Drug Prices and Shortages Taking a Toll on Hospitals: National Survey

Soaring drug prices and persistent drug shortages during 2015-2017 led one-fourth of United States hospitals to reduce staff to cope with the financial pressure, according to a study commissioned by the American Hospital Association (AHA), the Federation of American Hospitals (FAH) and the American Society of Health-System Pharmacists (ASHP).

In this eAlert, we present highlights of the new report to give hospitals and medical practices a glimpse of the national picture and help them understand the larger impact of these trends on institutions across the country, including their own.

The survey of 1,100 hospitals, conducted by the non-partisan and objective research organization NORC at the University of Chicago, found an increase of 18.5 percent in hospital drug spending between 2015 and 2017, far exceeding the 6.4 percent inflation rate for the same period. Price increases of more than 80 percent were found in several classes of drugs, including anesthetics, opioid agonists, parenteral solutions and chemotherapy.

"Continual and unjustifiable" surges like these "create unsustainable access challenges for patients and resource challenges for hospitals," according to a companion infographic, "America's Prescription Drug Spending Crisis."

"The budget pressures resulting from increased drug spending can have negative impacts on patient care with hospitals being forced to delay infrastructure investments, reduce staffing and identify alternative therapies," the report states. "Hospitals also continue to struggle with pharmaceutical shortages, which increase costs by disrupting typical work patterns and patient care, and often require significant staff time to address."

Among the drugs with the highest percentage changes in unit price from 2015 to 2017 (among drugs with total 2017 spending of more than $1 million) were hydromorphone HCl/PF (107 percent), mitomycin (99 percent), Vasostrict (vasopressin) (97 percent), ephedrine sulfate (87 percent) and phenylephrine HCl (65 percent).

Among drug shortages rated as "extremely challenging" by hospitals, opioid injectables, saline, sodium bicarbonate and sterile water were the top four, cited by 97.9 percent, 97.4 percent, 90.9 percent and 89.4 percent of hospitals, respectively. The top 10 drugs with a shortage in 2016 by percentage increase in unit price between 2016 and 2017 included mitomycin (32.9 percent), vinblastine sulfate (32 percent), Ringer's solution (29.8 percent), calcium gluconate (26.6 percent), amino acids 6.9 percent (22.4 percent) and bupivacaine HCl/epinephrine (22.3 percent).

Among the study's other key findings:

  • Increases in drug prices during the period of the study resulted in $1.8 million in new spending for the average hospital.
  • Outpatient drug spending per admission increased by 28.7 percent and inpatient drug spending per admission increased by 9.6 percent. The 9.6 percent increase was in addition to the 38.7 percent increase in inpatient drug spending between 2013 and 2015 shown in an earlier report.
  • More than 90 percent of participating hospitals reported having to identify alternative therapies to control costs. More than 70 percent of hospitals reported increasing in-hospital compounding of medications as a strategy to cope with rising drug costs.
  • Nearly 80 percent of hospitals reported "extremely challenging" instances of obtaining drugs in shortage.
  • Approximately two-thirds of responding hospitals reported that changes in drug prices had a moderate or severe impact on their budgets.

Hospitals used a variety of strategies to compensate for the shortages, including additional communications to ensure patient safety due to drug or packaging changes (94 percent), substituting a more expensive drug or therapy (92.5 percent), repackaging larger package sizes into smaller packages (84.6 percent), adjusting EHR documentation and management (73.7 percent) and diversion of staff to manage drugs in shortage and/or drug inventory (69.3 percent).

In interviews, hospital pharmaceutical supply leaders raised substantial concerns about the lack of transparency in pharmaceutical pricing and indicated that there is a lot of room for improvement in "value-added" new drugs. Interviewees said prices should reflect the added cost benefit for morbidity or mortality relative to existing drugs, and suggested increased scrutiny of new drugs to validate the need for substantive clinical trial data.

The AHA has submitted legislative, regulatory and best practice recommendations to the Food and Drug Administration to address drug shortages and drug pricing.

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Monday, 18 February 2019

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