Cost Spotlight: A 443% Markup on Prescription Drugs

May 1, 2012
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Kaiser Health News/USA Today shines a spotlight on increasing hospital costs specifically the price markup of over-the-counter and prescription drugs hospitals administer to patients.  The story examines what happens to patients when hospitals classify the care patients receive as “observational.”  This classification can lead to higher out of pocket costs for patients.  And some of these costs are eye popping.  Some examples from the story include:

Kaiser Health News/USA Today shines a spotlight on increasing hospital costs specifically the price markup of over-the-counter and prescription drugs hospitals administer to patients.  The story examines what happens to patients when hospitals classify the care patients receive as “observational.”  This classification can lead to higher out of pocket costs for patients.  And some of these costs are eye popping.  Some examples from the story include:

  • “Sudden chest pains landed Diane Zachor in a Duluth, Minn., hospital overnight, but weeks later she had another shock – a $442 bill for the same everyday drugs she also takes at home, including more than a half dozen common medicines to control diabetes, heart problems and high cholesterol…For the price she was charged for her insulin during her 18 hour stay at St. Luke’s Hospital, Zachor would have enough to cover her out-of-pocket expenses for a three-month supply under her private Medicare Advantage plan if she had been home. The tab for one water pill to control high blood pressure could buy a three-week supply. And the bill for one calcium tablet could have purchased enough for three weeks from the national chain pharmacy where she gets them over-the-counter.”
  • “In Missouri, several Medicare observation patients were billed $18 for one baby aspirin, said Ruth Dockins, a senior advocate at the Southeast Missouri Area Agency on Aging.”
  • “Pearl Beras, 85, of Boca Raton, Fla., said in an interview that her hospital charged $71 for one blood pressure pill for which her neighborhood pharmacy charges 16 cents.”
  • “In California, a hospital billed several Medicare observation patients $111 for one pill that reduces nausea; for the same price, they could have bought 95 of the pills at a local pharmacy, said Tamara McKee, program manager for the Health Insurance Counseling and Advocacy Program at the Alliance on Aging in Monterey County, Calif., who handled at least 20 complaints last year from Medicare beneficiaries about excessive hospital drug bills.”

Experts say that it is not surprising hospitals markup costs this much.  The reason — “Hospitals use their pharmacies to help generate revenue to subsidize the other operating costs of the facility, said Miriam Mobley Smith, dean of the College of Pharmacy at Chicago State University.”