Inpatient hospital drug costs increased more than 38% per admission between 2013 and 2015, according to a report from the University of Chicago’s NORC, an independent research institution. The report was commissioned by the AHA and Federation of American Hospitals (FAH), who unveiled its findings at an Oct. 11 teleconference with reporters.
The report analyzed inpatient drug pricing data from 712 community hospitals and two group purchasing organizations (GPO) representing more than 1,400 community hospitals. It said the price increases appear to be “random, inconsistent and unpredictable.” Unit price increases occurred for both low- and high-volume drugs and for both branded and generic drugs.
Nearly half of the drugs evaluated had no generic competition. For example, the GPOs spent roughly $2 million in 2013 for calcitonin-salmon, a drug used to treat bone pain related to osteoporosis and other diseases, and $55 million in 2015; the price per unit increased more than 3,000% during that time. According to the survey, more than 90% of hospitals reported that changes in drug prices had a moderate to severe impact on their ability to manage hospital budgets.
“The women and men who work in America’s hospitals recognize the value of truly innovative, life-saving medicines as much as anyone,” said AHA President and CEO Rick Pollack. “But a drug priced beyond our reach or a patient’s reach will not save anyone’s life.”
Pollack told reporters that the report “makes the case that drug makers need to do more to hold down their costs, just as hospitals are working hard to hold down their costs.”
The teleconference included Ardent Health Services President and CEO David Vandewater and Scott Knoer, the Cleveland Clinic’s chief pharmacy officer, who said rising drug costs are straining hospitals’ budgets and squeezing patients.
“The biggest impact of massive price increases is on drugs that for some reason are routinely used in our hospitals, meaning millions more spent this year than last year on the exact same drugs,” said Vandewater. “There is no change in usage, no clinical improvements. Just more costs.” He called rising drug prices a “weight on America’s health care system.”
Cleveland Clinic’s Scott Knoer stressed that the impact goes far beyond hospitals’ budgets. “Everyone eventually feels it, including insurance companies, employers, employees, the government and taxpayers – in other words, all of us,” he said. “Even those who are healthy and medication-free pay more when drug prices outpace inflation through increased premiums, co-pays, deductibles and taxes.”
When the price of one drug stabilizes, Knoer said another zooms up. “It’s like playing whack-a-mole,” he said.
The recent wave of increases in drug prices are “arbitrary and reflect monopoly power,” added FAH President and CEO Chip Kahn. “We would like to see these problems solved in the marketplace.”
The AHA’s Pollack noted that the association is a member of the Campaign for Sustainable Rx Pricing, a coalition of health care providers, insurers and seniors, that seeks greater transparency, competition and value to rein in escalating prescription drug prices.
Among other market-based solutions, the coalition proposes requiring drug makers to release a drug’s unit price, cost of treatment and projection on federal spending before Food and Drug Administration (FDA) approval; speeding up FDA approval of generic drug applications – especially for lifesaving drugs; reducing drug monopolies by incentivizing competition for additional market entrants; increasing funding for research on drug pricing and value; and requiring drug makers to compare cost and outcomes of new versus existing drugs.
“These are viable options and they need to be part of the public debate” about reining in drug costs, said Pollack, who observed that there is bipartisan concern over the issue in Congress.
The AHA on Oct. 11 also released an infographic outlining how rising drug prices are hurting hospitals and potentially limiting access to care for patients.