Community Based Care is Cost Effective Care
A new analysis finds that the same prescription drugs can cost thousands of times more across hospitals, raising questions about hospital pricing practices and transparency
The Community Oncology Alliance (COA) is highlighting the findings of a new report which shows extreme variation and inconsistencies in drug pricing across hospital settings and insurer plans. The report raises serious concerns about opaque drug pricing practices in large health systems and, in particular, the financial cost for patients with cancer.
The report, Analysis of Prescription Drug Prices in Hospitals by 3 Axis Advisors, examined hospital price transparency files and found wide variation in the prices hospitals negotiate with insurers for the same prescription drugs. In some cases, the highest negotiated price for the same drug was an astonishing more than two thousand times the lowest price across hospitals.
The analysis also found that many hospitals continue to publish pricing data that is incomplete or difficult to use, limiting the ability of patients, employers, and policymakers to evaluate the cost of care.
“As policymakers look for affordability solutions in health care, this analysis highlights a persistent problem in the system: hospital drug pricing remains opaque, inconsistent, and difficult to evaluate,” said Ted Okon, executive director of COA. “Patients with cancer can face dramatically different costs for the same treatment depending on where it is delivered, yet the underlying pricing practices of hospitals remain impossible to evaluate.”
Key findings from the analysis include:
- On average, the ratio between the maximum and minimum negotiated prices between the different hospitals and health plans for the same drug across different hospitals is 2,347 times. This means that a drug that costs just $1 at one hospital can cost up to $2,347 at another.
- Hospitals frequently publish pricing data that is incomplete or inconsistent. This undermines the ability of patients and payers to use pricing data to make informed decisions on where they receive care.
For patients with cancer, hospital drug pricing directly affects the total cost of treatment. Many cancer therapies are administered in the outpatient setting, where hospitals may bill insurers at prices that differ substantially from those of independent community oncology practices.
Previous research has documented similar patterns of abusive hospital drug pricing behavior. A 2021 COA analysis of 340B hospitals’ drug markups found that some hospitals acquired cancer medications at steep discounts and billed insurers and patients many times that amount, generating large markups on oncology drugs.
Evidence shows that independent community oncology practices provide high-quality cancer care at lower overall cost. A recent analysis in The American Journal of Public Health found that major drivers of cancer treatment costs, which include drug pricing, facility fees, and markups in hospitals, are consistently and significantly lower in community oncology settings.
“Hospital price markups matter enormously for patients with cancer and other serious diseases,” Okon said. “Independent community oncology practices routinely deliver the same evidence-based treatments at a lower cost and closer to where patients live. Policymakers examining the drivers of unaffordable health care costs should closely scrutinize hospital pricing practices.”
COA calls on Congress to strengthen and increase enforcement of hospital price transparency requirements, as well as examine how hospital consolidation and drug pricing practices contribute to higher health care spending.
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