Every year, significant amounts of expensive drugs are discarded. This is due in part to the growing number of prescription drugs that are administered in variable doses (rather than fixed or flat doses) based on a patient’s weight or body size. Because of safety considerations, the typical approach for manufacturers in the United States is to package these weight-based medications1 in single-dose vials that are intended for use by a single patient. These vials contain standard amounts of the drug which typically exceed the required dosages for the average patient. Strict regulations and guidance generally discourage or severely restrict the acceptable time frame for sharing medication from single-dose vials among patients. Many of the weight-based drugs in single-dose vials are among the more expensive drugs on the market, and they are paid for by federal health care programs, private health plans, and patients, who have copayment and coinsurance obligations. For Medicare patients, these drugs are covered under Medicare Part B when they are administered by infusion and injection in physician offices or hospital outpatient departments.
Typically, a health care provider will use a patient’s weight to calculate the required dose of a drug and extract the appropriate amount
1 The committee uses the term weight-based dosing to refer to drug dosing based on measures of “body size,” including dosing based on either weight or body surface area, which is closely correlated with body weight. Although these two approaches can be distinguished and justified clinically, for the purposes of this report they can be considered under the single term weight-based.
from a vial (or sometimes two or more vials, depending on how much each vial holds and how much the patient needs). The unused amount will typically be discarded. Since January 2017, the Centers for Medicare & Medicaid Services (CMS) has required health care providers to report, with a particular code called the JW modifier, the portion of drug from a single-dose vial that is discarded and eligible for payment under the “discarded drug policy.” Under this CMS policy, health care providers receive payment for the total amount of drug indicated on the vial or package label of a single-dose product, including that which is discarded. However, health care providers’ use of the JW modifier is inconsistent, which makes it difficult for health care payers to determine the amount of discarded drug and the associated payments with any accuracy or certainty. Also, when patients are responsible for drug cost-sharing, their share is based on the full content of the single-dose vial even if they received just a portion of it.
Thus, the current situation is one in which significant—but indeterminate—amounts of expensive prescription drugs are discarded each year. In light of this, the U.S. Congress mandated that CMS should enter into an agreement with the National Academies of Sciences, Engineering, and Medicine (the National Academies) to conduct a study on the federal health care costs, safety, and quality concerns associated with discarded drugs that result from the weight-based dosing of medicines contained in single-dose vials. This report is the response to that charge. It examines the current system for the production, administration, and reimbursement of weight-based drugs in single-dose vials with an emphasis on the economic issues related to discarded drugs, it reviews the responses of various stakeholders who have sought to address the issue of discarded drugs, and it offers recommendations on how the system might be improved while also ensuring patient safety. Box S-1 contains the Statement of Task for the study.
In addition to the study’s Statement of Task, CMS specifically required the committee to address some key items as they relate to the Statement of Task:
- Provide a comprehensive assessment of federal health care costs, to both the Medicare program and Medicare beneficiaries, due to billing for wasted drugs and biologicals from single-dose vials.
- Using available data sources, quantify the amount of waste associated with single-dose injectable drugs and biologics in billing units and/or proportion of available vial sizes and calculate the associated dollar amounts.
- Identify relevant drugs, vial sizes, dosing practices, and delivery practices most associated with waste.
- Evaluate dosing strategies that may contribute to or mitigate excessive drug waste where possible (e.g., dosing based on weight, body surface area, and institutional rounding/dose capping protocols).
- Investigate manufacturer rationale for developing particular vial sizes and safety standards (such as those from the United States Pharmacopeia) influencing requirements for single-dose versus multi-dose vial development and use.
PUTTING THE STUDY IN CONTEXT
To appreciate what is at stake in the area of weight-based drugs in single-dose vials, it is necessary to consider the larger context of health care in the United States. Americans pay significantly more for health care than people in any other country of the world; the percentage of the gross domestic product that the United States devotes to health care is, on average, about twice that of other developed countries even though the health of American citizens is, by most measures, worse than that of citizens of most other developed countries. U.S. health care costs have been rising steadily at well over the rate of inflation for several decades, and they are projected to continue increasing for the foreseeable future.
