fah hospital policy blog

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

New Report Shows Impact of Rising Drug Prices and Drug Shortages on Patients and Hospitals

January 15, 2019 | FAH Policy Blog Team

Category: Pharmaceuticals, Research

Today, the Federation of American Hospitals (FAH), the American Hospital Association (AHA), and the American Society of Health-System Pharmacists (ASHP) released a new report finding 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. The report was prepared based on analysis conducted by NORC at the University of Chicago, an independent research institution.

“We see a developing crisis. Relentless drug price increases and all too frequent shortages of critical medications are eroding the capacity of hospitals to provide our patients needed care,” said FAH president and CEO Chip Kahn. “We believe policymakers should act now to protect patients.”

“This report confirms that we are in the midst of a prescription drug spending crisis that threatens patient access to care and hospitals’ and health systems’ ability to provide the highest quality of care,” said AHA president and CEO Rick Pollack. “Solutions must be worked on to rein in out-of-control drug prices and ease the drug shortages that are putting a strain on patient care.”

“ASHP is at the forefront of efforts to combat the systemic impact of ongoing drug shortages and rapidly rising drug prices,” said ASHP CEO Paul W. Abramowitz, Pharm.D., Sc.D. (Hon.), FASHP. “By working with government agencies and partners such as AHA and FAH, we will continue to offer policy solutions and a roadmap for the changes necessary to ensure optimal care for patients.”

This report updates and expands on a previous AHA/FAH report from 2016 on skyrocketing inpatient hospital drug cost increases by also analyzing outpatient drug costs and the impact of drug shortages. The report found that hospital budget pressures resulting from the continued dramatic increases in drug prices have negative impacts on patient care, with hospitals being forced to delay infrastructure investments, reduce staffing, and identify alternative therapies. Hospitals also struggle with drug shortages, which can disrupt typical work patterns and patient care, and often require significant staff time to address. 

Specifically, the report showed that:

  • 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.