Money laundering. Hospitals & clinics buy drugs at lower prices from drug company but sell them to patients/insurance at much higher prices, keeping difference to pay own costs (instead of directly charging more for their services). nbcnews.com/nbc-out/out-he…
This is essentially money laundering. The public gets the impression that the clinic/hospital costs are lower & that drugs are much higher. The trouble is that eventually such drugs go generic, ending the scam.
Clinics that have been marking up HIV drugs for years are now shutting down as those drugs go generic. They would have to charge full price for their services to stay open but seems insurance won’t pay those rates.
Now you might think that such a money laundering scam would be illegal. But it’s not. It’s working as intended. The federal gov’t calls this 340b. It was designed to help hospitals & clinics tack their expenses onto drugs that they bought at discounts.
Patients were never told that their drugs were actually being sold by drug companies for lower prices but then marked up. This is a case of price distortion, along with rebates and copay maximizers. Makes drug list prices go sky high and grow- that’s what public sees.
At this point, around 30-50% of list price a patient pays for a drug goes to some middleman, not the drug company. The net prices drug companies get are lower, have been flat for last 5 years (below inflation). What’s next? Might congress jam its lunch bill into drug costs?
Why not? Free lunch for Washington, patients pay more thanks to shoddy insurance system, & of course drug industry takes heat for rising list prices.
Hospitals & clinics shouldn’t be a part of this problem. They should pass drug costs through, insurance should pay for drugs what drugs costs and for services what services costs.
End 340b. Lower OOP costs. And let’s celebrate when drugs go generic instead of marveling at the stupidity of a system that would have HIV clinics shut down when a medicine they dispense becomes much less expensive.
But no, says Congress. Let’s blame it on people who developed the medicines. Let’s cut incentives for further innovation. Then let’s set up our re-election headquarters in the empty shell left behind by that HIV clinic.
This mess is complicated but it’s not too complex to fix. Check out nopatientleftbehind.org @NPLB_org especially be sure to check out the explainers under “Policy—>Our Presentations” if you want to leave more about how healthcare works and what should be done to fix it.
Oh, laundering of hospital expenses through inflated drug prices doesn’t even end once a drug goes generic. Hospitals mark up generics like crazy to make their services seem cheaper. If hospitals were restaurants, drugs would be the wine. bloomberg.com/news/articles/…
But don’t think we can just cut drug markups to save money. While drugs aren’t THAT expensive (as wine isn’t really $100/bottle), if hospitals can’t mark up drugs, they would just charge what they must for surgery… as they should, so payers can compare & reward efficiency.
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