Everyone probably knows what brown bagging is. That’s when you pack a sandwich in a brown paper bag and take it to work rather than joining your spendthrift colleagues, when they go out for lunch or order takeout. Sometimes it saves you the time of going out to eat but mostly it saves you the expense of a meal prepared by a restaurant. A sandwich, an apple and a container of yogurt that costs you less than $2 to pack at home substitutes for a $12 takeout meal.
In the hospital industry the practice of brown bagging is called white bagging. That is when your insurance company refuses to pay the hospital’s 600% markup for costly oncology drugs and has them delivered to the hospital for patients’ infusions (or patient picks them up at the specialty pharmacy). Hospitals are fighting back. Today Kaiser Health News (KHN) wrote about hospitals’ efforts to outlaw white bagging.
At least 21 states, including Missouri, introduced some form of white or brown bagging legislation during the most recent legislative session, according to the American Society of Health-System Pharmacists. And in the past two years, the trade group said, at least 13 states have already enacted restrictions on white bagging, including Arkansas, Louisiana, and Virginia.
At stake in the battle to supply costly infusion drugs are high costs and high profits.
Health insurers and medical providers are battling over who should supply high-cost infusion drugs for patients, with the tussle over profits now spilling into statehouses across the country.
The issue is that some insurers are bypassing hospital pharmacies and physician offices and instead sending more complex drugs through third-party pharmacies. Those pharmacies then send the medications directly to the medical provider or facility for outpatient infusing, which is called “white bagging,” or, more rarely, to patients, in what is called “brown bagging.” That shifts who gets to buy and bill for these complex medications, including pricey chemotherapy drugs.
Insurers complain hospital markups are too high, while hospitals complain white bagging creates unnecessary delays and complications for patients. Both complaints are correct.
Even if the hospital has the exact drug on the shelf, patients must wait for a separate shipment, Hollabaugh said, potentially interrupting care. Their shipped drugs may sometimes be unusable when the doctor needs to change the dosage. Or the medicine comes in a nondescript package that doesn’t get immediately flagged for the pharmacy, potentially subjecting the drugs to damaging temperature fluctuations. For patients, that can mean delays in care.
Furthermore, as KHN asserts patients often get stuck in the middle, but that’s the convoluted nature of our health care system. Since hospitals don’t compete on price, payers such as health plans must search for other ways to avoid getting taken to the cleaners. Patients, for their part, are sometimes inconvenienced in the process. Patients would fill their pockets with cheap drugstore Tylenol before a hospital admission to avoid having to pay $12 a tablet but they don’t have a similar way to reduce costs for outpatient oncology drugs. Patients often are not compensated for their efforts (or inconvenience) when health plans require white bagged infusion drugs.
This is a tug of war over profits between insurers and medical providers, said Ge Bai, a professor of accounting and health policy at Johns Hopkins University. While insurers claim the arrangement reduces costs, she said, that doesn’t mean insurers pass along savings to patients.
In other cases, white bagging saves patients’ money when they are subject to cost-sharing, such as in traditional Medicare. If only there were a solution that would benefit everyone… you know, like hospitals competing with specialty pharmacies on price for the business of providing patients infusion drugs.
Several years ago my wife and I purchased a standard canine vaccine from Tractor Supply for $15. When informed, our dog’s veterinary office called to say how horrible that was. All manner of bad things could result they claimed. After all, a retail supplier of veterinary medications to (valuable) farm animals may not store them correctly or refrigerate them correctly or they could be shipped without property care (oops, that also applies to veterinary clinics too). My wife, an engineer who is a quality & regulatory consultant, formerly with the U.S. Food and Drug Administration, was not convinced by their arguments. Nor was I. Perhaps it wasn’t a safety concern, but rather the $100 in profit the vet makes from administering the vaccine. In the end they refused to put it in their records that our dog was vaccinated even after we showed them a receipt and we found a new vet.
The reality is our health care system is convoluted and not competitive in any meaningful way. The result is cumbersome machinations to save money or prevent price gouging in ways that aren’t beneficial to patients. As I was taught in Theories of Political Economy in grad school, money invested lobbying politicians to protect your monopoly is often a better investment than competing on price for business in a free market.
The article is worth a read: https://kffhealthnews.org/news/article/patients-squeezed-pricey-infusion-drugs-whitebagging-brownbagging/