Hos­pi­tal in­dus­try says it, too, is slammed by drug costs

Daily Local News (West Chester, PA) - - MARKETPLACE - By Ri­cardo Alonso-Zal­divar

WASH­ING­TON >> Hos­pi­tals, too, are get­ting slammed by sharp price in­creases in pre­scrip­tion drugs, and the in­dus­try is urg­ing the next pres­i­dent and Congress to take up the is­sue.

Con­sumer groups and in­sur­ers were al­ready com­plain­ing loudly about drug costs. Now hos­pi­tals are turn­ing up the vol­ume as well, leav­ing the phar­ma­ceu­ti­cal in­dus­try more po­lit­i­cally iso­lated.

A study re­leased Tues­day by the two big­gest hos­pi­tal lob­by­ing groups found that over­all, hos­pi­tals’ av­er­age an­nual in­pa­tient drug spend­ing in­creased by more than 23 per­cent be­tween 2013 and 2015.

The NORC study for the Amer­i­can Hos­pi­tal As­so­ci­a­tion and the Fed­er­a­tion of Amer­i­can Hos­pi­tals found higher prices were pri­mar­ily re­spon­si­ble for the spend­ing in­crease, not the quan­tity of med­i­ca­tions used.

Mea­sured on a per-ad­mis­sion ba­sis, the in­crease was even more strik­ing, nearly 39 per­cent. Per-ad­mis­sion spend­ing on med­i­ca­tions in­creased from $714 in 2013 to $990 two years later. NORC at the Univer­sity of Chicago, which con­ducted the study, is an in­de­pen­dent re­search or­ga­ni­za­tion.

Hos­pi­tals say they can’t eas­ily pass on the cost of pricey drugs be­cause pri­vate in­sur­ers and gov­ern­ment pro­grams like Medi­care usu­ally pay a pre-de­ter­mined amount per case.

“The sys­tem is clearly bro­ken,” Scott Knoer, chief phar­macy of­fi­cer at the Cleve­land Clinic, said in a tele­con­fer­ence spon­sored by the two hos­pi­tal lob­by­ing groups. “The (phar­ma­ceu­ti­cal) in­dus­try has proven time and time again it can no longer reg­u­late it­self.”

Call­ing the re­cent spate of price in­creases “egre­gious,” Knoer said there’s no way hos­pi­tals can get on top of it. When the price of one drug sta­bi­lizes, an­other zooms up. “It’s like play­ing whack-amole,” he said.

The drug in­dus­try crit­i­cized the re­port, say­ing it fo­cuses on “un­rep­re­sen­ta­tive, older” medicines and gives a “dis­torted” pic­ture of costs.

“Fur­ther, the re­port fails to ac­knowl­edge that hos­pi­tals of­ten sig­nif­i­cantly mark up medicines charged to pa­tients and pay­ers,” Holly Camp­bell of the Phar­ma­ceu­ti­cal Re­search and Man­u­fac­tur­ers of Amer­ica said in a state­ment.

In the study, one-third of hos­pi­tals said drug prices had a “se­vere” im­pact on their bud­gets.

Lead­ers of the two hos­pi­tal groups said they want to avoid an out­come in which the gov­ern­ment di­rectly reg­u­lates drug prices, but they add that a de­bate is clearly needed.

“The con­cern about the rising cost and prices of pre­scrip­tion drugs has been a bi­par­ti­san is­sue,” said Rick Pol­lack, pres­i­dent of the hos­pi­tal as­so­ci­a­tion. “We are hop­ing this study will help in­form pol­icy mak­ers as to the na­ture of the prob­lem.”

The NORC study was based on data from 712 of the na­tion’s more than 4,300 com­mu­nity hos­pi­tals. It also an­a­lyzed drug pur­chase costs for 28 drugs from two ma­jor group pur­chas­ing or­ga­ni­za­tions, which al­low hos­pi­tals to max­i­mize vol­ume dis­counts for com­monly used sup­plies.

The study found that price in­creases seemed to be “ran­dom, in­con­sis­tent and un­pre­dictable.” It found siz­able price in­creases both for highly used drugs and some that get less use, as well as for branded and generic drugs. In­pa­tient drug spend­ing grew more rapidly than re­tail pre­scrip­tion spend­ing in 2014 and 2015.

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