Hospitals mark up cancer drugs by 10 times their value

Amid calls to rein in escalating healthcare costs, hospitals are marking up chemotherapy drug prices by two to 10 times their average retail price, the Charlotte Observer reported.

For instance, Carolinas HealthCare-owned Levine Cancer Institute received roughly $4,500 for a dose of irinotecan, which is used to treat people with colon or rectal cancer, while the average sales price was less than $60.

The problem is exacerbated by hospitals buying up independent oncologist practices and then charging patients much more for the same treatment in the same office, the article noted. The markups also can hurt patient care, as some cancer patients forgo needed treatment because it's too expensive.

But it's not only cancer drugs carrying hefty price tags. Hospitals also charge patients huge markups for relatively commonplace drugs while they are placed in observation care.

Hospital officials defend their pricing as cost-shifting needed to cover the expenses of treating financially struggling cancer patients and make up for other money-losing services, noted the Observer.

Research earlier this year found that cancer care costs considerably more in a hospital setting than a physician's office. Oncology treatment in a hospital costs about 24 percent more on average than the same care received in an office or freestanding cancer treatment center, according to an Avalere Health study.

However, it's not an apples-to-apples comparison, as comprehensive cancer centers accredited by the Commission on Cancer of the American College of Surgeons must provide services not required of physician practices, North Carolina's Novant Health said in a statement to the Observer. "This all means we provide many services for free or at a significant loss," the nonprofit system said.

With huge markups on cancer care drugs, it's no surprise U.S. cancer patients spend more than European countries. According to research published in the April Health Affairs, it could be worth the extra dollars as patients live about two years longer.

For more:
- read the Observer article
- see the Novant Health statement