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Report: Shift to Hospital Outpatient Facilities Drives Chemo Costs Higher

U.S. accounts for 41% of global spending on cancer drugs

According to a new report from the IMS Institute for Healthcare Informatics, the price of cancer drugs has doubled during the past decade, with the average brand-name cancer treatment in the U.S. costing $10,000 for a month’s supply — up from $5,000 in 2003.

Americans are also paying higher prices because more patients are being treated by oncologists whose practices have been bought by hospitals, which may charge double or more for the same treatments, the report said.

The authors calculated the prices for 10 common chemotherapy treatments and found that reimbursement levels for drug administration costs in hospital outpatient facilities were on average 189% of the level of physician office-reimbursed costs for commercially insured patients under the age of 65 years. The higher costs in hospital outpatient facilities were incurred despite the increasing proportion of hospital systems that benefit from discounted drug pricing via 340B eligibility.

Congress created the 340B Drug Discount Program in 1990, requiring drug-makers to provide medications at significantly reduced prices to health care organizations that treat a large number of underserved people.

Hospitals say the higher charges are needed to support overhead and administrative costs — but they often translate into steeper out-of-pocket costs for insured patients, depending on how their benefits are set up.

The report calculated that for commonly used cancer drugs, the average increased cost to patients was $134 per dose if treatment is received in a hospital outpatient setting rather than in an oncologist’s office. Moreover, since patients often receive multiple therapies at the same visit, the increased costs may result in “significant increases in member financial burden,” according to the report.

The authors noted that patients who face higher out-of-pocket costs are more likely to withdraw from treatment. The report cited a study showing that an increase of as little as $30 in co-pays caused some breast cancer patients to skip or drop therapy.

The higher charges come even as a federal program expanded under the Patient Protection and Affordable Care Act allows many hospitals to purchase cancer drugs for as much as half the wholesale price, the authors said. Hospitals can use the less-costly drugs in the oncology practices they bought and charge steeper fees, the authors found.

Global spending worldwide on cancer drugs reached $91 billion last year, with the U.S. accounting for $37.2 billion (41%) of that, the report said.

Sources: Kaiser Health News; May 6, 2014; and IMS Institute; May 2014.

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