Irrational Hospital Drug Prices

A May 20th report from the Michigan Health Purchasers Coalition reveals drug pricing at Michigan hospitals which defy rhyme and reason.  Even the prices within a hospital system vary radically from hospital to hospital:

https://www.freep.com/story/news/health/2025/05/29/michigan-health-purchasers-coalition-prescription-drug-price-differences-michigan-hospitals/83750921007/

https://mihpc.org/wp-content/uploads/2025/05/MIHPC-Press-Release-5.20.25-Final-w-links-2.pdf

Some Michigan hospitals marking up drug prices by up to 800%, report finds
By Kristen Jordan Shamus - May 29, 2025

*   Some Michigan hospitals are marking up prescription drug prices by 800% above what they they pay manufacturers, according to a new report from the Michigan Health Purchasers Coalition.
*   The MIHPC issued a report detailing its analysis of the prices for the same three drugs across 53 Michigan hospitals and found a broad range of pricing for Neulasta, Orencia and Humira.

Some Michigan hospitals are marking up prices by thousands of dollars above what they pay manufacturers for certain prescription drugs, according to a new report from the Michigan Health Purchasers Coalition, a nonprofit patient advocacy organization.

The analysis compares the prices of three specialty drugs across 53 Michigan hospitals and suggests that even within a single health system, the charges billed to patients and their health insurance plans can vary by as much as $14,600 for the same medication at the same dosage — and were sometimes more than 800% higher than the manufacturer's average sales price.

"We honestly just think that it's the hospitals taking advantage of an opportunity to make more money," said Bret Jackson, president of the coalition, which issued the report in late May.

The effect is that consumers pay more out of pocket, Jackson said, at a time when medical debt in the U.S. has reached $220 billion, burdening about 1 in 12 U.S. adults, according to a Kaiser Family Foundation analysis.

Laura Appel, executive vice president of the Michigan Health and Hospital Association, said hospital drug pricing is complex and is affected by multiple factors, including the price at which manufacturers sell the medicine, the volume of medicine hospitals order, the costs of properly storing it and administering it.

"We're all paying attention to affordability and trying to make sure that patients get the care they need without being financially burdened, but we don't think that the place to start is by placing blame on hospitals, which are really, to some extent, price takers from drug manufacturers," she said.

The coalition's report used Turquoise Health, a health industry price transparency platform, to find the drug pricing data hospitals report to the U.S. Centers for Medicare and Medicaid Services. It compared those numbers with the volume-weighted average sales price (after rebates, discounts, etc.) at which manufacturers sell drugs to all purchasers.

The report detailed pricing for three specific specialty drugs:

Neulasta, also known by the names Nyprevia or pegfilgrastim, used to lower the risk of infection in people with cancer who are being treated with chemotherapy and/or radiation. The average sales price manufacturers charge for a 6-mg dose is $239.77, according to the report.

Orencia, also known by the name abatacept, used to treat such autoimmune conditions as rheumatoid arthritis, psoriatic arthritis, juvenile idiopathic arthritis and to help people who have undergone stem cell transplants prevent acute graft-versus-host disease. The average sales price manufacturers charge for a 750-mg infusion dose is $3,253.28, according to the MIPHC.

Humira, also known by the name adalimumab, used to treat people with autoimmune diseases like rheumatoid and psoriatic arthritis, Crohn's disease, ulcerative colitis, juvenile idiopathic arthritis, hidradenitis suppurativa and uveitis. The average sales price manufacturers charge for a pack of two, 40-mg injectable doses (total 80 mg) is $1,748.44, the coalition reported.

It found, for example, that at Henry Ford Health, which has 13 acute-care hospitals and two specialty hospitals serving six Michigan counties, patients at the Rochester hospital were charged $2,728 per 80 mg of Humira. But at three other metro Detroit Henry Ford hospitals — in Madison Heights, Warren and St. John in Detroit — the cost of Humira was $12,738. And at Henry Ford Jackson Hospital, patients were charged $15,808.

That’s a difference of $13,080 for the same amount of Humira between the most expensive and least expensive Henry Ford Health locations. And there’s an 804% upcharge between the average sales price and the cost of the medicine at the Jackson hospital, according to the MIHPC.

At Corewell Health, the state's largest health system with 21 hospitals across the Lower Peninsula, the cost ranges from $1,949 per 80-mg lot for Humira at the Grand Rapids Butterworth hospital to $7,338 per 80-mg pack at its hospitals in Royal Oak and Troy. By comparison, Humira is available at a discounted price on GoodRx for $550.

