Thread by @wbfeldman

1/ New paper out w/ @bnrome @Beatrice__Brown @akesselheim @PORTAL_Research examines how top-performing hospitals mark up prices on clinician-administered drugs.

🧵 below.

jamanetwork.com/journals/jamai…

2/ As of January 1, 2021, hospitals must now post payer-specific prices for all goods and services, including clinician administered drugs.

nejm.org/doi/full/10.10…

3/ Early compliance with the rule has been sluggish. See great work from @suhas_gondi @AdamLBeckman @averyofoje @JMichaelMcW

jamanetwork.com/journals/jamai…

4/ Many hospitals were actually hiding their files from searches. @mcgint @annawmathews @_melaevans @WSJ

wsj.com/articles/hospi…

5/ But with ~9 months of data, we sought to examine variation in drug prices at top-performing hospitals, focusing on 10 highly utilized drugs at 20 top hospitals.

Our focus was on the rates negotiated with commercial insurers.

6/ An important aside about methodology: #Medicare sets reimbursement rate at the average sales price (#ASP) + 6% (or 4.3% during budget sequestration). We compared the payer-specific price of each drug relative to the #Medicare reimbursement rate.

7/ We found substantial variation by #drug, #hospital, and #insurer.

8/ Take #infliximab, a drug used to treat #Crohn disease and other auto-immune conditions.

The median negotiated rate at several hospitals was > 400% the Medicare reimbursement rate.

At @MayoClinic in Arizona, the median was 860% the Medicare reimbursement rate.

9/ Even at the same hospital, different commercial insurers paid vastly different prices.

At @umichmedicine, some commercial insurers paid as low as 102% of the Medicare reimbursement rate for infliximab; others paid as high as 880%.

10/ This pattern was observed across drugs and hospitals. For the 10 drugs in our sample, the median negotiated rates with commercial insurers ranged from 169% of the Medicare reimbursement rate @RushMedical to 344% at @MayoClinic in Arizona.

11/ We also examined self-pay cash prices. These are the prices charged to the uninsured (or those who otherwise pay without insurance).

Median self-pay cash prices ranged from 149% of the Medicare reimbursement rate @RushMedical to 306% @BrighamWomens and @MassGeneralNews.

12/ What are we to make all of this?

13/ Top-performing #hospitals routinely charge commercial insurers prices for #prescription #drugs far in excess of the acquisition costs for these drugs. And they may earn considerable revenue in the process.

14/ The potential revenue is particularly sizeable once we consider that more than three-quarters of hospitals in our sample were #340B entities.

15/ #340B hospitals serve vulnerable patient populations and are entitled to acquire drugs from manufacturers at steep discounts.

These hospitals can earn high sums from markups on commercial insurers.

hrsa.gov/opa/index.html

16/ Our findings are consistent with a recent report by Ronny Gal examining #340B DSH Hospitals.

communityoncology.org/hospital-340b-…

17/ Our findings also fit within a broader literature on #340B led by @contirena1 @saynikpay @MelindaBBuntin @peterbachmd @sunitamd @JMichaelMcW @DrugChannels raising questions about whether this program is fulfilling its mission.

18/ See, for example, important work @contirena1 @saynikpay @MelindaBBuntin @JAMANetworkOpen estimating that #340B hospitals earned ~$2 billion from Medicare on prescription drugs in 2016.

jamanetwork.com/journals/jaman…

19/ And work by @contirena1 & @peterbachmd showing how 340B may have shifted to serve more affluent communities.

healthaffairs.org/doi/full/10.13…

20/ @sunitamd & @JMichaelMcW found that #340B participation was associated with more hematologists-oncologists and ophthalmologists than would otherwise be expected. (These specialties often use expensive clinician-administered drugs).

nejm.org/doi/full/10.10…

21/ Our work should also be understood within the broader context of #hospital pricing for many goods and services. See, e.g., the phenomenal reporting by @sarahkliff @jshkatz @iamrumz @UpshotNYT.

nytimes.com/interactive/20…

22/ There are several limitations to our study. First, we do not know the payer mix at hospitals. Payers who negotiate the lowest rates may have the highest volume of patients at that hospital. We focus on median reported price, not the median prices that hospitals receive.

23/ Second, we only examined a small sample of top-performing hospitals. Within this sample, only 55% reported payer-specific drug prices.

24/ We did attempt to contact all hospitals that failed to post the relevant data. We received some interesting responses.

25/ @StanfordMed and @UCSFHospitals posted files that contained thousands of rows with cells that just said “variable” and no actual prices for drugs.

Official response: negotiated contracts did not have fixed prices and so could not be provided.

26/ Some hospitals said that they were in compliance even though they had only posted negotiated prices for a small number of goods and services.

27/ We are hopeful that our study may shine further light on the need for better enforcement of the transparency rule.

The Biden administration has outlined new plans to address non-compliance. @annawmathews @_melaevans

wsj.com/articles/u-s-r…

28/ We also hope that this work will serve as a starting point for larger studies that examine more hospitals and more drugs.

29/ In the end, #patients in the US suffer from high prescription drug costs.

#Manufacturers contribute to the problem by setting high prices.

#Hospitals exacerbate it through substantial markups.

30/ Thanks to @edsilverman @pharmalot @statnews for covering our work. @bnrome @Beatrice__Brown @akesselheim @PORTAL_Research

statnews.com/pharmalot/2021…