PhRMA blames hospitals for rising drug prices, hospitals association responds

In a paper titled Hospital Charges and Reimbursement for Medicines: Analysis of Cost-to-Charge Ratios the Moran Company, funded by PhRMA, suggested that on average hospitals charge 479% of the actual cost of drugs they give to patients. However critics have cast doubt on the methodology used to reach that conclusion, as the prices of just 20 different drugs were analysed.

The paper goes on to say that "A small share of hospitals - one in six (17%) - charge seven times the price of the medicine. On a medicine with an ASP of $150, a 700% mark-up would result in a charge of $1050. One out of every twelve hospitals (8%) has average charge markups greater than 1000% - meaning they are charging at least 10 times their acquisition cost for medicines, on average"

PhRMA has gone on to publish both print and digital adverts as part of the 'Let's talk about costs' campaign which began in the summer of last year. The Moran Company data is now playing a central role in the industry group's advertising with one print ad reading "Medicines don’t perform 700% better at a hospital. So why do some hospitals mark them up 700%?"

However, the American Hospitals Association (AHA) has denounced the research as an attempt at shifting the blame. In a statement the organisation commented:"The Pharmaceutical Research and Manufacturers of America (PhRMA) released yet another 'report' in an obvious attempt to divert attention away from a problem of their own making: skyrocketing drug prices. They return once again to their standard playbook of pointing fingers and blaming everyone other than themselves to try to justify the dramatic increases in the prices of drugs, as they continue to make double-digit profit margins. The higher prices that drug manufacturers demand have caused immense hardships for many patients, their families, and the providers who care for them." 

The AHA continued in saying that the Moran Company's report was a "brazen misrepresentation of the facts" as it suggested that "It is time for drug companies to stop attacking others and come to the table with solutions on how to rein-in out-of-control drug prices for patients."

Louis Goss

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