Hartford Business Journal

18 HARTFORDBUSINESS.COM | JANUARY 27, 2025 FOCUS | Health Care Robert Viens is the executive director for government affairs and director of pharmacy at Day Kimball Healthcare in Putnam. CONTRIBUTED PHOTO Tough Medicine CT hospitals seek cure for rising drug costs bags as one example. Overall, he said, "something that cost us five bucks a few years ago now costs us $15, but it's something that we use hundreds and hundreds of, and that's driving costs as well." Paul Kidwell, CHA's senior vice president for policy, said such big increases in lower- priced drugs can result in a huge expense for hospitals. "When there's a drug that is needed 10,000 times a year and there's just a marginal increase, that (adds up to) a big number," Kidwell said. He added that, ideally, drug cost increases "would be considered in the payments made to hospitals by government and commercial payers for the care provided to patients. However, Medicaid and Medicare payments have not kept pace with the cost of care, and commercial insurance rates are negotiated at set times," so what patients pay is deter- mined by their insurance coverage. "This situation results in rising drug costs being shouldered by hospitals and contributing to the overall nega- tive operating margin hospitals are facing," Kidwell said. Viens said drug shortages and supply-chain issues contributed to price increases during and after the pandemic, but price-gouging is also a problem. Kidwell said manufacturers also manipulate patent laws to protect their ability to be the sole producer of a drug. There are ways the federal regula- tory environment could be improved, Kidwell said, "to ensure that those types of things aren't happening." Even before the pandemic, state and federal regulators raised concerns about price-fixing. In 2019, attorneys general from multiple states filed two lawsuits (and later, a third) against 20 of the nation's largest generic drug manufacturers and corporate executives, accusing them of a price-fixing conspiracy. Settlements have been reached with a couple of those drugmakers, which have agreed to pay a combined $49.1 million to resolve the allegations. The Pharmaceutical Research and Manufacturers of America (PhRMA), a trade group that represents drug manufacturers, did not respond to a request for comment for this story. In addition, Connecticut, like other states, has a prescription drug cost transparency program, which requires "drug manufacturers, pharmacy benefit managers, health plans, and others to report information that explains high price increases and high-priced new drugs," according to the state Office of Health Strategy. Medicare, Medicaid & 340B Of course, any discussion of hospital financial woes would be incomplete without talking about Medicare and Medicaid. By David Krechevsky davidk@hartfordbusiness.com T he Connecticut Hospital Association (CHA) in December released a report that said health systems in the state "continue to face extraordinary financial pressures." Even if there were a magic pill to relieve those pressures, chances are pretty good that hospitals would have trouble affording it. The state Office of Health Strategy says hospital expenses have spiked by $3.3 billion since before the COVID-19 pandemic, while revenues have not kept pace. The result was a statewide hospital operating margin of -1.3% in fiscal year 2022 that improved just slightly in fiscal 2023 to -0.5%. Still, the total operating loss for all Connecticut hospitals in fiscal 2023 was $76 million, the CHA said. The rising cost of prescription drugs is one reason for that. According to an October 2023 report from the U.S. Department of Health and Human Services, from January 2022 to January 2023, "more than 4,200 drug products had price increases, of which 46% were larger than the rate of inflation." The average drug price increase during that timeframe was 15.2%, "which translates to $590 per drug product," the report states. It adds that high prescription drug prices "create affordability challenges for patients, health care payers, employers, and taxpayers." In its report, CHA said drug costs in Connecticut grew by 10%, or $249 million, from fiscal year 2022 to 2023. Hospital officials say there are a variety of reasons for the rise in prescription drug prices. They also say they are doing what they can to manage costs, while lobbying federal and state officials for help. Not just 'big-dollar' items Robert Viens, executive director for government affairs and director of pharmacy at Day Kimball Health- care in Putnam, says it's important to put the rising cost of prescription medications into context. "When you talk about things being expensive, you tend to think about the 'big-dollar' items," he said. That might include, for example, the weight-loss drug Ozempic, which costs about $936 for a one-month supply. "But not only are the big-dollar items expensive, the cheaper, everyday drugs are also skyrocketing as well," Viens said, citing IV saline Paul Kidwell RISING DRUG COSTS Drug expenses at Connecticut hospitals increased by 10%, or $249 million, in 2023. That was a higher increase than the national average. HOSPITAL REGION % INCREASE IN DRUG PRICES (2023) Connecticut 10% Northeast/Mid-Atlantic 9% National 6% Source: CT Hospital Association

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