Random, Inconsistent Price Hikes Hitting Hospitals Hard

Inpatient drug costs rose 38.7% per admission between 2013 and 2015, according to a new analysis from the National Opinion Research Center at the University of Chicago. What is more, many of the drug price hikes appear to be “random, inconsistent, and unpredictable,” affecting both branded and generic medications used in both high and low volumes.

The Trends in Hospital Inpatient Drug Costs report was commissioned by the American Hospital Association and the Federation of American Hospitals. According to the findings, delays in updating the pharmaceutical price index have rendered Medicare unable to keep up with price increases, and hospitals are suffering as a result. More than 90% of 712 community hospitals surveyed said drug price hikes had a moderate to severe impact on attempts to manage their budgets.

“This analysis is a real wake-up call on health care spending,” said Chip Kahn, president and CEO of the Federation of American Hospitals. “It confirms what local hospital administrators recognize as a serious and growing problem for their patients. Rapidly rising drug costs combined with unsustainable Medicare and Medicaid cuts put hospitals in an impossible bind.” 

In addition to survey data from 700-plus community hospitals, the analysis included information from group purchasing organizations representing some 1400 more hospitals. Researchers examined overall trends in inpatient drug costs and their impact, while also zeroing in on a subset of drugs considered high spend because of their volume, price, or both.

The latter part of the analysis identified some staggering increases, such as a 3263% per-unit price hike over the 3-year span for calcitonin-salmon, which is used to treat bone pain associated with osteoporosis and other diseases. In 2013, the 2 group purchasing organizations spent approximately $2 million on the drug. In 2015, that amount skyrocketed to $55 million, largely due to the price increase. The price of the vasodilator hydralazine grew 776% over the same period; meanwhile, the price of the vasodilator nitroprusside jumped 672%.

A spokesperson from the Pharmaceutical Research and Manufacturers of America dismissed the analysis, however, for focusing on a subset of medications and not providing a greater picture, Kaiser Health News reported.

“Focusing on a set of unrepresentative, older, and off-patent medicines at a time when new generic drug applications had a record backlog gives a distorted portrayal of medicine spending,” Holly Campbell told the publication. —Jolynn Tumolo