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Price Transparency Strikes Again: New study shows capricious price variation and gouging by hospitals for cancer therapy

A team out of Harvard and Yale recently published in the Journal of the American Medical Association a study of hospital markup in chemotherapy. Looking across more than 60 hospitals designated as National Cancer Institute-designated cancer centers, these hospital systems are supposed to be the best of the best. 

Finding 1: Fewer than half of cancer centers are even complying with the federal price transparency rule enough to measure the prices across different payers for even one of the studied chemo drugs. 

Conclusion: Hospitals that want to hide their prices aren’t doing it because their prices are reasonable and fair. 

Finding 2: Employers – watch out! Markups on chemo drugs ranged from between 118-633%.

Conclusion:: you’re getting gouged, even in the best case.

Finding 3: Markups varied arbitrarily for the same drug across different hospitals by between 220% and 1,580%!

Conclusion: whatever price your hospital charging you is not actually based on cost, it’s based on what they can get away with in your local market. If employers banded together, they could probably change that dynamic.

Finding 4: Markups varied arbitrarily for the same drug within the same hospital, across different insurance plans, by between 180% and 250%.

Conclusion: Other plans are getting a better deal than you are, so it’s worth exploring some workarounds. Ninja moves involve: 1. Carve out your PBM. If you’re using one of the big 3 (OptumRx, ExpressScripts, CVS Caremark), you’re almost certainly getting a bad deal; 2. Bring on a partner to your plan that engages in alternative sourcing and optimizing assistance programs for specialty or infusion drugs. You can often obtain much closer to wholesale rates this way; 3. Insist on chemotherapy in the community rather than a hospital owned oncology department. Your oncologist can refer elsewhere for chemo administration if the patient or the plan  insists. Creating an incentive for patients such as waiving cost-sharing would save your plan dramatically; or 4. “White-bag” the chemo drug by shipping a drug from a lower-cost source directly to the infusion center. This can be disruptive if there are shipping delays or cold-chain mishaps, so be sure to use a quality vendor to help with this process.

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