Study: Hospitals Charge Insurers, Cash Patients More for Drugs

Findings show substantial variation in payer-negotiated prices and self-pay cash prices at top-performing U.S. hospitals and considerable markups on clinician-administered drugs.

Hospitals charged health insurance payers and cash patients significantly more for prescription drugs than they did Medicare, according to a new study.

Researchers from Brigham and Women’s Hospital in Boston, MA, reviewed the 10 clinician-administered drugs with the greatest Medicare Part B spending in the study published in JAMA Internal Medicine.

Based on drug pricing information from 20 top-rated hospitals, the researchers found that median prices surpassed Medicare payment limits by 169% at Rush University Medical Center in Chicago on the low end and by 344% at Mayo Clinic Hospital in Phoenix on the high end.

“The findings show substantial variation in payer-negotiated prices and self-pay cash prices at top-performing U.S. hospitals and considerable markups on clinician-administered drugs,” the researchers wrote.

There was also substantial variation by drug. The lowest median negotiated prices relative to the Medicare payment limit were for Bristol Myers Squibb’s Orencia (abatacept), and the highest median negotiated prices were for Janssen’s Remicade (infliximab).

The other eight drugs reviewed were: Eylea (aflibercept) from Regeneron; Keytruda (pembrolizumab) from Merck; Opdivo (nivolumab) from Bristol Myers Squibb); Rituxan (rituximab) from Biogen and Genentech; Prolia (denosumab) from Amgen; Lucentis (ranibizumab) from Genentech; Neulasta (pegfilgrastim) from Amgen; and Avastin (bevacizumab) from Roche.

“The gap between pharmaceutical acquisition costs and hospital charges is particularly wide for 340B entities, including many hospitals in the study sample,” the researchers wrote. The 340B program was designed to help hospitals provide care to vulnerable patient populations and offset the costs of uncompensated care, they added.

They believe further research is necessary to “understand how 340B entities generate revenue from commercial insurers and how proposed cuts to the 340B program may affect the ability of hospitals to fulfill their obligations to provide care for marginalized communities.”

The researchers also found that 85% of hospitals posted files publicly to comply with the federal government’s new drug price transparency rule, while 55% included payer-specific pharmaceutical prices. Of the hospitals that released pharmaceutical data, 82% (and 85% of hospitals overall) were 340B entities.

“Many hospitals have still not complied with the new transparency requirement,” they noted.

The analysis was limited by its small sample size and the lack of transparency data available, according to the researchers. Additionally, there is a lack of data on the number of patients at each hospital covered by different insurance plans. “Therefore, our findings may not be reflective of average prices after weighting by payer and plan mix,” the researchers wrote.