An estimated $2.8 billion is wasted each year by government and private insurers for expensive cancer medicines that will be thrown away because the drugs are distributed only in vials that contain more than most patients need, according to a new analysis.
The medicines, which are packaged in single-dose vials, are typically injected or infused in doctor’s offices and hospitals based on a patient’s weight. However, the drugs are packaged in uniform-sized vials, which often generate leftover medicine that must be discarded due to safety standards.
And the authors of the analysis, published in the BMJ, say there is a lot of leftover medicine, which makes it possible for drug makers to “artificially increase” the amount of medicine they sell. The companies can accomplish this by increasing the amount of each single-dose vial relative to the required dose.
“The companies are not open about how their package decisions affect revenue,” said Dr. Peter Bach, one of the BMJ authors, who is a physician at Memorial Sloan Kettering Cancer Center in New York. “But it seems inconceivable they are unaware of the relationship between the size of their packaging and how much waste and added revenue those packages generate.”
For their analysis, the researchers examined the top 20-selling cancer drugs, which collectively account for 93 percent of all sales of such medicines. They calculated that public and private payers spent $1.8 billion on leftover quantities.
The analysis also noted that the extra amount of drug sold for each patient provides a payday to doctors and hospitals. Under the so-called “buy and bill” system, they purchase single-dose vials of medicines and mark up invoices sent to insurers. Such markups amounted to another $1 billion in overspending.
The amount of leftover medicine can vary anywhere from 1 percent to 33 percent of the amount of drug that patients actually need. One example cited is Rituximab, which is used to treat non-Hodgkin’s lymphoma and chronic lymphocytic leukemia. This year, the researchers estimated 7 percent of $3.9 billion in sales will be spent on discarded quantities. The drug is marketed by Biogen (BIIB) and Roche (RHHBY). Roche was not available for comment, and Biogen did not respond.
Then there’s Kyprolis for combating multiple myeloma. About 33 percent of $697 million in sales, or $231 million, will be spent for discarded amounts of the Amgen (AMGN) medicine, according to the analysis. Amgen did not immediately respond to a request for comment.
The researchers cite Keytruda as another interesting example. When the Merck cancer drug was first approved in the US in September 2014, the medicine was sold in 50-milligram vials as a powder. But in February 2015, Merck introduced a 100-milligram vial, which was sold in liquid form, and stopped distributing the other version.
By changing the dosage size, there may be still more leftover medicine with the larger vials. And this can also depend upon the weight of the patient. As a result, the researchers forecast that Merck can be expected to reap an extra $1.2 billion in revenue over the next five years from the 100-milligram vials. And this is on top of yet another $1.2 billion attributed to leftover medicine from the smaller vials.
[UPDATE: A Merck spokesman wrote us to say that “our manufacturing decisions – decisions that need to be made years in advance – were based on the uncertainty of which of the two doses being studied would be approved. Over time, our understanding of dosing in multiple tumor types has improved, and our latest trials now assess only one dosing option, a 200 mg fixed dose, which, if approved by regulatory agencies and implemented, which will eliminate wastage.” We asked how this larger fixed dose will eliminate waste and will pass along any reply.]
Of course, this hurts patient pocketbooks, too.
The researchers note that Medicare Part B, which covers about half of all cancer patients, includes a 20 percent coinsurance payment with no upper limit, and 14 percent of Medicare Part B beneficiaries do not have added coverage for their coinsurance. And private health plans generally have out-of-pocket maximum payments that many patients with cancer reach.
A key problem, according to the researchers, is inconsistent signals from policy makers about sharing vials, even though the US Pharmacopeial Convention permits sharing only if leftover medicine is used within six hours, and only in specialized pharmacies. The Centers for Medicare and Medicaid Services essentially encourages it, but the Centers for Disease Control and Prevention says it is unsafe.
The Food and Drug Administration, meanwhile, is “concerned with the stability of the packaging, not whether packaging is efficient,” said Bach.
So what to do?
The researchers say the FDA could require drug makers to provide different size vials to ensure the amount of wasted medicine is low. They suggest a goal of no more than 3 percent. And they urge the different government agencies to get on the same page when it comes to vial sharing.
Ultimately, they believe the amount of money spent on discarded medicines would drop to $400 million from $1.8 billion. The effect this would have on doctor and hospital markups would bring total savings to about $2 billion.
Alternatively, drug makers would be free to select their vial sizes, but would also be required to refund the cost of leftover drug.