The Time Is Right to Address High Drug Prices
Rising prescription drug prices impact all of us, with the average American spending $1,200 per year on their medications. For nearly one in four Americans, these costs are difficult to afford and force hard choices between housing, food, or medicine. Just as our patients struggle to afford their medications, providers have also found it increasingly difficult to manage the frequent, unexplained, and unpredictable drug price increases plaguing our system. For these reasons, I applaud Congress and the Administration for their ongoing efforts to find bipartisan and meaningful solutions to the issue of drug pricing. But more can be done.
I recently testified before the House Energy & Commerce Health Subcommittee to share Ascension’s experience with high and rising drug prices, and their impact on our system and the patients we serve. As I told the Subcommittee, Ascension has had to mitigate against a 34 percent increase in drug costs over four years. This equates to $564 million in added costs to provide life-sustaining therapies to our patients. Managing our expenditures is extremely important. We cannot carry out our mission to its fullest potential without being good stewards of our finite resources. At Ascension, that mission is to provide the highest quality care for the patients we are privileged to serve, with special attention to those most vulnerable. Any added costs we incur detract from resources we could otherwise invest into serving the community, providing free or low-cost care, and offering financial support to patients who are struggling.
And while pharmaceutical price inflation is nothing new, the frequent and unpredictable increases we have seen in the last few years are unprecedented. High and rising drug prices have become the largest driver of hospital costs. This is unsustainable. For other types of supplies, we have seen a steady decline in prices resulting from negotiations and competition. In the prescription drug market, the lack of competition driven by sole-source products and patent abuses means manufacturers have almost no incentive to offer providers negotiated price concessions or other contracting accommodations.
A common misperception is that systems like Ascension can leverage our size to obtain significant discounts on drugs. But the fact is, manufacturers are only willing to negotiate for about half of the drugs we buy. We have no leverage when it comes to drugs that face no competition. In fact, even the vast majority of contracts we are able to negotiate do not establish a set price for the year. We remain subject to the drug makers’ desire to raise prices, despite our best efforts. This has a significant impact on our ability to forecast, budget, and steward our resources to benefit patients.
We manage this unpredictable and costly situation in several ways. When the cost of a drug spikes, we explore lower-cost alternative therapies that we can implement without compromising patient care. This process requires evidence-based research, clinician education, and changes to electronic systems – which can take months to implement. In many cases, substitution simply isn’t possible, and we are forced to absorb the higher cost of the drug. Observers might expect these added costs are reimbursed. Not always. Inpatient stays are paid as bundles, which remain fixed throughout the year. For hospitals, this means drug price increases fall squarely on us.
And when patient out-of-pocket expenses go up even after we’ve done everything possible to keep underlying costs down, we offer a variety of programs to limit patient impact. We provide medications at low or no cost, deliver free medical care in and out of the hospital, embed nurse services in school districts, and more. These programs are often made possible with savings derived from the 340B Drug Pricing Program, a vital tool that allows qualified hospitals to mitigate against the impacts of high and rising drug prices and expand services for those most in need.
But the most effective way to keep costs down is to keep prices down. This requires greater competition. Fortunately, the time is ripe – we are experiencing a rare moment in Washington of bipartisan, bicameral, and Administration support for meaningful change. We urge Congress to build on the momentum already achieved and pass legislation to spur competition and bring lower drug costs to the market. Lawmakers can help facilitate lower prices by supporting faster FDA approval and market entry of generics and biosimilars, increasing funding for public and private research on drug pricing and value, and ending patent and data exclusivity abuses. We owe it to patients across our country to move forward with solutions that increase access to affordable prescription drugs.
Lynn Eschenbacher, PharmD, MBA, FASHP is Chief Pharmacy Officer for Ascension, the nation’s leading Catholic and non-profit healthcare system