Under Pressure: Oncology Drug Costs in the State of Maryland

This paper reviews the challenge of rising oncology drug costs in the global budget reimbursement system of Maryland’s regulated hospital environment. Hospitals in Maryland receive a fixed annual payment based on historical precedent under the global budget system regardless of actual volume or operating expenses. While this model has been credited with slowing rates of healthcare utilization and incentivizing hospitals to focus on quality rather than quantity, the explosive rise of oncology drug costs has forced hospitals to seek relief as operating costs have far exceeded budgeted amounts. In order to address these problems, one community hospital in Maryland responded to this situation by switching to generic drugs, changing the site of drug infusion, increasing palliative care usage, and standardizing treatment plans. Additionally, the hospital engaged policymakers, physician advocates, and pharmaceutical companies to create awareness and action on this issue outside of the walls of the hospital. These tactics resulted in significant short-term savings, however the long-term outlook remains concerning since the fundamental systemic structures driving this issue remain unchanged.