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Tips on determing how much hospitals mark-up drugs

September 27, 2012

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Reporters from the Charlotte Observer and The News & Observer teamed up to investigate the cost of cancer drugs.

Ames Alexander and Karen Garloch of the Charlotte Observer and Joseph Neff of The News & Observer in Raleigh teamed together again to show how much hospitals mark-up the costs of chemotherapy drugs.

They compared Medicare’s quarterly report of average sales prices of chemotherapy drugs against claims from doctors’ offices and hospitals, as well as explanation of benefits from insurance companies. Among their findings: one medical center “collected about $680 for 50 milligrams of cisplatin. The markup: more than 50 times the average sales price,” the story says.

Ames says they received a tip about the price mark-ups after their five-part series on profitable nonprofit hospitals ran. (I spoke with both Joseph and Ames to get tips from the series.)  Karen says they chose to focus on chemotherapy drugs because it’s an “area of treatment that lots of people are familiar with. It’s one we thought would resonate with people.”

While getting the Medicare data wasn’t a challenge, getting the comparative information was, they say.

“There is no public database that allows you to collect this kind of information in a comprehensive way,” Ames says. “It’s not the sort of thing you’re able to tell a reporter to do. You have to work your sources.”

To find patients, they contacted bankruptcy lawyers and cancer support groups. They also posted a request for patients on the paper’s website and a query on the paper’s Public Insight page that seeks input from readers.

Ames used Microsoft Access to calculate the data and create spreadsheets. “I don’t think I could have done that alone,” Karen says. “You need somebody like Ames who knows how to do this stuff.”

You’ll notice in the story the reporters actually got information from insurance companies – a big surprise to me.

“We shared with them what our data showed so they knew we had a good sense of the patterns already,” Ames says. “It didn’t take a lot of arm twisting.”


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