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Doctors and Hospitals Are Radically Over-Charging for Drugs

The prices that hospitals charge patients and their insurance companies for cancer drugs are often at least double what the hospital paid to acquire the drugs, according to a new study in the prestigious medical journal JAMA: Internal Medicine. In some cases, the hospitals marked the drugs up as much as 7X what it cost them to stock it in the supply cabinet.

A separate study sponsored by AHIP, the health insurance trade association, found that:

  • Costs per single treatment for drugs administered in hospitals were an average of $7,000 more than those purchased through specialty pharmacies.
  • Drugs administered in physician offices were an average of $1,400 higher.
  • Hospitals, on average, charged double the prices for the exact same drugs, compared to specialty pharmacies.
  • Prices were 22% higher in physicians’ offices for the exact same drugs, on average.

These are prime examples of how America’s fee-for-service healthcare system drives up the cost of care. Doctors, hospitals and all other healthcare providers are incentivized to charge as much as they can get away with, because neither the patients nor their insurance companies have any bargaining power to drive down costs.