That’s a difference of $5,389 between the most expensive and least expensive Corewell locations for the same medication, and there’s a nearly 320% upcharge between the average sales price and the cost billed to patients for the drug at the Troy and Royal Oak Corewell hospitals, according to the MICHP data.

"There is no difference between Humira that you get at hospital A versus Humira you get at hospital B," Jackson said. "This shows that this excessive marking up of drug prices is really just the type of corporate greed that we're getting from these big, large consolidated health systems."

The analysis found that of the hospitals it investigated, the cheapest price for Humira was at the University of Michigan Health in Ann Arbor, which charged $1,201.

Health systems refute coalition's pricing data

Henry Ford Health spokesperson Lauren Zakalik said the Detroit-based health system couldn't corroborate the pricing included in the coalition's report.

"We welcome an informed, healthy conversation on this important topic in which everyone understands and has access to the same standardized set of data," she said in an emailed statement to the Detroit Free Press. "That is not the case here. We feel it’s vital to continue to point out the data this group is using to shape its findings cannot be corroborated. Because we can’t validate their analysis, it’s impossible to interpret or make any sense of their claims."

Zakalik did not disclose what it charges for Humira, Neulasta or Orencia at any of its hospitals. Instead, she said: "Sharing the individual list prices would create unnecessary and unfounded concern and confusion for our patients. Should our patients ever have any concerns about their individual drug costs, we have an entire team dedicated to this."

Corewell Health also did not disclose a list of prices for the drugs at its hospitals, saying in a statement: "The pricing estimates provided by MIHPC do not accurately reflect charges or negotiated reimbursement rates for the drugs they have highlighted. Pharmaceutical pricing is highly complex and takes into account factors such as where the drug is delivered, how it is administered, dosing, the manufacturer, contractual agreements with both suppliers and payors (sic), routine price changes from suppliers and individual patient circumstances."

Jackson acknowledged that patients rarely pay out of pocket the full amount that hospitals bill for prescription drugs; nearly 96% of Michiganders have some form of health insurance coverage, according to KFF. Insurance companies typically negotiate with hospitals to reduce the price they'll pay for prescription drugs, he said.

"One of the limits of transparency ... is we can't find out: What is the actual number in total of all the drugs that are sold in Michigan by hospitals (and) how much revenue is being taken in?" he said. "But what we can do ... is look at individual drugs and we can see how much patients are actually paying for drugs right now."

The prices, he said, also don't include fees to administer the medication. Neulasta, for example, is given by infusion. Orencia also can be delivered by infusion or via injection. Humira is an injectable drug.

"There is a separate charge for the nurse or doctor or clinician to infuse the drug into the patient," Jackson said. "They are paid for that separately. This is just the cost of the drug itself — the same drug — at various hospitals around the state."

He explained that private, employer-based health plans often use an 80/20 coinsurance model for hospital services, requiring patients to pick up 20% of the total bill, while the insurance company covers the remaining 80%.

"When a hospital is delivering a drug to a patient, the patient doesn't pay a co-pay, like they would in the pharmacy," Jackson said. "They pay a co-insurance or they pay the percentage of the total hospital bill. And so the average co-insurance for hospital bills in the state of Michigan on private employer insurance arrangements is around 20%.

"The patient would pay 20% of whatever is charged for that drug. ... The employer is paying 80% if they have private insurance."

Based on the MIHPC analysis, a patient with a 20% co-insurance being treated at Trinity Health Oakland Hospital in Pontiac would pay $78 for an in-hospital infusion of Neulasta, which is 20% of the total $390 that hospital bills for the drug. But if that patient were treated instead at Henry Ford Genesys Hospital in Grand Blanc, the person would pay $655.60 out of pocket, which is 20% of the $3,278 that hospital bills for the same drug.

By choosing the less expensive hospital for treatment, people with employer-based private health insurance plans can cut costs for themselves and their company, Jackson said.

"If the employee chooses a lower-cost option, the employee saves money and the company that (provides) health benefits to them also saves money," Jackson said, urging Michiganders to advocate for more transparency so it is easier for consumers to make smarter choices when it comes to where they get their health care.

Drug prices affected by negotiations with manufacturers, volume

Appel said hospital drug pricing is complicated and begins with the sale prices set by pharmaceutical companies.

