High drug costs and shortages threaten care quality, AHA warns

Drugmaker price hikes that have occurred in tandem with ongoing drug shortages have not only created headaches for both hospitals and providers  — but also jeopardized patient access to care, according to an analysis published May 22 by the American Hospital Association. 

Inflation has not been the sole factor driving up prices, either. Between January 2022 and January 2023, the prices for about 2,000 drugs "increased faster than the rate of general inflation, with an average price hike of 15.2%," the report states.

The combination of drug shortages and price increases that outpace inflation led to around 85% of hospitals reporting to the AHA that their hospital has been critically or moderately affected, with 99% reporting that their hospital experienced a drug shortage in 2023.

In 2023, hospitals saw the highest number of drugs in shortages in 23 years, another report found. 

Responding to the changing pharmaceutical supply landscape and either acquiring alternative medications, renegotiating contracts or identifying new suppliers raises what hospitals typically spend on drugs by about 20%, the AHA found. 

"Though the problem of high drug prices is not a new issue for hospitals and health systems, the rate at which drug prices are increasing combined with the problem of drug shortages is becoming unsustainable for the field and having a direct impact on patient outcomes," the report reads. "Higher drug prices and increasing drug shortages mean more costs for hospitals and health systems to bear, further stretching their limited resources and ultimately jeopardizing patients' access to needed care."

Here are three more notable findings from the AHA:

  • Generic drugs account for around 83% of drug shortages.

  • The 15.2% average increase in drug prices in 2023 was equivalent to an average increase of $590 per drug.

  • The median annual price for new drugs went up 35% from the year before to $300,000 in 2023.

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