The Pharmaceutical Research and Manufacturers of America (PhRMA) released yet another “report” in an obvious attempt to divert attention away from a problem of their own making: skyrocketing drug prices. They return once again to their standard playbook of pointing fingers and blaming everyone other than themselves to try to justify the dramatic increases in the prices of drugs, as they continue to make double-digit profit margins. The higher prices that drug manufacturers demand have caused immense hardships for many patients, their families, and the providers who care for them.
This most recent report is a brazen misrepresentation of the facts. The report conveniently fails to explain that, unlike drug manufacturers, hospitals are subject to fixed reimbursement amounts for the vast majority of the care they provide.
In fact, more than half of hospital payments are from public payers, including Medicare and Medicaid, which reimburse hospitals at a set amount far below their costs. Private payers also negotiate competitive rates with hospitals that often bundle the cost of drugs into a single, fixed reimbursement.
A 2015 study conducted by NORC at the University of Chicago for the AHA and the Federation of American Hospitals found that inpatient drug spending per admission increased 38.7 percent from 2013 to 2015. One of its primary findings was that continued growth in drug spending is a result of growing drug prices. And, more than 90 percent of hospital executives surveyed report that drug price increases have had a moderate or severe effect on their ability to predict and manage costs.
The U.S. health care system is in the midst of a prescription drug spending crisis that threatens both patient access to care and the ability of hospitals and health systems to deliver the highest quality of care. The Altarum Institute, which analyzes pricing data collected by the U.S. Bureau of Labor Statistics, identified price growth for prescription drugs as “easily the fastest growing category.”
To curb the skyrocketing prices of drugs, the AHA has put forth specific recommendations to further increase competition, transparency, access and value, while fostering innovation. It is time for drug companies to stop attacking others and come to the table with solutions on how to rein-in out-of-control drug prices for patients.
Ashley Thompson is AHA Senior Vice President of Public Policy Analysis and Development