Blog: Analysis on drug prices fails to provide full context

In addition to being based on a very small sample size, a recently published study on hospital costs for clinician-administered drugs under Medicare Part B does not provide direct insight as to what hospitals actually pay to acquire these drugs, writes Aaron Wesolowski, vice president of policy research, analytics and strategy at AHA.

“While Average Sales Price (ASP) is the price drug companies charge wholesalers, it is not necessarily reflective of the price hospitals pay to acquire the drug,” he notes. “Some drugs do not even have an ASP and as a result, hospitals are forced to purchase the drug at the much higher Wholesale Acquisition Cost (WAC) price. Further, there are also instances where drugs are placed in limited distribution and/or are in shortage resulting in hospitals paying higher prices to acquire the drug. For many hospitals and health systems, this is a persistent and costly problem, and has been exacerbated during the COVID-19 pandemic, as evidenced by Kaufman Hall data that shows hospital drug expenses are 30% higher year-to-date compared to 2019.”