Hospitals push back on drug price increases

Hit hard by dramatic increases in drug costs, hospitals and healthcare systems are sorting their options and finding ways to push back.

Ascension Health, the largest nonprofit hospital operator in the United States, recently banned sales reps from its properties, according to the St. Louis Post-Dispatch.

Although the Post-Dispatch noted the ban will have little effect on Ascension's purchasing practices--after all, it still needs drugs to treat patients--it is intended to send a message to the big pharma companies regarding their pricing practices.

"The effect of the ban has been to galvanize other provider systems to speak out against these arbitrary and debilitating price increases," Nick Ragone, Ascension's chief communications officer, told the St. Louis Post-Dispatch.

Altogether, Ascension's spending on drugs has risen by $36 million, or 9 percent, over the last year. Two-thirds of the overall increase, about $23.5 million, was linked to higher prices for generic medicines, which usually cost far less than brand name medications.

"We can't afford those prices," Mary Ella Payne, Ascension's senior vice president of advocacy, told the St. Louis Post-Dispatch. The increases are coming despite the fact that a system the size of Ascension has considerable leverage in negotiating prices for supplies such as drugs.

In 2012, spot shortages of more than 200 different drugs, including many generics, prompted hospitals to both ration and horde different medications, depending on their general availability, and the amount of time hospital pharmacists spent managing their supplies skyrocketed.

However, other business practices of pharmaceutical firms outside of straightforward price increases have driven up prices. For example, Genetech's recently announced plans to scrap its wholesale distribution network for cancer drugs, forcing hospitals to use pricier specialty distributors, which could drive up costs for hospitals and oncology patients by as much as $300 million a year.

To learn more:
- read the St. Louis Post-Dispatch article