Drug costs keep going up

medsA lot has been made about EpiPen prices increasing by 1,100 percent in recent months.  EpiPen is life saving allergy medication that has a one year expiration date.  If someone has a severe allergy to bee stings or peanuts an EpiPen may be the difference between life and death.  EpiPen controls the market because there are very few competitors that provide auto-injectors like the EpiPen.  When you control the market and you provide a life saving drug, you can set the price wherever you want and people are going to find a way to buy.

Although the EpiPen price increase seems excessive, it is reflective of what’s occurring throughout the pharmaceutical industry as a whole.  A recent report from the Bureau of Labor Statistics found that prescription drug prices grew 7.3 percent from September of 2015 to September of 2016 which is the highest rate of growth since 1992.  The American Hospital Association recently released a report on trends in inpatient hospital drug costs.  The study found that average annual inpatient spending on pharmaceuticals increased 23 percent between 2013 and 2015.  On a per admission basis the spending grew by 39 percent during the same period.  The spending was driven by increased cost and not by increased admissions because during the same period, hospital admissions decreased.

Hospitals like GVMH are working hard to reduce cost and the federal government is putting a lot of pressure on hospitals to become more cost conscious.  The growth in drug costs isn’t sustainable because during the same time frame as referenced above hospital rates only increased 2.7 percent.  As hospitals divert more money to pay for medications provided to patients it limits their ability to invest in other services that would benefit their patients and the communities they serve.

Back to EpiPen, it may be there was an endgame in mind when Mylan, the manufacturer of EpiPen imposed the price increase.  Mylan has applied the have the EpiPen added to the federal list of preventive medical services.  The list currently contains thing like wellness visits and birth control and anything on the list must be provided by insurance companies and federal payers like Medicare and Medicaid at no cost to recipients.

If EpiPen gets added to the list the cost will shift from consumers to the government and insurance companies.  Ultimately the cost would be absorbed by tax payers and anyone paying a premium to have commercial insurance.  The consumer will still be paying but without any real knowledge of sticker price and Mylan will be out of the spotlight.  It’s a  sneaky way to drive profits and a way to do so when no one is watching.

 

About Craig Thompson

I am a young professional with two great sons, and I work in the healthcare setting. I am employed in hospital administration and serve as Chief Operating Officer at Golden Valley Memorial Healthcare in Clinton, Missouri. These are challenging and exciting times in healthcare and my blog will focus on healthcare, raising boys or being raised by boys, and living in mid America.
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