Hospital looks to soften drug price hits

Efforts continue to protect patient health while costs soar
September 28th, 2016

The recent public outcry over steep price increases for Mylan Specialty’s EpiPen, an auto-injection device used to deliver epinephrine to counteract the effects of anaphylactic shock, has shined a light on the profit-generating practices of some drug manufacturers.

University of Colorado Hospital is among the many health care organizations, insurers and individual consumers absorbing the steadily rising cost of the EpiPen, which reached more than $600 for a two-pack this year. The cost of the device has climbed more than five times since 2010. The company hastily announced availability of a $300 coupon card and plans to release a generic version of the auto-injector system, but it took public relations hits after congressional hearings and revelations that it underestimated the profits it earned on sales of the two-pack.

In a hospital like UCH that spends tens of millions of dollars each year for drug supplies, the EpiPen is a relatively small player. Erik Johnson, PharmD, supervisor of Pharmacy Services for UCH, said the hospital dispenses about $20,000 in epinephrine auto-injectors each month, the vast majority of them EpiPens. But the EpiPen is only a high-profile example of the rising cost of drugs, Johnson said.

For example, when he began his professional career 15 years ago, Johnson said, insulin typically ran about $15 to $20 a bottle. Today, it’s $75 to $100. “It’s more than regular inflation,” he said.

In 2015, the hospital paid the price for staggering hikes on three frequently used drugs – nitroprusside, isoproterenol, and vasopressin. The bill for those cost increases alone: $2 million. The challenges of managing costs while protecting patients’ health and safety haven’t gotten easier, said UCH Pharmacy Director Nancy Stolpman, PharmD, PhD.

“Many of the increases are random,” she said. “We try to predict inflation, but the market is too volatile.”

A good illustration of that occurred early this year when Valeant Pharmaceuticals suddenly more than doubled the price for aerosolized ribavirin, a very expensive inhaled drug used to treat infants and children with pneumonia and to prevent worsening of upper respiratory tract viral infections in adult patients with suppressed immune systems, such as those recovering from lung transplants or battling blood malignancies.

Sticker shock

Drug supply inflation adds significantly to the hospital’s cost of doing business. For fiscal year 2017, which began July 1, the budget for drugs increased 5.3 percent, said Alison Mizer, director of finance and controller for UCH. That translates to more than $2 million above the outlay for the previous year – and before any unanticipated increases like the ribavirin surprise.

The rising cost of the EpiPen accounts for a relatively small portion of the hospital’s inflation hit, but it can have an outsized effect on individuals, Stolpman said. Kids and adults with severe allergies have to make sure their injectors are with them and ready to deliver a potentially lifesaving shot. The epinephrine, which by itself costs only a few dollars, has only a 12- to 18-month shelf life, so the auto-injectors have to be replaced regularly whether they get used or not.

“Some families are starting school season with a huge out-of-pocket expense,” Stolpman said.

Johnson said the Pharmacy team and providers try to direct patients who are uninsured or underinsured to a lower-priced generic auto-injector from Lineage Therapeutics, and to coupon cards to defray expenses. But even a Lineage auto-injector typically runs $450 retail, he said. A $300 coupon for a cash-paying customer knocks the cost down to $150, but some patients still can’t afford it. In those cases, the hospital absorbs the expense.

“We’re not in the business of sending people home without vital medications,” Johnson said. “We write that cost off.”

Many people covered by insurance, as well as those enrolled in Medicare and Medicaid, won’t pay anywhere near the full price for the EpiPen. But Stolpman noted that individuals with high-deductible plans “will be hit hard” by the price hikes. In addition, the responsibility for paying for the increases always falls somewhere. Insurers pass their costs along to their enrollees in the form of higher premiums; accelerating Medicaid expenses must be reckoned, either with tax hikes or cuts in services.

“We are all paying for the for-profit behavior of some drug manufacturers,” Stolpman said.

