The blame game over drug prices is intensifying as drug industry group Pharmaceutical Research and Manufacturers of America (PhRMA) released a new report Wednesday about the role hospitals are playing in marking up the cost of prescriptions.
According to the report— produced by health consulting firm The Moran Company—hospitals mark up the cost of prescription drugs on average of nearly 500%. The report also says 17% of hospitals mark up the price of prescription drugs by at least 700%.
“Hospitals receive billions of dollars every year in negotiated and mandatory discounts from biopharmaceutical companies while simultaneously increasing the price of these medicines to insurers and patients,” said Stephen J. Ubl, president and chief executive officer of PhRMA in a statement. “In order to make medicines more affordable for patients, we must address the role hospital markups play in driving up medicine costs.”
PhRMA said average markups were likely much higher at hospitals participating in the 340B drug pricing program where medicines are acquired, on average, at a 50% discount.
Of course, policy experts have routinely said the best way to reduce high drug costs is to lower the list price of medications set by drug companies.
PhRMA has sought to spread the blame, launching ad campaigns to point to the contributions of other players including health systems, insurers and PBMs in the system after it became a natural target in the Trump administration’s focus on the problem of high prescription drug prices. As the Washington Post reported earlier this year, PhRMA started an industry war by seeking to explain to consumers role of pharmacy benefit managers while also calling them “middlemen” who were pocketing savings that might otherwise belong to patients.
They face an uphill battle. Healthcare costs, including drug prices, are expected weigh heavily in the upcoming midterms and a Kaiser Family Foundation poll released Wednesday found a growing share of the public who say drug companies are making too much profit is a “major reason” why healthcare costs have been rising. The same poll found a pretty even split with about 40% of the people polled said they thought Trump’s strategy of publicly shaming drug companies and asking them to cut prices will be effective while about 40% believe Trump will be able to deliver on his promise to cut the cost of prescription drugs.
In its analysis, Moran said it used Centers for Medicare and Medicaid Services 2016 cost report data in the Healthcare Provider Cost Report Information System. It examined all hospital-administered drugs to study the average mark up. Moran points out these are charged and not what hospitals are actually paid for the drugs.
This matters, they said, because hospitals are “routinely reimbursed as a percent of billed charges by commercial payers” driving up costs which can be passed along to patients, particularly those who are uninsured or do not have negotiated rates with the hospital.
See the report here:
