Hospitals Seek Ban of Safe, Lower Cost Prescription Drugs

Donald J. Pfundstein
Published on : 2021-09-17

In my column Hospital Specialty Pharmacy – follow the money!  (also published in I set out how hospital specialty pharmacy is a huge business.   This follow-on article is not about a hypothetical —-but an actual proposed ban with real life patient impacts.  The hospital lobby recently filed a petition to ban brown and white bagging with the state’s Board of Medicine, Board of Nursing and Board of Pharmacy.  They seek to eliminate the well-established practice of safely delivering specialty prescription drugs at lower costs than what hospitals charge in the hospital setting.  One Nursing Board member stated during a recent board meeting that a patient of hers faced $15,000-$20,000 more for her chemo drugs because the facility would not allow white-bagging!  Real patient harm.   We do not know the name of this facility.  However, hospitals should not be putting their specialty pharmacy profit centers ahead of affordable, quality care for patients.   That is exactly what a ban on brown and white bagging would do.  This harms NH patients as well as employers and residents who pay health insurance premiums.  And, every New Hampshire taxpayer!

The hospital lobby wants the Boards to ban white bagging and brown bagging because of patient safety concerns.  Wink. Wink.  It isn’t the money they say.   Keep reading and then make up your own mind.

Let’s look at the “safety issue”.  URAC accreditation, a well-respected national seal of approval, is promoted by Dartmouth Hitchcock’s Specialty Pharmacy as evidence of its own specialty pharmacy’s “commitment to quality care…and better patient outcomes.” (last accessed June 11, 2021)   One non-profit’s work up of URAC data shows that out of over thirty million (30,000,000) specialty drugs dispensed and distributed by accredited special pharmacies during the review period, the zero error rate was 99.98% and 99.96%, respectively.   The hospital lobby wants to ban white bagging and brown bagging by non-hospital-owned specialty pharmacies even though these pharmacies are accredited by the exact, same organization that accredited the hospitals’ specialty pharmacies.  The targets of the proposed ban, namely the independent specialty pharmacies, have in the words of the large local incumbent, demonstrated through the identical form of URAC accreditation “commitment to quality care ….and better patient outcomes.”  The only apparent difference then between these two types of specialty pharmacies, (hospital-owned and non-hospital-owned), is that one is generating substantial profits for the hospitals and the other is providing much needed competition that lowers costs for health care consumers and health insurance premium payers….. That is you and your employers, and fellow New Hampshire taxpayers.

A 2018 study by The Moran Company 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%.”  (Hospital Charges and Reimbursement for Medicines: Analysis of Cost-to-Charge Ratios for Medicines)

Let that data sink in.

Turning again to New Hampshire, Upper Valley media reported on June 20, 2021 that Dartmouth Hitchcock Health’s financial improvement had…”been bolstered by the continued expansion of [its] contract and specialty pharmacy business….”   Similarly, on March 3, 2021 it was reported locally that federal stimulus payments “combined with growth in its contract and specialty pharmacy business, resulted in a $111.1 million increase in revenue…” for Dartmouth Hitchcock Health over the prior year’s same 6 month period.  On August 28, 2020 local media also reported that despite losses in 2020, total revenue and incoming money grew to $2.35 Billion Dollars thanks to $88.7 million in CARES funds and “growth in D-HH’s specialty pharmacy program…” citing a then current D-HH bond filing.  According to a newspaper report of September 3, 2019 “…all areas of operating revenue have grown, especially D-H’s contract and specialty pharmacy business, which grew $61.8 million or 41.5% compared with 2018.” (All references to Valley News with date specified.)

Let that data sink in too –    But hey, what’s a mere extra $15,000-$20,000 when we say it’s for your safety!  Wink. Wink.

As a proud insurance lawyer/lobbyist I know…. thou not always saintly … but let’s not forget the providers know their way around the collection plate!

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