A study released in March found that price markups on specialty drugs by hospitals and professional provider offices will cost North Carolinians $366,770,000 in 2024 compared to if the drugs were supplied by a pharmacy.

The markups are a result of something called “buy and bill” where a hospital purchases a specialty drug and stores it until the drug is needed for patient care. The hospital then marks up the cost of the drug and bills the patient.

For example, let’s say a patient is in a hospital setting to be treated for osteoporosis. Instead of having the patient obtain their medication at a specialty pharmacy, the hospital itself provides the drug that it previously bought and stored. The patient is then unknowingly subjected to a more than 80 percent markup on the drug compared to if they obtained the medication from the pharmacy. That 80 percent is straight profit.

Because of “buy and bill,” North Carolina consumers and businesses will pay on average $52 more for single coverage and $159 more for family coverage in premiums in 2024.

The average hospital markup is 42 percent for them to supply the same specialty drugs that could have been obtained at a pharmacy.

This report comes amid criticism from state officials that North Carolina hospitals are taking advantage of a federal drug program to help turn record profits by significantly up-charging patients for cancer drugs.  

The federal program was originally designed to help patients with low-income afford drugs. But today, it has been reported that hospitals are obtaining drugs at steep discounts and then placing substantial markups on them to secure significant profits.

“The ability of hospitals to charge high prices and earn high revenues from specialty drugs creates socially undesirable incentives for all the major stakeholders in the health care system,” said James C. Robinson, a professor of health economics at UC Berkeley School of Public Health. “Hospitals continue to merge with competitors to be able to raise prices even more. Insurers limit patient access to expensive drugs through requirements for prior authorization and cost sharing. And drug manufacturers raise prices to try to recoup some part of the revenues lost to hospitals.”

It appears clear that price markups on specialty drugs have become a major source of revenue for North Carolina’s hospital systems.

And it is coming at the expense of businesses, workers, and their families.

This year with a price tag north of $366 million.

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