Hospitals Stressed by 'Out-of-Control' Drug Costs, Shortages

Average total drug spending per hospital admission increased by 18.5% between 2015 and 2017, forcing hospitals to cut staff, delay capital improvements, and develop alternative therapies.

Rising drug prices and shortages of critical medications are hurting patient care, and stressing hospital staffs and budgets, according to a new report commissioned by hospital associations.

The analysis, conducted by National Opinion Research Center at the University of Chicago, expands on a 2016 report commissioned by the American Hospital Association and the Federation of American Hospitals.

The updated NORC analysis found that hospitals continue to face budget pressures resulting from the ongoing "dramatic" increases in drug prices have hurt patient care, forcing hospitals to reduce staff, delay infrastructure improvements and develop alternative therapies.

The shortages also disrupt staff work flow and require significant staff time to develop work-arounds, the report said.

"This report confirms that we are in the midst of a prescription drug spending crisis that threatens patient access to care and hospitals’ and health systems’ ability to provide the highest quality of care," said AHA President and CEO Rick Pollack.

"Solutions must be worked on to rein in out-of-control drug prices and ease the drug shortages that are putting a strain on patient care,” he said.

The updated report showed that:

• Average total drug spending per hospital admission increased by 18.5% between FY2015 and FY2017.
   
• Outpatient drug spending per admission increased by 28.7% while inpatient drug spending per admission increased by 9.6% between FY2015 and FY2017. This 9.6% increase was on top of the 38% increase in inpatient drug spending between FY2013 and FY2015 included in the previous report.
   
• More than 80% increases of unit prices were seen across different classes of drugs, including those for anesthetics, parenteral solutions, and chemotherapy.
   
• More than 90% of hospitals reported having to identify alternative therapies to manage spending.
   
• One in four hospitals had to cut staff to mitigate budget pressures.
   
• Almost 80% of hospitals found it extremely challenging to obtain drugs experiencing shortages. Almost 80% also said that drug shortages resulted in increased spending on drugs to a moderate or large extent.

As HealthLeaders reported in December, the one-two punch of exorbitant prices and sketchy access to inpatient drugs have left hospitals across the nation reeling.

The shortages are often accompanied by dramatic price hikes. Sometimes the supply is readily available, but the price is prohibitively high, as is often the case when sole suppliers leverage their monopolies.

PhRMA on Wednesday morning did not respond to HealthLeaders' requests for comment on the study.