Hospital Drug Price Increases Addressed at Governor’s Task Force on Reducing Prescription Drug Prices

June 25, 2020

The Governor’s Task Force on Reducing Prescription Drug Prices met virtually June 18, hearing from both the American Hospital Association (AHA) and Door County Medical Center. In January 2019, the American Hospital Association issued a report, “Recent Trends in Hospital Drug Spending and Manufacturer Shortages.” Mark Howell and Aaron Wosolewski of AHA presented the highlights of the report to the task force along with several recommendations to impact the high cost of pharmaceuticals. The 2019 report updates a 2016 report which was prepared for AHA by the National Opinion Research Center at the University of Chicago, which found that continued rising drug prices and shortages of critical medications are impacting patient care and straining hospital budgets and resources.
 
The updated report found that average total drug spending per inpatient admission increased 18.7% since 2016, with a greater increase for outpatient admissions than inpatient admissions. Hospitals experienced price increases of more than 80% across some classes of drugs, including chemotherapy drugs, opioid agonists and anesthetics.
 
Howell and Wosolewski presented some policy ideas endorsed by AHA that could curtail rising drug prices:
 
  • Restrict “evergreening” – a practice by which a drug manufacturer makes minimal changes to a drug, such as dosing changes, and applies for a new patent. 
  • Enact federal legislation to make “pay for delay” illegal. This is a pharmaceutical industry practice that involves brand-name drug makers compensating their generic counterparts for holding off on marketing their versions of brand-name drugs.
  • Expedite entry of generic drugs into the market.
  • Limit orphan drug incentives (marketing exclusivity, research grants, tax incentives) to true orphan drugs which are used to treat rare health conditions, rather than allowing them to be marketed broadly to treat non-rare conditions.
 
Door County Medical Center (DCMC) CEO Brian Stephens and team members Dr. Jim Heise, chief medical officer; Amy Konop, pharmacy director and Carrie Peterson, certified pharmacy technician described the impact of rising pharmaceutical prices on DCMC. Stephens, who is a member of the Governor’s Task Force, said that drug prices for DCMC increased 4.7% from 2018 to 2019. This 4.7% growth rate was accomplished despite steep increases in the price of commonly used drugs.
 
Dr. Heise and Ms. Konop illustrated the impact of drug price increases with a few examples:
 
  • A single dose of Stelara, a drug to treat inflammatory bowel disease, is more than $22,000. The hospital experienced a 12% increase in the price of this drug in one year. 
  • NovoSeven, a hemophilia drug, costs $200,000 for one patient stay in the hospital.
  • Naloxone (Narcan) counteracts the impact of an opioid overdose. The nasal spray costs more than $400 per dose, and the hospital experienced a 700% price increase for the generic version.
  • Epinephrine, a drug to treat asthma attacks and allergic reactions, increased from $100 per dose to more than $300, due to patent exclusivity. Although there is now a generic version of the drug, the cost is still closer to $200 per dose. 
 
Stephens reported DCMC dedicates a full-time staff member to daily monitoring and management of the drug supply chain in order to access vital drugs at the lowest price possible. Carrie Peterson, who holds this role at DCMC, said that drug availability is their top priority, followed by affordability. Stephens said it is essential to have someone like Peterson in every hospital to ensure they have necessary drugs on hand when needed.
 
Stephens expressed his support for the AHA recommendations presented to the task force and added that linking a price for drugs needed by a patient with the patient’s electronic health record would be very helpful.
 
The task force will meet again in July to discuss potential policy recommendations in depth. 
 

This story originally appeared in the June 25, 2020 edition of WHA Newsletter