The problem with recouping drug waste
Estimates from the Centers for Medicare & Medicaid Services (CMS), which tracks costs associated with discarded weight-based drugs covered under Medicare Part B, support the notion that small quantities of discarded drugs can still translate to big bucks.
Since 2017, CMS has required healthcare providers to report the volume of drugs discarded from a single-dose vial using a code, known as the JW modifier. The JW modifier means that providers can be reimbursed for the entire vial amount, not just the quantity the patient used.
In 2019, claims data from Medicare Part B showed that 1.85% of discarded rituximab came to $33.3 million. For infliximab, the 1.55% of discarded liquid translated to $15 million, and just 0.36% of discarded pembrolizumab reached $10 million.
However, experts question whether the JW modifier accurately reflects the quantity of drugs discarded.
According to the 2021 report from the National Academies of Sciences, Engineering, and Medicine (NASEM), most physicians don’t use the JW modifier. Among Medicare claims, 16.2% included the JW modifier in 2017 and 16.9% did in 2018.
The rate was significantly lower for private insurance. Of more than 4 million private insurance claims on 77 drugs made in 2017 and 2018, only 3.6% included the JW modifier; 15 of these drugs had no JW claims.
“Although we found that most physicians don’t use the JW modifier, even those who do, don’t use it consistently, even for the same patient,” said Dr. Yabroff, a co-author on the report.
Going a step further, Dr. Yabroff and colleagues argue that even if everyone used the JW modifier as intended, manufacturers would probably increase the price of drugs to compensate for any loss, potentially eliminating savings for payers.
That’s because, in the United States, manufacturers typically base drug prices on a patient and payers’ “willingness to pay for better health,” not on the volume of liquid used. Take a patient who pays $2,000 to receive the dose they need. If that dose is 600 mg but requires using two vials of 400 mg, then “to the patient, the 600-mg dose is worth $2,000, and the remainder has no value whatsoever,” the NASEM authors argue.
The authors parallel this scenario to purchasing a designer coat or dress. If that item requires alterations that remove a section of material, “the customer does not typically get a rebate because all the fabric was not needed,” the NASEM team writes.
But there’s a flaw in this rationale, argues Daniel Goldstein, MD, a medical oncologist at the Rabin Medical Center, Petah Tikva, Israel. A person’s willingness to pay for better health assumes that the price of a drug is based on proper market forces, where a drug’s cost and its effectiveness are in harmony.
“The problem is we’re operating in a broken market where the prices of oncology drugs have no real bearing on their efficacy,” said Dr. Goldstein.
And, as Dr. Bach noted in a 2021 Health Affairs piece, willingness to pay also requires that consumers know what they’re paying and allows them to walk away from an excessively high price.
But neither is a reality.
For one, Dr. Bach explains, companies may lowball the monthly price of a drug. In 2020, GlaxoSmithKline (GSK) announced that its new drug Blenrep would carry a list price of $8,277 per vial, or about $23,900 per month for an average 79 kg (175 lb) patient. That price accounts for two vials of the drug. But, according to Dr. Bach, “what GSK left out is that 44% of U.S. adults weigh more than 80 kg, and above that weight, three vials are needed per dose.” That would raise the average monthly cost to $30,479.
Perhaps more importantly, consumers can’t easily walk away.
“Medicare can’t negotiate prices and is forced to pay what a drug company says,” Dr. Goldstein said. “This is very different to when I buy a coat. If the price is too high, I can walk away.”