Drug experts: Hospitals—not pharma—to blame for rising healthcare costs

The hospital bill showing a charge for skin-to-skin contact.
Hospital costs are generally higher than drug costs, but it’s easier for patients to have a negative view of big pharma because patients have more exposure to drug prices compared to hospital fees because of the way insurance plans are designed. (Reddit/halfthrottle)

Despite the popular perception that greedy drugmakers are responsible for rising healthcare costs, some experts say that hospitals are the true culprits and pharma is getting a bad rap.

Hospital costs are generally higher than drug costs, but it’s easier for patients to have a negative view of big pharma because patients have more exposure to drug prices compared to hospital fees because of the way insurance plans are designed, Kirsten Axelsen, vice president of worldwide policy for Pfizer, told FierceHealthcare’s sister publication, FiercePharma.

And it’s easier for lawmakers to blame pharma. After all, says David Dreier, a former congressional rep, in a recent op-ed piece for The Hill, every member of Congress has a hospital in his or her district but only a few have a drug manufacturer.

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Drugmakers also point out that a recent Altarum Institute report (PDF) proves their point. In 2016, the United States spent $3.4 trillion on healthcare, including $1.1 trillion in hospital costs, $683 billion in physician and clinical expenditures and $348 billion on prescription drugs.

But Tom Nickels, the EVP of government relations and public policy for the American Hospital Association, told FiercePharma that the argument is “laughable”

“Just because you are a bigger part of something doesn’t mean that you should be the focus in terms of cost reductions,” he said. It’s more important to look at where costs are going up the fastest, Nickels said, adding that some drug companies have implemented “predatory pricing" practices.

“On a bipartisan basis, from Donald Trump to Elijah Cummings, many public officials have pointed out, and we would agree with them, that rising drug costs are a huge problem,” Nickels said.

Read the full FiercePharma report here.

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