Hospitals Charge Exorbitant Markup For Generic Drugs

Hospitals are charging insane markups on generic drugs administered during observation stays.

After hernia surgery, Mary Corfeld stayed overnight for observation. When she got the bill

It included $16 for four acetaminophen tablets, $4 for a single multiple vitamin, $49 for two breast cancer tablets that Walgreens sells for $9.93 each when purchased in a 30-day supply, and $13.98 for an antacid tablet that sells for $1.27. She also was charged her $258 for an asthma inhaler that costs $42 at Walgreens.

The rub comes because Medicare doesn’t cover the costs of self-administered drugs taking during observational stays. This also means they can’t regulate the practice. Defending it

Beth Earnest, a spokeswoman for Community Memorial, said the hospital’s costs are higher. For example, the drugs are not simply taken from a large bottle, but are individually wrapped, she said

Evident ally, the solution is to hide some generics in your bag and refuse when the hospital tries to feed you one of these golden Tylenols. — BEN POPKEN

Pills for a premium [JS Online] (Thanks to AcilletaM!)

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  1. bones says:

    The high prices for medications while staying in hospitals are due to several factors. First, a pharmacist has to fill each patient’s medications individually. Second, a nurse has to administer medications. So you have to add the cost of a pharmacist and a nurse. Medical – legal requirements mandate these procedures. Medical – legal requirements also don’t allow people to take their own medications. You don’t want a hospital full of patients taking medications that were or were not ordered and may or may not actually be “just tylenol”, or may or may not have been stopped by their doctors when they were admitted. If you were admitted with liver disease, taking “just tylenol” might kill you. And too often “Oh, it’s just tylenol” turns out to be illegally obtained controlled narcotics.

  2. facted says:

    There are instances in which patients are allowed to take medications from home. However, they are basically limited to instances where the medication is not on forumulary at the hospital and it is the only medication that the patietn can take for whatever reason. When that occurs (I’ve seen it once), the medication was sent to the pharmacy and they checked it out and put a hospital label on it to approve it. I highly recommend patients don’t take medications from home while in the hospital, no matter how much money it may or may not save you.

    As for the costs, agree with Bones. There are other factors than just the actual cost of the pill to the hospital.

  3. Michael says:

    One, the cost of your nurse is a separate charge on your bill. Two, even with the extra cost to the hospital to dispense medicine, no matter how you break down the expenses it’s not going to account for an antacid pill being 11 times more expensive.

    That said, I’m grateful to hospitals for all they do and don’t begrudge them needing to take in a lot of money. It’s just that trying to hide the costs in the medicine you receive is a little silly.

  4. kerry says:

    Yeah, there are a lot of added costs, but the base price for the hospital is far below retail. For a while my hospital’s outpatient pharmacy was selling jugs of the hospital’s Tylenol. You could get a bottle of 1500 “hospital use only” regular strength tylenol for $11 (and I did, btw). Same goes for betadine, which sells for about $12 retail and $1.30 at the hospital.
    Part of the reason hospitals charge so much is that medicare and medicaid only pay for 50% of what they’re billed, it’s how the arrangement works. To make up for this, hospitals often charge double for everything.

  5. Michael says:

    Addendum: I realize there are hidden costs in everything. The price you pay for any product or service can include a miriad of things in it, from packaging to transportation to inspection to the salaries of all involved in the process of getting it to the consumer. It’s just in instances where we end up with a pricing disparity so large as to be startling, I think hospitals would do well to stick the cost in some general administration fee in order that their billing makes more sense.

  6. infinitysnake says:

    They don’t pay THAT much more, although the markup from hospital suppliers is still egregious. One of our bills, we were charged $72 for a box of gloves. (retail- $3 hospital retail- $8)

  7. pooryoric says:

    I remember being outraged the first time I saw the charges for pharmaceuticals on a hospital bill, but my wife, the nurse, explained the same way bones did above – it includes the associated costs of delivering the meds to the patient.
    And there was no separate charge for nursing care on that bill, though I suppose that varies.

  8. bearymore says:

    I once had the misfortune of working for a private hospital company. Drug charges were not set on the basis of cost, but of cost shifting. Medicare limited payment for inpatient days but not drugs, so the charges were shifted to the drugs to maximize revenue.

