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Report: Increasing Drug Prices, Shortages Causing Hospitals to Cut Staff, Putting Patient Safety at Risk

Jaime Rosenberg
Between 2015 and 2017, drug spending increased by nearly 20% as drug shortages also increased, resulting in hospitals cutting staff and warning that patient safety is at risk.
Rising costs and shortages of drugs are disrupting patient care and causing staffing cuts across hospitals, according to a report from the American Hospital Association, the Federation of American Hospitals, and the American Society of Health-System Pharmacists, in conjunction with the National Opinion Research Center (NORC).

Drug spending in the United States has become a central focus in healthcare discussions, with year-over-year growth reaching 12.4% in 2014 and 8.9% in 2015. Research has shown that this spending growth is driven by price, not utilization.

Between 2015 and 2017, average total drug spending per hospital admission rose 18.5%, with outpatient drug spending per adjusted admission increasing by nearly 30% (28.7%) and inpatient spending increasing by 10%. Increases in drug spending in each setting surpassed growth in Medicare hospital payment rates, as well as growth in general healthcare expenditures during the period.

Using a combination of survey data, informational interviews with 1184 hospital and health system executives, and pricing and spending data from 2 group purchasing organizations, the report also found that hospitals experienced price increases of more than 80% across different classes of drugs, such as anesthetics, parenteral solutions, and chemotherapy.

When asked how policy makers can help contain rising drug costs, “interviewees indicated much room for improvement in the ‘value-added’ of new drugs,” states the report. “They noted that prices should reflect the added cost-benefit for morbidity or mortality relative to existing drugs; called for more evidence from manufacturers on the comparative effectiveness of new drugs; and suggested increased scrutiny of new drugs to validate the need for substantive clinical trial data.”

For the top 10 drugs with the highest hospital spending in 2017, there was an average increase of 9.9% per unit between 2015 and 2017, with notable increases among alteplase (Activase), immunosuppressants such as adalimumab (Humira), orphan drugs such as infliximab (Remicade), and hepatitis C drugs.

Nearly two-thirds of hospitals reported that hikes in drug prices had a moderate to severe impact on their budget and 15% indicated that the increases impacted their budgets to a large extent.

In response to budget constraints, 90% of hospitals reported identifying alternative therapies and 1 in 4 reduced staffing.

The report also highlighted the impact that drug shortages have had on hospitals, with 80% indicating that they found it “extremely challenging to obtain drugs in short supply.”

These shortages included opioid injectables, saline, sodium bicarbonate, sterile water, epinephrine, and dextrose.

“The key informant interviews revealed that drug shortages can create a substantial burden, often times siphoning off critical staff hours that should be dedicated to care delivery, ultimately creating the potential to impact patient care,” states the report.

Hospitals indicated several actions taken to mitigate drug shortages and continue caring for patients, including additional communications to ensure patient safety due to drug or packaging changes, substituting a more expensive drug or therapy, diverting staff to manage drugs in shortage add/or drug inventory, adjusting electronic health record documentation and management, and changing patient care patterns or delaying therapy.

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