Hospitals, drug companies and oncology patients are in an uneasy financial dance

Editor's note: This article has been updated to include new and additional information from the American Hospital Association and the Federation of American Hospitals.

When it comes to drugs, pricing and trends, hospitals, the pharmaceutical sector and patients--particularly those battling cancer--are in a constantly shifting and often uneasy financial position.

In a report conducted on behalf of the Community Oncology Alliance by the Berkeley Research Group, the COA noted that disproportionate share hospitals have seen their 340B revenue grow from 12 percent of hospital outpatient revenues in 2003 to almost 40 percent in 2013 (340B is an outpatient-based program).

When all 340B participant hospitals are factored in, the percentage of 340B-related revenue increases to 47 percent for 2013. The report did note that the Affordable Care Act has expanded 340B eligibility significantly in recent years, increasing from 430 in 2010 to 1,546 in 2013.

Meanwhile, 340B-related purchases grew from $6 billion in 2010 to $7.5 billion in 2013, a 25 percent increase. During that same time period, Medicare Part B oncology drug reimbursement grew 86 percent at hospitals continuously enrolled in the 340B program, compared to a 58 percent growth rate at hospitals that were not enrolled in 340B.

The 340B program has also come under fire for some hospitals purchasing the drugs at a steep discount and then selling them to commercially insured patients for a significant profit.

But that may be tempered to some extent by a report issued today by the American Hospital Association (AHA) and the Federation of American Hospitals and undertaken by researchers at the University of Chicago. That report noted that while spending on drugs by hospitals rose 8.5 percent in 2015, inpatient drug spending on average increased 23.4 percent between 2013 and 2015 and 38.7 percent on a per admission basis.

At a press conference on Tuesday, AHA CEO Richard J. Pollack blamed much of that dramatic cost rise on market manipulations by drug manufacturers. He noted that not only would that put patients in a difficult position regarding being able to afford their medications, but that it put increased pressures on hospital budgeting priorities. “It's a serious economic threat to hospitals and their communities,” he said, later adding that it could hinder the ability of many hospitals to modernize their infrastructure.

Patients do find themselves economically battered by the price of drugs, particularly those to treat cancer. In some instances, insured patients face six-figure out-of-pocket costs. They may also have five-figure annual costs for monitoring and followup care.

Meanwhile, another report issued by the Berkeley Research Group earlier this year criticized hospitals in the 340B program for not providing enough information to patients about their charity care options.

What role hospitals have in contributing to these costs is unclear, but hospitals are fundamentally reshaping how U.S. patients receive their oncology care. According to another COA report released last week, there has been a 121 percent increase in community cancer clinic closings and a 172 percent increase in consolidation into hospitals since 2008.

“It is no coincidence that this aligns perfectly with the enormous growth of the 340B program and misguided government experiments that continually ratchet down reimbursement,” COA Executive Director Ted Okon said in a statement. “Policymakers should be alarmed at the real world impact DC has had on community oncology and particularly think twice about the proposed CMS Part B experiment in cancer care.”