According to an article published in Healthcare Finance, a new report released by the National Opinion Research Center (NORC) at the University of Chicago found that inpatient drug spending increased 23.4% annually from 2013 to 2015, compared to a 9.9% annual increase in retail drug spending in that same period.
The researchers found that the increase in spending was driven by higher drug unit prices, not by a greater volume of drugs being used in the hospitals. Approximately 50% of the drug price hikes occurred in drugs that had no generic competitors, and these price surges tended to be random and inconsistent from one year to the next.
Chip Kahn, CEO of the Federation of American Hospitals, said in a press briefing, “It would be one thing if price increases were associated with clear and important clinical improvements, but they’re not.”
For the report, 712 community hospitals were given a national web-based survey from April to June of this year. Their responses were then weighted to develop estimates for 4369 community hospitals in the US. Aggregate data for 28 drugs from 2 group-purchasing organizations (GPOs), representing 1400 community hospitals, were also included in the analysis.
Results show that more than 90% of respondents thought that drug prices had a “moderate or severe” impact on their budgets, and that Medicare reimbursements often do not accurately reflect increased inpatient drug costs. This is because Medicare reimbursements are based on price indexes. With drug prices increasing so rapidly, the indexes cannot keep up.
Rick Pollack, president and CEO of the American Hospital Association, said, “We understand the value of innovation. However an unaffordable drug is not a lifesaving drug and a price increase resulting from market manipulation is simply wrong.”
“Hospital Inpatient Drug Spending Skyrockets More Than 20 Percent, Report Says.” Healthcare Finance News. Updated October 12, 2016. Available at: http://www.healthcarefinancenews.com/news/hospital-inpatient-drug-spending-skyrockets-more-20-percent-report-says. Accessed October 13, 2016.