Study: Hospitals markup drugs 487%, receive 2.5 times what they paid after negotiations

Hospitals markup brand-name drugs nearly 487 percent, according to a study performed by The Moran Company and commissioned by Pharmaceutical Research and Manufacturers of America.

The study examined the charges and reimbursement rates for 20 brand drugs made available through the "Magellan Rx Management Medical Pharmacy Trend Report: 2016 Seventh Edition." Researchers calculated units per claim values by dividing commercial hospital cost-per-claim data by cost-per-unit data and calculated the hospital charge per claim from the 2015 Medicare 100 percent Outpatient Standard Analytic File. They expected charges per unit to be roughly the same for commercial insurers as they were for Medicare. Finally, the average total markup for each drug was weighted using drug-level commercial per member per month data to reflect the volume of each drug in the commercial market.

Though the markup does not reflect the actual cost insurers pay for the drugs, the study found that even after negotiations with insurers, hospitals receive over 2.5 times what they paid for the drugs.

The drugs analyzed spread across a range of treatment areas, from cancer to arthritis, but they were not named in the report.

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