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How Drug Shortages Are Impacting Drug Prices in 2019 - Part 1

Posted by Dr. Brita Hansen on Feb 8, 2019 10:21:08 AM
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Rising Drug Prices Feature PhotoFeb. 8, 2019 - We’re all familiar with skyrocketing prescription drug prices and the challenges posed by drug shortages. Thanks to a new report, we now have a better understanding of the extent of the problem.

Report Overview

The January 2019 report, “Recent Trends in Hospital Drug Spending and Manufacturer Shortages,” was issued jointly with the American Hospital Association (AHA), Federation of American Hospitals (FAH) and the American Society of Health-System Pharmacists (ASHP).The report quantifies overall impact and reveals how hospital systems are responding and working to minimize disruptions to patient care. Supporting data of the report includes survey responses, health executive interviews and pricing and spending data.

Why Are Prices Rising?

According to the report, average total drug spending per hospital admission in the U.S. increased 18.5 percent between 2015 and 2017. That increase builds on record growth in prescription drug spending from 2013 to 2015. What’s driving the escalation? It isn’t utilization. Rising drug costs have ultimately stemmed from both higher launch prices and annual price increases.

These increases put a huge strain on hospital budgets and operations. Bundled payments, in the form of per diem or diagnostic-related group payments, don’t match these increases. This makes it more challenging than ever to manage prescription drug spending.

Consequences of Higher Prices

The data is daunting. Outpatient drug spending per adjusted admission increased 28.7 percent, while inpatient drug spending per admission increased 9.6 percent between 2015 and 2017. These increases exceed medical inflation and dramatically outpace reimbursements. For example, expenditure growth on inpatient drugs per hospital admission exceeded the Medicare reimbursement five-fold during the study period.

Which Drugs Are Most Impacted?

The report revealed the drugs with the highest hospital spending experienced especially large price increases. For example, unit prices for a medication used to treat heart attack and stroke patients increased by 18.8 percent. Three of the top 10 drugs by total spending are immunosuppressants used to treat rheumatoid arthritis and other auto-immune conditions. The unit prices for these drugs increased between 15 and 21 percent.

Part Two

In Part 2 of this blog series, we’ll delve deeper into what the report reveals about how hospitals are managing the impact of significant price increases and escalating drug shortages. Now, more than ever, hospital systems need solutions for controlling medication spending and managing drug shortages.

One solution is the Drug Shortage App from LogicStream Health™, a management tool that helps hospital pharmacy teams better manage drug shortages and minimize disruptions to patient care. I encourage you to learn more about what this solution can do to help your organization take control of the situation. Let’s face it, we all need the right tools in our toolbox! To download a free overview of The Drug Shortage App, visit this page.

About Dr. Brita Hansen

Brita Hansen, M.D., is Chief Medical Officer of LogicStream Health. She began her career as an internal medicine hospitalist physician after receiving her undergraduate degree at NYU and her Doctorate of Medicine from the University of Minnesota School of Medicine. She served as Chief Health Information Officer for the Hennepin County Medical Center before joining LogicStream Health.

Topics: Drug Shortages, Drug Prices

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Brita Hansen, MD, is Chief Medical Officer at LogicStream Health. Dr. Hansen is also a practicing internal medicine hospitalist and has served as a healthcare system executive, most recently as Chief Health Information Officer at Hennepin County Medical Center in Minneapolis. Dr. Brita’s Blog covers a range of topics, including:

  • Appropriate Utilization
  • Clinician Engagement
  • Clinical Process Performance & Improvement
  • Healthcare Information Software & Technology
  • EHR Optimization
  • Clinical Decision Support
  • Healthcare Patient Safety & Quality

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