Insurer Payments, Hospitals Price Markups, and Manufacturer Revenues for Oncology and Specialty Drugs in the US
In this month’s edition of the NOVA SBE Health Economics & Management Seminar Series, James C. Robinson, Leonard D. Schaeffer Professor of Health Economics and Director of the Berkeley Center for Health Technology at the University of California, Berkeley, will present his research on the dynamics between insurer payments, hospital price markups, and manufacturer revenues for oncology and specialty drugs in the United States.
Title: Insurer Payments, Hospitals Price Markups, and Manufacturer Revenues for Oncology and Specialty Drugs in the US
📅 Date: 29th May 2025
⏰ Time: 14:30 (Lisbon Time)
📍 Location: Nova SBE | Room B002
Abstract:
Background: Hospitals can leverage their position between the ultimate buyers and sellers of drugs to retain a substantial share of insurer pharmaceutical expenditures.
Methods: In this study, we used 2020-2021 national Blue Cross Blue Shield claims data regarding patients in the United States who had drug-infusion visits for oncologic conditions, inflammatory conditions, or blood-cell deficiency disorders. Markups of the reimbursement prices were measured in terms of amounts paid by Blue Cross Blue Shield plans to hospitals and physician practices relative to the amounts paid by these providers to drug manufacturers. Acquisition-price reductions in hospital payments to drug manufacturers were measured in terms of discounts under the federal 340B Drug Pricing Program. We estimated the percentage of Blue Cross Blue Shield drug spending that was received by drug manufacturers and the percentage retained by provider organizations.
Results: The study included 404,443 patients in the United States who had 4,727,189 drug-infusion visits. The median price markup (defined as the ratio of the reimbursement price to the acquisition price) for hospitals eligible for 340B discounts was 3.08 (interquartile range, 1.87 to 6.38). After adjustment for drug, patient, and geographic factors, price markups at hospitals eligible for 340B discounts were 6.59 times (95% confidence interval [CI], 6.02 to 7.16) as high as those in independent physician practices, and price markups at noneligible hospitals were 4.34 times (95% CI, 3.77 to 4.90) as high as those in physician practices. Hospitals eligible for 340B discounts retained 64.3% of insurer drug expenditures, whereas hospitals not eligible for 340B discounts retained 44.8% and independent physician practices retained 19.1%.
Conclusions: This study showed that hospitals imposed large price markups and retained a substantial share of total insurer spending on physician-administered drugs for patients with private insurance. The effects were especially large for hospitals eligible for discounts under the federal 340B Drug Pricing Program on acquisition costs paid to manufacturers. (Funded by Arnold Ventures and the National Institute for Health Care Management.).
SHORT BIOGRAPHY: James C. Robinson, PhD, MPH
James Claude Robinson is a Professor of Health Economics in the School of Public Health at the University of California, Berkeley, where he has the title of the Leonard D. Schaeffer Endowed Chair in Health Economics and Policy. Robinson is also the Chair of the Berkeley Center for Health Technology, which supports research and professional education projects related to coverage, management, and payment methods for innovative technologies including biopharmaceuticals, medical devices, and diagnostics.
At Berkeley, Professor Robinson teaches health policy and economics, focusing on the biotechnology, medical device, insurance, physician, and hospital sectors. He has published three books and over 140 papers in scientific and policy journals such as the New England Journal of Medicine, JAMA, and Health Affairs.
This event is part of the Social Equity Initiative , a partnership between Fundación ”la Caixa”, Banco BPI and Nova SBE.