Budget buster, patient peril

The high-profile EpiPen hike to some extent obscures even more startling drug increases that affect care for vulnerable populations.

Take aerosolized ribavirin. What had already been a very expensive treatment, at about $10,000 per day for a five-day regimen, ballooned without any advance warning to $23,000 a day, said Gerry Barber, RPh, MPH, coordinator of the Pharmacy and Therapeutics Committee and Clinical Pharmacy Services for UCH. That cost was on top of a minimum five-day hospital stay, during which patients are confined to a negative air pressure room for the nebulized treatment.

The increase was especially worrisome because aerosolized ribavirin was generally accepted as “the only available treatment option” to slow the progression of viral infections from the upper to the lower respiratory tract and stave off bronchiolitis, said Matt Miller, PharmD, an infectious disease pharmacy specialist. The jump also coincided with steady growth in the number of blood disease and blood and marrow transplant patients at UCH.

Looking for an alternative to mitigate what Barber called the “egregious expense” and “meager outcomes data” for aerosolized ribavirin, the Pharmacy Department decided to investigate using the oral form of the drug, which costs a tiny fraction of the inhaled version. They consulted with Marty Zamora, MD, professor of Pulmonary Sciences and Critical Care at CU and a lung transplant specialist, and with Norihiro Yogo, MD, an infectious disease specialist and director of antimicrobial stewardship at UCH. The change would have to be monitored and evaluated tightly to ensure patient safety.

Oral report

Barber, Miller, Yogo and others formed a team that brought in Fiona Wong, a pharmacy intern with Barber for the inpatient pharmacy and a student at the University of Colorado’s Skaggs School of Pharmacy and Pharmaceutical Sciences. The goal: develop a protocol for administering oral ribavirin to treat community-acquired respiratory virus infections in patients with hematologic malignancies. They consulted with Jonathan Gutman, MD, associate professor in Hematology with the CU School of Medicine, who was receptive to moving forward.

The protocol for administering oral ribavirin began last March. Critically ill and mechanically ventilated patients were excluded. Eight patients went through the oral regimen, compared with five who received the aerosolized treatment. Barber said the team worked closely with Ambulatory Pharmacy and the Medication Access and Renewal Center to ensure patients got their oral medications.

Barber and Miller
Pharmacy’s Gerry Barber (left) and Matt Miller helped to spearhead a protocol testing the safety and efficacy of oral ribavirin in treating viral respiratory infections in patients with blood cancers at UCH.

The results of the study were promising, although both Barber and Miller caution that the number of patients involved was small. Still, there were no infection-related mortalities or adverse drug events in either group. One patient treated with aerosolized ribavirin and two treated with the oral form were readmitted to the hospital within 30 days, but none of the readmissions was related to the viral infection. The average length of stay per hospital admission for the oral ribavirin group was five days, compared with 10.4 for the aerosolized group, an important benefit.

“These are very fragile patients and our aim is to keep them out of the hospital and out of harm’s way when we can,” Barber said.

The oral protocol produced estimated direct cost savings of $920,000, Wong concluded in an abstract of the study, with indirect savings possible through fewer hospital admissions and shorter lengths of stay. Most importantly, using oral ribavirin as a preferred method of treatment did not affect patient outcomes or safety.

More work needs to be done to evaluate the use of oral ribavirin and the effectiveness of the protocol, Barber added. But the effort “should spur others” to think about their use of drugs and examine the evidence of their effectiveness over lower-cost alternatives, he said.

The times demand that, Stolpman agreed. “We always examine the cost of drugs with a microscope and look at alternatives,” she said. “The price increases have forced the issue.”

About the author

Tyler Smith has been a health care writer, with a focus on hospitals, since 1996. He served as a writer and editor for the Marketing and Communications team at University of Colorado Hospital and UCHealth from 2007 to 2017. More recently, he has reported for and contributed stories to the University of Colorado School of Medicine, the Colorado School of Public Health and the Colorado Bioscience Association.