Better Solutions for Healthcare

AXIOS: Hospitals’ massive cancer drug markups

By Caitlin Owens

April 19th, 2022

The prices that private insurers agree to pay hospitals for cancer drugs are often at least double what the hospital paid to acquire the drugs, according to a new study in JAMA Internal Medicine.

Why it matters: 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.

The big picture: 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 published yesterday suggests that hospitals also have a huge role in what patients and insurers pay, at least in the oncology space, 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.