Healthcare News & Insights

Report: Drug costs on the rise for hospitals

Rising drug prices are making an impact on every aspect of health care, including hospital care. In fact, increased drug costs are straining many facilities’ budgets – even with older brand-name drugs and generics. A new report sheds light on just how expensive some prescriptions have gotten. 

The report, from the American Hospital Association (AHA) and the Federation of American Hospitals (FAH)gettyimages-452548009, compares drug costs over the past several years.

According to the report, between fiscal years 2013 and 2015, inpatient drug spending grew by 23.4% on average, and 38.6% per individual hospital admission.

Drug prices often increased in large, unpredictable ways, while reimbursement amounts from payors only increased slightly.

This has been leaving many facilities scrambling to stay within budget. A survey of hospital administrators, conducted by AHA and FAH, found that almost 90% of administrators believe that higher drug prices had a moderate or severe impact on their budgets.

Most expensive drugs

The report has a “top 10” list of the specific drugs that have experienced the most significant cost increases over the past two fiscal years – and have made the biggest impact on overall hospital spending:

  1. Pyrimethamine (treats toxoplasmosis and prevents malaria)
  2. Calcitonin, salmon (used for bone pain and osteoporosis)
  3. Hydralazine (treats high blood pressure)
  4. Nitroprusside (used for congestive heart failure and life-threatening high blood pressure)
  5. Isoproterenol (improves patients’ breathing under anesthesia, also treats heart problems)
  6. Neostigmine metylsulfate (reverses effects of certain muscle relaxants used in surgery)
  7. Phytonadione, or vitamin K (helps with blood clotting)
  8. Glycopyrrolate (reduces secretions in the mouth, airways and throat before surgery)
  9. Sodium benzoate (treats urea cycle disorders)
  10. Ephedrine sulfate (prevents low blood pressure during spinal anesthesia)

Another common drug, acetaminophen (which treats minor pain and fevers), also increased significantly in price over the past two fiscal years.

Many of these drugs, such as isoproterenol and pyrimethamine, don’t have generic alternatives, so hospitals aren’t able to shop around for a better price. But even out of those that do have generic versions, prices have skyrocketed for the entire drug class.

And it’s been tough for facilities to manage these increases, which have amounted to millions of extra dollars spent in some cases.

Managing impact

Much of the pricing information in the AHA/FAH report came from hospitals in group purchasing organizations (GPOs), or groups made up of several hospitals that band together to use their purchasing power to get volume discounts on drug purchases.

Because not every hospital is part of a GPO, the AHA estimates that these cost hikes could be hurting facilities even more than the data suggests.

To respond to these increases, hospitals need to do their homework, looking into treatments and medications that may be more affordable, yet just as effective for patient care.

Joining a GPO may also be a good bet, if your facility isn’t already part of such an arrangement. That way, you’ll at least have better negotiating power to relieve some of your financial burden.

Hospitals can also look into other innovative solutions to save costs on prescription drugs, including the use of electronic health records (EHR) technology to quickly identify acceptable alternatives.

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