The Pharmaceutical Research and Manufacturers of America (PhRMA) announced that hospital systems are marking up decades-old cancer drugs significantly above Medicare rates. This practice is raising costs for patients and employers, while also highlighting concerns about incentives linked to the 340B program as the debate grows in New Jersey.Â
According to an analysis of Turquoise Health data covering more than 1,700 hospitals, eight generic cancer drugs, and major insurers, approximately 40% of hospitals charged at least one insurer five times—or more—the Medicare payment rate for these older chemotherapy drugs. For instance, Medicare would pay around $35 for a dose of oxaliplatin, yet nearly 150 hospitals billed at least one insurer five times that amount or higher.
Bloomberg highlighted the case of colon cancer patient Ida Martin. Her first oxaliplatin infusion at Rush University Medical Center cost her plan $13,560. Three weeks later, the same drug at another clinic in the same health system cost $134. Unite Here Health reported a California case where oxaliplatin infusions totaled nearly $90,000—over 700 times the Medicare rate. The plan estimated that chemotherapy markups alone added about $10 per member per month in one of its plans.
The 340B program allows eligible hospitals and clinics to buy outpatient drugs at steep discounts but bill insurers at full price, generating revenue from the price difference rather than guaranteed savings for patients. Separately, the Federal Trade Commission (FTC) reported that the three largest pharmacy benefit managers (PBMs) marked up specialty generic drugs for cancer and other conditions, producing $7.3 billion in excess revenue from 2017 to 2022, with markups sometimes reaching hundreds or even thousands of percent.
National research on 340B oncology and infusion drugs shows that after eligibility expansions, participating hospitals across states, including New Jersey, increased spending on outpatient-administered drugs for commercially insured patients without evidence of commensurate patient savings. The study concludes that 340B incentives may encourage higher markups and site-of-care shifts, raising concerns about whether New Jersey patients are seeing any direct relief on their medical bills.
PhRMA is the U.S. trade association representing leading biopharmaceutical research companies. On its website, PhRMA states it works to advance policies supporting discovery and development of new medicines and vaccines while improving patient access and affordability. It publishes policy briefs and research on issues like 340B, PBMs, and pricing transparency and advocates for a healthcare system that rewards innovation while lowering out-of-pocket costs for patients.
