AHA: Drug price increases, shortages forcing hospitals to tighten their belts 

Drug prices healthcare costs pill money
Drug price increases and shortages are hurting hospitals' bottom lines, according to a new report. (Pixabay)

Rising drug prices and shortages are squeezing hospital budgets to the point that a quarter reported cutting staff to mitigate the problem, according to a new report. 

NORC at the University of Chicago surveyed more than 1,100 community hospitals on behalf of the American Hospital Association and the Federation of American Hospitals and found that average total drug spending per admission increased by 18.5% between fiscal years 2015 and 2017. 

This spending is in addition to record increases recorded between fiscal years 2013 and 2015, where inpatient drug spending went up by 38%, according to the report. 

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Rick Pollack, president of the AHA, said during a press briefing that the groups are “putting the drug companies on notice” over the increases. 

“If we don’t rein in drug prices for patients, this means having to choose between the medication they need and other essentials,” Pollack said. 

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The rising prices and shortages have also forced about 90% of hospitals to find alternative therapies or treatment workarounds for some patients and have led about 70% to do more in-hospital compounding of drugs. 

More drastic measures were also reported. Just under 30% of the surveyed hospitals said drug price increases and shortages had led them to delay investing in new equipment, or fixing what they have on hand, and about 20% said they had reduced service offerings. 

Chip Kahn, president of FAH, said at the briefing that hospitals have reported scenarios were drug companies significantly increased the price for a drug on shortage, which can further tighten the belt. 

“We find instances where drug companies are using these shortages, and really put the hospitals and our patients at their mercy in terms of raising prices,” Kahn said. 

That issue is one of the driving forces that led several of the biggest hospitals and health systems in the country to form Civica Rx, a nonprofit drug company that aims to provide generic medications for some of the most needed medications. The AHA’s Center for Health Innovation collaborates with Civica. 

RELATED: Insurers blame specialty drug costs for rising premiums. This report from California shows why 

About 80% of hospitals surveyed said they struggled to obtain a drug that was on shortages, and the same number said that these shortages led to increased spending on certain medications. Erin Fox, senior director of drug information and support services at University of Utah Health, said during the briefing that the drugs on shortage are often some of the most commonly used in hospitals, including ketamine, injectable opioids, lidocaine and even still water. 

The report also found that price increases were the highest in certain drug classes, with some increasing by as much as 3,600% in just two years. Increases of over 80% were reported in chemotherapy drugs, anesthetics and parenteral solutions.

Kahn said that in addition to work done at Civica and from hospitals sounding the alarm about these concerns, steps taken to increase the options available on the generic drug market hold promise.

“I think at a minimum we need to focus on the generic area,” he said.

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