Drug prices have skyrocketed in recent years and they’re having an adverse effect on both patients and the hospitals that treat them.
Frustrated with this ongoing trend, two trade groups — the American Hospital Association and the Federation of American Hospitals — recently commissioned a new study to put a number to this surge. They found that inpatient hospital drug costs have leapt by 38 percent per admission in just three years.
Just last year, prescription drug spending surpassed $309 billion, which represents an 8.5 percent uptick compared with that of the previous year. The “tremendous” rise in such costs is harming patients and forcing hospital leaders to make tough choices, Rick Pollack, president and CEO of the AHA, said in a conference call with reporters Tuesday. Those include forgoing facility modernization projects, or putting off the purchase of new technology; 90 percent of those surveyed said rising drug prices have had a moderate to severe impact on their budgets.
Patients, too, are often forgoing medicines because of their high cost, which can lead to rehospitalizations or trips to the emergency department. “That makes no sense,” and Pollack believes the excuse that such price hikes help to fuel innovation is no longer acceptable.
“We often hear from the drug manufacturers that these price increases finance the development of lifesaving drugs of the future, and be certain, the women and men who work in hospitals and health systems recognize as much as anyone the value of truly innovative, lifesaving medicines,” he says. “But a drug beyond our reach or a patient's reach cannot save anyone’s life.”
The University of Chicago’s independent research arm, NORC, conducted the study on behalf of the AHA and FAH. It used data collected through an AHA/FAH survey of more than 700 community hospitals, also gathering further data from group purchasing organizations representing another 1,400-plus community hospitals. Overall, they found that price increases appeared to be random, inconsistent and unpredictable, with hikes occurring for both high- and low-volume drugs, and for both generic and brand name medications.
Pollack and FAH President and CEO Chip Kahn were joined on the call by hospitals leaders from the Cleveland Clinic and Ardent Health Services in Nashville, Tenn. David Vandewater, president and CEO of the 14-hospital Tennessee system, said skyrocketing drug costs have placed a strain on his organization. Some of the hikes affect drugs that have been around for decades and are used routinely in every day hospital care, and with no corresponding uptick in quality or outcomes.
As one example, he noted that two pharmaceuticals used for surgery — neostigmine, which helps patients recover from anesthesia, and glycopyrrolate, which reduces secretion in the mouth and throat to administer anesthesia — have gone up by 883 and 1,350 percent, respectively, over the past three years. That represents an increase of $5 million in spending for the hospital network.
“Just to put this in perspective, if these kinds of increases took place in the sale of gasoline in the United States, you’d be paying about $30 a gallon, and I suspect if that were the case, the federal government or somebody would decide enough is enough. We’ve got to stop these individuals from taking advantage of hospitals, the patient and the consumer today,” says Vandewater.
CEOs from both associations said they do not favor a heavy-handed response to the issue, but they are pushing for various changes on Capitol Hill to better rein in drug prices through a coalition of groups called the Campaign for Sustainable Rx Pricing. Along with the study, the AHA also simultaneously released a set of policy recommendations to advance sustainable drug prices. Those include limits on ads to consumers, shortening exclusivity periods and expanding value-based payment to drugs, Pollack said.