A new entrant in the battle over drug prices: Hospital systems

Not that it isn’t obvious to wonks, but I’m proud to have predicted this years ago, when I thought about the incentives of ACOs and vertical integration. I’ll let Jaimy Lee explain:

All drugs [at  Christiana Care Health System in Wilmington, Del.] that cost more than $10,000 for a course of treatment—about 5% of the medications dispensed through the system’s inpatient and outpatient settings—are now assessed by the medication value subcommittee, which includes 12 physicians, administrators, nurses, pharmacists and finance executives.

The subcommittee looks at a wide range of factors, including the drug’s efficacy and risk and the financial impact on the patient and the healthcare system. A group of five community leaders, including a local high school teacher, a pastor and a community activist, also evaluate factors such as a drug’s tolerability, cost and safety to provide input on quality-of-life issues. Of 27 drugs assessed by the subcommittee, 17 ended up on the system’s formulary list. […]

Hospitals traditionally have been less concerned with drug costs in the outpatient setting. But the move away from a fee-for-service model, the broader push to improve value for patients, and the potential for health systems to end up shouldering all or part of the cost of some pricey medications is driving more interest in controlling the costs of outpatient drugs. […]

“In light of healthcare reform, hospitals have no choice but to select drugs that are effective and have value,” a group of Christiana Care leaders wrote in a 2012 study looking at its cost-scoring system for pricey new drugs. […]

In 2012, oncologists at Memorial Sloan Kettering Cancer Center in New York pulled cancer drug Zaltrap from the hospital’s formulary, arguing in a New York Times op-ed that the drug wasn’t worth its monthly treatment cost of $11,000. The manufacturer Sanofi eventually halved the price of the drug.


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