by AHA and FAH, and other resources are available at www.aha.org/drugpricing.

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