You already know you pay too much for prescription medication. But a new study by Memorial Sloan Kettering Cancer Center reveals one simple factor that may be contributing to high costs: Waste.
According to the new study, published Tuesday in BMJ, as much as $3 billion worth of cancer drugs is thrown away every year, unused. The reason why is drug manufacturers package single dose vials that contain more medicine than needed so that leftover medication is simply thrown away. As the authors, which includes Peter Bach, director of MSK’s Center for Health Policy and Outcomes, note:
These drugs must be either administered or discarded once open, and because patients’ body sizes are unlikely to match the amount of drug included in the vial, there is nearly always some left over. The leftover drug still has to be paid for, even when discarded, making it possible for drug companies to artificially increase the amount of drug they sell per treated patient by increasing the amount in each single dose vial relative to the typically required dose.
Reviewing the waste generated by the top 20 selling cancer drugs, the researchers found that insurers ended up paying drug makers $1.8 billion each year on discarded medications plus another $1 billion on price markups to doctors and hospitals. This is because most cancer drugs are injected by needle, and the amount is carefully measured out based on a particular patient profile. The remaining medicine is then thrown out because of safety concerns.
“None of this extra spending improves patient outcomes,” said Bach.
In some cases, drug makers have even substituted larger vial sizes in favor of smaller options.
Merck’s Keytruda, which is used to treat metastatic lung cancer and melanoma, was previously available in 50 milligram vials in the U.S. But was recently replaced by a larger 100 milligram size, said Bach. That change is expected to provide Merck (MRK)with an estimated $1 billion extra revenue over the next five years on top of the $1 billion they would have made from the 50 milligram waste. Meanwhile, the 50 milligram option is still available in Europe, where regulators play a more prominent role in pricing and distribution.
The researchers recommend a series of steps that could reduce cancer drug waste. One, regulators should clarify rules around vial sharing. Currently, the Centers for Medicare and Medicaid Services essentially encourages it, while the Centers for Diseases Control says that it is unsafe.
Two, regulators could require manufacturers to provide medicines in a reasonable set of size options so that doctors can choose an option to keep the wasted drug low. The group showed a 3% waste standard is achievable simply by adding more vial size options.
The researchers estimate that drug makers’ revenue from wasted medicines would drop to $400 million from $1.8 billion annually today. Including the reductions to doctor and hospital mark-ups on leftover drug, savings could reach $2 billion in total.