The recent wave of increases in the cost of prescription drugs is straining hospital budgets and squeezing patients. 

Hospitals point to tactics like Canadian-based Valeant’s purchase earlier this year of the rights to a pair of life-saving heart medications, Isuprel and Nitropress. The day following the acquisition, Isuprel’s price rose 525% from $215.46 to $1,346.62 for a one-milliliter vial. Nitropress jumped 212% from an original price of $257.80 to $805.61 for a two-milliliter vial.

Like Valeant, more pharmaceutical companies are buying drugs they say are undervalued, then jacking up the prices. It is one of several practices, along with companies hiking prices on older drugs and launching newer treatments at previously unheard of prices, driving up the cost of prescription drugs overall.

The Cleveland Clinic says the increases in the price of Isuprel and Nitropress alone is adding more than $8 million to its pharmaceutical budget. “We planned to cut drug spending through cost-saving initiatives by $10 million,” says Scott Knoer, the clinic’s chief pharmacy director.

But he says soaring drug prices have “significantly undermined this effort. Valeant alone, in one fell swoop, virtually eliminated all of the savings we projected we would achieve.”  

In May 2014, Mallinckrodt Pharmaceuticals purchased Cadence Pharmaceuticals. Three months later, the list price for a package of 24 vials of Ofirmev (an acetaminophen pain reliever injected into a vein through an IV) rose two and a half times to $1,019.52. After the increase, three of the Salt Lake City-based University of Utah Health Care’s hospitals were spending up to $55,000 a month on the drug, up from $20,000 to $25,000 a month.

That’s “highway robbery,” according to Erin Fox, who directs the health system’s drug information services. She says the health system spent $140 million during its past fiscal year – July 2014 to June 2015 – on drugs, compared to $114 million in the previous year. “This year we are budgeting that we will spend $155 million,” she says. “We are seeing very large inflation rates on some medications.”   

The huge increase in drug costs affects hospitals and patients alike, notes Daniel Ashby, Johns Hopkins Hospital’s chief pharmacy officer in Baltimore. “These expenses deplete important savings and result in less funding for research, programs and technologies that improve care,” he says. “And the high costs threaten patients’ access to critical treatments and create financial burdens for low- and middle-income patients.”

In a recent AHASTAT blogpost, AHA President and CEO Rich Umbdenstock expressed concern over the rapid rise in the cost of prescription drugs, including for previously available drugs that are sold from one company to another then priced higher. “The impact on patients and providers is real, as is the threat to appropriate care,” he wrote.

Umbdenstock noted the AHA’s support for the Campaign for Sustainable Rx Pricing, a project of the National Coalition of Health Care designed to focus the public’s and policymakers’ attention on high-cost drugs. “The AHA will continue to push back on the issue of escalating drug costs,” Umbdenstock wrote.

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