Hospitals mark up drugs by 479%: 6 report findings

On average, hospitals mark up prescription drugs by 479 percent, according to a new report from PhRMA, the drug industry's main lobbying group.

For the report, consultants at the Moran Company analyzed CMS data from 2016, including cost reports for 3,792 hospitals. Analysts compared hospitals' purchase price for certain drugs to the maximum amounts they would charge.

Here are six report findings:

1. Most hospitals (83 percent) charged patients and insurers more than double the cost of medicine. This means they marked up the medicines by 200 percent or more.

2. A majority of hospitals (53 percent) marked up medicine 200 percent to 400 percent.

3. About 1 in 6 hospitals (17 percent) set prices at least seven times more than what the hospital paid for the medicine. A 700 percent markup means that if a medicine cost the hospital $150, patients could be billed $1,050 for that medicine.

4. Eight percent of hospitals, or 320 of the 3,792, set prices more than 1,000 percent higher than what the hospital paid.

5. "Hospitals receive billions of dollars every year in negotiated and mandatory discounts from biopharmaceutical companies while simultaneously increasing the price of these medicines to insurers and patients," said Stephen Ubl, president and CEO of PhRMA. "In order to make medicines more affordable for patients, we must address the role hospital markups play in driving up medicine costs."

6. The report focuses on the sticker prices hospitals charge; however, the prices insurers pay are generally lower.

Read the full report here.

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