Prescription drugs account for approximately 17 percent of the overall health care costs in the United States, and drug costs have been increasing faster than overall health care costs for at least the past few decades. A major driver of the ongoing increases in drug costs is spending on specialty drugs2—many of which are weight-based drugs in single-dose vials—which account for half of the overall U.S. expenditures on drugs even though they make up only about 2 percent of the total number of prescriptions written each year. In short, the high and increasing costs of weight-based drugs in single-use vials significantly contribute to the high costs of health care in the United States.
At the level of individual patients, high drug costs can lead to substantial financial hardship even for those who have health insurance. Many weight-based, single-dose vial drugs are very expensive—thousands of dollars per treatment is not unusual. Traditional fee-for-service Medicare beneficiaries pay 20 percent of the billed amount for prescription drugs covered under Part B, with no cap on annual total out-of-pocket expenses on drugs. For Medicare beneficiaries, those without supplemental insurance incur substantially higher out-of-pocket costs than their counterparts with supplemental coverage. Even most individuals with health insurance have deductibles, copayments, or coinsurance to pay. This high patient out-of-pocket spending for medical care may be associated with asset depletion and medical debt, distress and worry about household finances, and trade-offs in paying for routine daily needs, including food and housing. Some patients may delay or forgo needed medical care because of expected out-of-pocket costs.
Historically, prescription drugs have been primarily delivered in two forms—as fixed doses or as weight-based doses. In the case of fixed doses, which are typical of the drugs sold in pharmacies, usually in the form of tablets or capsules, patients receive drug doses that may vary by therapeutic need but are not based on a patient’s weight. By contrast, weight-based doses, which are typically liquids given through injection or infusion directly by physicians or other health care providers, vary according to a patient’s weight or body size and are much more common for infused and injectable drugs than for tablets or capsules. Despite the widespread use of weight-based dosing, particularly in cancer medicine, empirical evidence supporting this practice is limited.
Weight-based dosing has the advantage of being tailored to a patient weight or body size, but this individualization makes manufacturing and
2Specialty drugs is a general term for drugs that feature one or more of the following characteristics: great expense, molecular complexity (often derived from living cells), limited availability or specialized distribution network, unique storage or shipment requirements, and use for treating rare and complex disease indications.
packaging of drugs more complex. Injected or infused drugs are typically packaged in vials intended to be used a single time for a single patient, but because the doses will vary by patient, the drug manufacturer needs to decide which fixed vial size or sizes to produce. No matter what sizes are chosen, some drug will almost always be left over when the appropriate amount is withdrawn from the vial for a treatment. The drugs can be packaged in larger vials intended for multiple uses by multiple patients, but that choice has its own concerns, such as the risk of bacterial contamination after first use and the fact that these drugs can be used only for a limited, specified period of time after the seal has been broken.
In economic terms there is a major difference between fixed-dose and weight-based drugs. That is, with the former, patients receive all of the amount of drug that they pay for and variations in dose are achieved by using multiple pills at a time or an alternate formulation in which there is a higher or lower dose. But for the latter, drug companies generally sell the drug by the vial and even if a patient does not receive the entire contents of a vial, the entire vial still has to be paid for.
This situation, in which the cost of an entire single-dose vial is reimbursed even when only part of the vial is used, provides no incentive to minimize the amount of discarded drug. Because neither drug manufacturers nor health care providers have any incentive to change the system and reduce the amount of discarded drugs, significant amounts of expensive drugs are manufactured and distributed but ultimately not used.
QUESTION OF WASTE
Making appropriate and effective policy choices in this area requires a clear understanding of the concept of drug “waste.” The committee’s Statement of Task used waste specifically to refer to the discarded portions of single-use vials of weight-based drugs, which raised the question of exactly how to understand the term in this context.
While there are many ways to define waste, for the purposes of this report, the most relevant meaning of the term reflects the way it is used by researchers and other observers who are interested in the issue of efficiency in health care spending. In this context, waste refers to any spending that does not produce as much value as it could have if it were directed differently, and in this conceptualization of waste, discarded portions of weight-based drugs might fit into the category of clinical waste—assuming that their presence is associated with excessive spending.
