Hospital Rx Pricing Data Fact Sheet

Donald J. Pfundstein
Published on : 2021-09-30

Report finds Hospitals charge 200-400% of cost for medicines.

A 2018 study by The Moran Company, Hospital Charges and Reimbursement for Medicines: Analysis of Cost-to-Charge Rations for Medicines, found “that, on average, hospitals charge 479% of their cost for drugs nationwide.”  The study goes on to report that “Most hospitals (83%) charge patients and insurers more than double their acquisition cost for medicine, marking-up the medicines 200% or more. The majority of hospitals (53%) markup medicines between 200-400%, on average.  A small share of hospitals – one in six (17%) – charge seven times the price of the medicine… One out of every twelve hospitals (8%) has average charge markups greater than 1000%.”

Analysis Discovers Hospitals markup cancer drugs 400% for “remarkable profit”.

Hospitals participating in the 340B drug discount program price oncology drugs at an average of 3.8 times their 340B acquisition costs, according to a report by Moto Bioadvisors for the Community Oncology Alliance, Examining Hospital Price Transparency,
Drug Profits, & the 340B Program, published Sept. 14, 2021.  The team found of 59 cancer drugs studied, the lowest median markup was 2.4 times the 340B acquisition cost (Adcetris), and the highest was 11 times (Epogen) (pp. 8-9).   They also found 340B hospitals don’t decrease the prices they charge insurers or patients when their acquisition prices decline, which nullifies efforts to reduce prices at the drugmaker (sic) level. “Obviously problematic” was the observation that 340B hospitals often charge their cash-paying customers (or, uninsured) the same as the median price for commercial insurers……400% of cost!  (p. 14.)

No End in Sight: Specialty and cancer drugs will continue to drive expenditures.

The American Society of Health-System Pharmacists, the national version of the Petitioner NHSHP, reports in its “National trends in prescription drug expenditures and projections for 2020”, (American Journal of Health-System Pharmacists, Volume 77, Number 15, August 1, 2020):  “Specialty drugs are reshaping the biopharmaceutical market. Utilization of specialty drugs is highly concentrated, accounting for only 2.2% of prescriptions but 48.0% of expenditures.19 Spending on specialty drugs is growing faster than growth of the overall market (11.3% in 2019), and most novel new drugs approved by FDA in 2019 were specialty drugs.20 Treatments that cost upwards of $100,000 per year are becoming common, and potentially curative therapies that cost over $1 million are now available. Many of these are orphan drugs…” (p. 1225).

And, further that, “Oncology drugs will continue to drive drug expenditure growth in 2020 across all sectors and especially in clinics.”  (p. 1226.)

Attorney Pfundstein is admitted in the state and federal courts of New Hampshire.

THIS ARTICLE IS NOT INTENDED TO PROVIDE LEGAL ADVICE, AND DOES NOT CREATE AN ATTORNEY-CLIENT RELATIONSHIP.