Rationale for markups
Resource consumption drives cancer drug prices in hospitals. Medicines that treat cancer are toxic, dangerous chemicals that demand the highest levels of trained personnel, specialized equipment and facilities. The resources hospitals must devote toward making cancer care safe for patients and staff far exceed those required for most other medications. Adding these necessary safety elements adds to the cost of administering cancer drugs. Hospital pharmacists are very heavily involved in the delivery of cancer medicines. Pharmacists spend more time preparing cancer drugs for administration than most other medicines used in hospitals. The higher charges for cancer medications reflect the higher hospital costs.
Comparison with Independent Clinics
Never miss a local story.
Hospitals take all patients. Independent oncology practices have the option of choosing their patients. These independent clinics can elect to treat less ill (and therefore less costly to treat) patients and insured patients. The independents probably take very few if any Medicaid patients. Hospitals treat patients across the entire spectrum of acuity, including the more sick and more costly, and treat the uninsured and those underpaid for by the government programs.
In creating the 340B program, the federal government recognized that some hospitals serve high volumes of patients who cannot pay for the medications and services they receive. The 340B program enables hospitals to purchase drugs at lower costs. This savings for safety-net hospitals is vital to keeping the services extended to low-income patients available in their communities.