"It starts with: What is the price of this drug?" she said. "How do you get it into your hospital so it's available to ... your patient? Hospitals don't set those prices. Drugmakers do ... and the hospitals negotiate for purchasing that. And when you take into account all of the other things that go into taking care of and administering a drug, that's where you get the differences.

"The drug Humira is not like (dropping) off a crate of apples at Meijer and somebody carefully stacks them all up and you go in, grab them off the shelf and leave. ... Prescription drugs that come to hospitals have to be very carefully handled so that you make sure the right drug is going to the right person, and that it's kept at the right temperature.

"Some of these drugs have to be refrigerated. Some drugs can't be mixed until they're ready to go. ... Nuclear medicine has a half-life so a skilled pharmacist is in charge of those kinds of things. ... Those are all the things that go into what hospitals ask insurers to pay for a prescription drug."

She said pricing also can be affected by the volume of a medication a particular hospital needs.

"A large hospital might buy a lot of something. A smaller hospital might not buy so much," Appel said. "We all know what it means to go to Meijer versus Costco, right? The unit price changes when you're able to buy a whole lot of it, but you also have to have a place to store it and (have) the means to make sure that you're using it, and the demand and things like that. So ... you can see why that would vary, even within a system based on volume."

Drug manufacturer assistance programs and hospital-based assistance programs can help make medicine more affordable, Appel said, and for people who are uninsured and making 250% of the poverty level or less, there are limits on what hospitals can bill.

"There are many reasons for why a hospital establishes its charge(s) ... the way it does," Appel said. "And there are many different reasons why hospitals negotiate what they get in payment."

The coalition's report, she said, isn't "putting those two things together."

Jackson said the pricing system is too opaque.

For the drug Orencia, for example, the MIHPC found the cost U-M Sparrow Clinton Hospital billed is $3,374, but Trinity Health Chelsea Hospital's price for the same drug is more than double — $7,940.

"These are significant costs to the patient," Jackson said.

Trinity Health Michigan spokesperson Bobby Maldonado declined to comment on the coalition's analysis, referring questions to the Michigan Health and Hospital Association.

Beata Mostafavi, a spokesperson for U-M Health, said drug pricing is complex, but "it’s important to emphasize that charges do not reflect what patients pay, and U-M Health teams work hard to ensure our patients have affordable access to what they need."

She included the following publicly available links for its master charge lists:

U-M Ann Arbor hospitals: https://www.uofmhealth.org/michigan-medicine-standard-charges.

U-M Health-West Hospital: https://uofmhealthwest.org/patients-visitors/pricing-estimates/metro-health-university-of-michigan-standard-charges/

U-M Sparrow locations: https://www.uofmhealthsparrow.org/patient-resources/financial-resources/standard-charges

"Our charges may vary from other health systems because of differences in what we pay to purchase the drug from the manufacturer, and what we get paid by the pharmacy benefit managers when we fill a prescription," Mostafavi said.

Zakalik said that for a drug like Neulasta (pegfilgrastim), the name brand is rarely given to Henry Ford patients.

"Any meaningful analysis of these drug prices would include all classes, including generics and biosimilars, as the availability of generics and biosimilars are an important strategy for affordability," he said. "Unfortunately, it appears this group is looking at name-brand therapies only. In the case of the cancer drug pegfilgastrim, we prescribe the generic or biosimilar version more than 80% of the time. If a patient is uninsured, they never pay more than 138% of the Medicare rate for their drugs, and patients may also be eligible for additional discounts depending on their financial circumstances."

Jackson said the wide range of prices the coalition found across hospitals for the same drug at the same dosage show why there should be more transparency.

"Drug prices matter," he said. "We want people to make informed decisions and compare hospitals whenever they can.

"We don't have a macro-level idea of how much hospitals are getting in revenue for drugs. We need more transparency, and we need policymakers to do that. So, we're hoping that people contact the legislators about the need for reform that prioritizes patient needs."

"...couldn't corroborate the pricing..." followed by a refusal to corroborate pricing has to be the worst ever creative construction from a crisis management firm. 😎 

The Michigan Health Purchasers Coalition (MIHPC) is a 501(c)(4) established to mobilize employers, families and other healthcare stakeholders across the state to rein in the excessive prices paid for employer-sponsored healthcare for over half of all Michiganders.

MIHPC initiatives include increasing hospital price transparency, prohibiting anti-competitive contracts and billing, increasing oversight on consolidations and mergers, and incorporating fair pricing among all payers of healthcare.