    Seminars were available from various sources on cost shifting and diagnosis upcoding to maximize revenue from Medicare and insurers. Nothing like formalizing thievery.

  9. orielbean says:

    Also, if you get rx’s on the night shift vs the hey will fight tooth and nail against it.day, they have to pay someone extra to come in and unlock the pharmacy after normal hours. It is all those little costs which add up at the end of the day. See, this is one problem which would be solved by a national healthcare system. Right now we only have a national payment system for some people for some things.

    The providers (dr and hospital) then overcharge and change codes to get the max possible. Once there is only a Single Payer, they cannot gouge as much as they are forced into schedules. It would be bad for the professional groups, and rest assured t

  10. facted says:

    orielbean: A good number of hospitals actually lose money and there are quite a few physician specialties which are getting paid less each year. In fact, medicare was set to cut payments to doctors by 4.5%.

    One striking example of how much doctors and hospitals are “fleecing people”: at the hospital I work at, we have a cardiology clinic staffed by residents and an attending physican. The resident spent approximately 35 minutes with the patient, for which the hospital, from medicaid, gets all of $7. My resident is paid a salary by the hospital, but that doesn’t even cover his living expenses, and he has to take a second moonlighting job at another hospital.

    Bringing down the cost of medicine is a noble goal, but why does everyone focus on limiting how much doctors and hospitals get? Why not go after the pharmaceutical companies or insurance companies which cry foul all day long and yet go home every year with great profit margins, while hospitals are left out in the cold. The answers aren’t always so easy.

  11. chickymama says:

    As far as I know nurse charges are part of the bill, not separate as they are normally employees of the hospital. Doctor bills are separate. And bones is correct about the costs going into the bill. Working in insurance billing, it is hard to explain this to patients on a regular basis.

  12. Orinda says:

    What galls me is not just the charges for medications but the infantalization of adults who are in the hospital for non-psychiatric care. Strangely enough, I am perfectly trustworthy to take ibuprofen, vitamins, prescribed meds, etc at all times while outside the hospital . . . but if I ever go inside the hospital, I will have to have these things administered by a nurse from the hospital pharmacy? That makes no sense at all. Why not allow people to bring their routine meds from home and simply report to the medical staff (at intake) what they plan to take and (later) when they have taken it? If an individual is underage, or has psychiatric problems making them untrustworthy, or is otherwise too incapacitated to self-administer, or if the person is known to be at risk for narcotics abuse, or whatever, then sure, put that person on a “no meds from home” status. But if the person is competent and trustworthy to take their asthma inhaler or their multivitamin outside the hospital, then why not inside, too? Personally, I would be very happy to sign a waiver saying that I won’t sue the hospital if I somehow hurt myself by taking my usual multivitamin, or if I sneak something verboten under the guise of a multivitamin from home.

  13. sboedges says:

    In times that one must go to the hospital, usually it is an anxious time for the patient and loved ones involved. No one is really thinking straight, and little details forgotten, which normally occurs in these type of situations, can lead to disasterous consequences. Something as minor as what you eat can affect the meds you take.
    Grapefruit interacts with Xanax and Zoloft, to name a few. So, yes the hospital should take care of all meds for the patient.

  14. Anonymously says:

    A large percentage of medicine’s efficacy comes from the alien nature of the procedures. The more power you can rob from the patient, the more power it gives the doctor, and the strong the treatment becomes.

    Basically you’re paying a premium for an increase in the placebo effect.

    A pill administered by a nurse, while you are restricted to bed and dressed in a garment that exposes your posterior, will probably be more effective than one that is self administered.

  15. facted says:

    Orinda: The majority of patients that I’ve seen in my clinical days thus far can’t even remember what medications they’re taking. They just say: that purple pill or come up with names that are not even remotely close to what they’re taking.

    If patients were allowed, in a hospital, to take medications from home on their own, there could be grave interactions with medications they were taking given by the hospital. Life-threatening interactions, in fact.

    Couple that with the fact that the most common reason for blood pressure pills not working, for instance, is non-compliance (patients often DON’T take the medicine they say they do), and you develop a form of chaos in the hospital, which is really not what you want.

    Lastly, all of this could lead to big lawsuits when things go wrong because a patient took a medicine they weren’t supposed to or didn’t tell a doctor about it. You may not sue, but it happens way too frequently for hospitals and doctors to let this happen.