Sky-high drug prices have made headlines in recent years, from the 500 percent increase in the price of Epi-Pens ($100 to $600 for a two-pack) to $84,000 for a 12-week regimen of Sovaldi, one of the breakthrough hepatitis C treatments.
Who pays the bill for these price increases? It depends. One factor is whether drugs are given on an inpatient or outpatient basis. Drugs given to outpatients typically are paid on a prescription-by-prescription basis by Medicare and other insurers, with patients responsible for their out-of-pocket share as required by their respective benefit plans.
But payment works differently for inpatients. Medicare and other insurers tend to pay hospitals a fixed fee for all nonphysician services, including drugs, provided to inpatients. But these bundled payments fall far short of what hospitals are spending on inpatient drugs, according to an October 2016 report called "Trends in Hospital Inpatient Drug Costs: Issues and Challenges," by the American Hospital Association and the Federation of American Hospitals.