Specialized cancer hospitals hike drug costs by up to 630%, study finds

cancercenterlogoWhile patients often seek treatment at big, fancy hospitals, in part because they are designated as National Cancer Institute centers, these institutions provide a sticker-shock surprise for those receiving their specialized care: They jack up the already sky-high cost of prescription cancer drugs with markups going up from 120% to 630% above what they pay for the medications.

Those are the findings of researchers at the Harvard and Yale medical schools and elsewhere as reported in the Journal of the American Medical Association’s Internal Medicine publication. As they noted with expert restraint:

“The findings of this study suggest that, to reduce the financial burden of cancer treatment for patients, institution of public policies to discourage or prevent excessive hospital price markups on … chemotherapeutics may be beneficial.”

As the news site Axios reported of this JAMA cancer drug-pricing study:

“The blame for high drug prices goes well beyond drug manufacturers and is ultimately borne by patients through higher premiums and out-of-pocket costs … Patients generally either get their prescriptions drugs from pharmacies or administered directly in a hospital or doctor’s office. Both pathways have complicated supply chains, meaning there are multiple middlemen between drug manufacturers and patients. Pharmacy benefit managers, for example, have come under fire in recent years for their alleged role in higher prices at the pharmacy counter. But the JAMA study … suggests that hospitals also have a huge role in what patients and insurers pay, at least in [cancer care], where treatment courses can cost hundreds of thousands of dollars.

“‘This supply chain is not very friendly to patients, because pharmaceutical manufacturers set prices at levels that can be quite high, and ultimately prices increase down the chain and patients are left footing the bill,’ said Vinay Rathi, a physician and health policy researcher at Massachusetts Eye and Ear and one of the study’s authors.”

The latest research also gives only a glimpse at cancer center pricing practices, based on analyses of data released by 61 NCI-designated institutions, which have begun to provide information at different rates under payer disclosure policies put in place by the Trump Administration, the news site Fierce Healthcare reported. The site noted that:

“To conduct their analysis, the researchers sought out payer-specific price disclosures from 61 NCI-designated cancer centers between April 1 and Oct. 15, 2021. The team chose to review prices for the top 25 injectable or infusible cancer therapies as determined by Medicare Part B spending in 2019. They estimated how much hospitals paid for the therapeutics using a percentage of Medicare average sales price, which they adjusted based on whether the hospital participates in the 340B Drug Pricing Program [which requires drug makers to give discounts to certain hospitals].

“Of the 61 centers, just over two-thirds listed payer-specific negotiated prices for any item or service and only 44% disclosed for at least one of the study’s 25 cancer therapies. Disclosure rates for specific drugs ranged from 21% of the hospitals to 42.6%. Among the drugs, leuprolide saw the highest median price markup (633.6%) across the sample, as well as the broadest pricing spread across the different cancer centers, the researchers wrote. More than half of the drugs had median price markups exceeding 200%, according to the study. The researchers acknowledged that their analysis could be overestimating market-wide cancer drug price markups, as NCI-designated centers ‘likely have greater market power than many other hospitals when negotiating with private payers.’ On the other hand, it could also be an underestimate due to the large portion of centers that did not disclose their prices, due to the potential ‘to prevent public concern about price-gouging,’ they wrote.”

Axios reported that the hospitals could be setting high cancer drug prices “to subsidize other lines of business that are less lucrative, like research and development that isn’t federally funded or providing uncompensated care. ‘The question is, is this really the right way to do it? Is using profits from cancer centers the right way to cross subsidize a lot of other things hospitals may do?’ Rathi said.”

Both the Axios and Fierce news articles quoted experts who said that patients’ concern about nose-bleed drug costs typically would be low — if they have health insurance and their policies cover the prescription cancer medications. (FYI, the drug mentioned earlier, leuprolide goes for $2,000 a month on average, without discounts, so just imagine a 600% markup on a treatment that may last for six months …)  Patients, incorrectly, too often disregard high charges, believing that insurers will pay them, and they will not. They do not realize that they eventually will get socked with these costs, notably through higher premiums or reduced benefits.

A spokesman for U.S. hospitals also argued that looking at costs with cancer drugs isn’t especially revelatory about institutions’ approaches to dealing with soaring prescription medication prices, saying:

 “The fact is cancer drugs are extremely expensive drugs whose prices are set and continually increased at the sole discretion of pharmaceutical companies. Hospitals across the country are forced to contend with arbitrary price increases on these products as well as other challenges related to accessing some of these drugs that are placed in limited distribution or have other supply chain issues. Many cancer drugs, as well as drugs used to treat other critical conditions, require specific handling, storing, compounding, and administration procedures, which are costs borne by the hospital, and are not factored into this analysis.”

Hmm. In my practice, I see not only the harms that patients suffer while seeking medical services, but also the damage that can be done to them and their loved ones by dangerous drugs. My partners and I also see how patients struggle to access and afford safe, efficient, and excellent health care. This has become an ordeal due to ever-increasing cost, complexity, and uncertainty of treatments and prescription drugs.

Cancer care, among many medical treatments, has become crushing in its cost, a reality that specialists have recognized with a term for the bankrupting expense they describe as the disease’s “financial toxicity.” Patients and their loved ones deserve the highest level of transparency about how medications that might improve, extend, or save their lives increase in cost at each step in the supply chain — from raw materials to manufacture to advertising, marketing, and promotion, to hospital acquisition, doctor prescribing, and pharmacy dispensing. It is a painful reality in the current system that many hands not only are involved but that they are grabbing for profits all along the way.

While critics question the high cost and too often lack of effectiveness of cancer drugs, all prescription drugs have seen jarring, unacceptable price increases, with brand name drugs covered by Medicare Part D, for example, doubling in price between 2010 and 2020, according to new federal data.

We have much work to do to help patients get a much better financial handle on extreme cost increases for prescription medications, especially with cancer drugs. Participants in the U.S. health care system should, in our capitalist system, make a reasonable return on their invested resources. But, c’mon, man, we can’t keep allowing Big Pharma to slam sick and injured patients when they are most vulnerable.

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