fah hospital policy blog

Perspectives on health policy affecting America’s hospitals and the patients we serve.

Before the Finger Pointing Begins – Here are the Facts about Drug Costs

February 26, 2019 | FAH Policy Blog Team

Category: Hearings, Pharmaceuticals

This morning the leaders of seven major pharmaceutical companies are going to testify before the Senate Finance Committee. It is widely expected that they will downplay their role in the out-of-control price increases for lifesaving drugs needed by American families.

But the truth – skyrocketing drug costs and shortages are causing a crisis across the health care system,

Just last month, a joint study released by the Federation of American Hospitals (FAH), the American Hospital Association (AHA), and the American Society of Health-System Pharmacists (ASHP) found that continued rising drug prices, as well as shortages for many critical medications, are impacting patient care and putting strains on hospital budgets and operations.

Key findings include:

  • Average total drug spending per hospital admission increased by 18.5% between FY2015 and FY2017.
  • Outpatient drug spending per admission increased by 28.7% while inpatient drug spending per admission increased by 9.6% between FY2015 and FY2017. This 9.6% increase was on top of the 38% increase in inpatient drug spending between FY2013 and FY2015 included in the previous report.
  • Very large percentage increases (over 80%) of unit price were seen across different classes of drugs, including those for anesthetics, parenteral solutions, and chemotherapy.
  • Over 90% of surveyed hospitals reported having to identify alternative therapies to manage spending.
  • One in four hospitals had to cut staff to mitigate budget pressures.
  • Almost 80% of hospitals found it extremely challenging to obtain drugs experiencing shortages, while almost 80% also said that drug shortages resulted in increased spending on drugs to a moderate or large extent.

The full report can be found HERE. You can view a short video explaining the issue HERE and find an infographic HERE.

The report was prepared based on analysis conducted by NORC at the University of Chicago, an independent research institution.