On the surface it can indeed seem extremely wasteful that health care providers discard significant portions of the drug in single-dose vials that can cost thousands of dollars. And, indeed, it is that appearance of significant economic waste that has led observers to attempt to calculate the
total value of drugs discarded in this way each year and to look for ways to minimize this waste. One estimate, for example, indicated that in 2016 approximately $2.8 billion was spent by the federal government and private health care payers on discarded portions of single-use vials of cancer drugs. Another estimate suggested that in 2018, the federal government paid $725 million for discarded drugs administered in hospital outpatient clinics and physician’s offices. However, there are a variety of complex factors that could affect the accuracy of how these estimates are made. It is easy enough to multiply the per-milliliter cost of a drug by the number of milliliters discarded each year to get a putative value for how much is “wasted” and then add up all such drugs to get a total, but interpreting that number as the “value” of the discarded drugs is problematic. These typical calculations of the payments for discarded drugs produce only nominal values that are based on the assumption that one can assign a value to an ounce of discarded drug that is equal to the value of an ounce of the drug in an unused vial. They do not accurately capture the “economic value” of discarded drugs and do not reflect the reality of the excess costs to patients and the system. This is because of the factors that go into determining the price of drugs in the United States. The price of a drug is typically based not on how much is used but on the willingness to pay for the drug’s therapeutic benefit.
The underlying concern with discarded weight-based drugs is that payers believe that they are paying for discarded medication. One approach to addressing this issue would be to focus on efforts to reallocate unused drugs by sharing vials among multiple patients; another would be to seek reimbursement from manufacturers for these unused drugs. As described in the full report, to the extent that these practices become widespread, drug manufacturers are likely to adjust prices of their drugs upward to reflect the fact that more patients are being treated by the same amount of a given drug, or to account for the cost of reimbursing for unused portions. Raising drug prices combined with the costs associated with developing methods to allocate drugs to multiple patients from single-dose vials or to collect reimbursements would likely not result in any actual financial savings to payers or patients. This would reflect true economic waste in the sense that those resources used to reallocate drugs would not have generated additional medical benefits or cost reductions to payers.
Put differently, because manufacturing costs do not drive drug prices, the quantity of a drug that a patient receives also does not drive pricing. This is why payment strategies used in many other countries provide a uniform reimbursement for a given treatment no matter how much of the drug was required for a specific patient.
Based on the way drugs are priced and paid for in the United States, the committee concluded that when a drug is discarded, there is no money to recoup. Therefore, there is limited economic value to discarded injectable or infused drugs from single-dose vials. While the committee asserts there is little recoverable value to discarded drugs, they do see several opportunities to reduce inefficiencies that could lead to cost savings and improve the quality of care for patients. Therefore, the committee’s overarching recommendation3 is:
RECOMMENDATION 5-1: Drug developers, health care providers, and payers should focus their efforts on reducing inefficiencies in drug development, delivery, and payment systems that lead to excess costs for both the health care system and for patients rather than on trying to recoup payments associated with the discarded drugs.
ALIGNING INCENTIVES AND INCREASING EFFICIENCY TO IMPROVE QUALITY OF CARE
To lay the foundation for strategies to reduce certain inefficiencies that lead to discarded drugs while ensuring patient safety and quality care, the committee presents two broad goals and eight associated recommendations. The goals and proposed recommendations are oriented toward changing incentives and increasing efficiency in how these drugs are developed, administered, and paid for. The committee recognizes that successfully addressing the issue of discarded drugs will necessitate an implementation process that requires effective collaborations and efforts by all stakeholders in the biopharmaceutical supply chain. Therefore, in formulating its recommendations the committee has considered the ways in which a proposed action could change if another is not carried out. In this sense the committee’s recommendations should ideally be viewed as a “package.” The two goals are:
- Promote the effective, efficient, and safe use of infused or injectable drugs.
- Implement an efficient and effective reimbursement system for the clinician administration of infused or injected drugs.
Goal 1: Promote the Effective, Efficient, and Safe Use of Infused or Injectable Drugs
The current practice of using weight-based dosing for many drugs has its roots in historical concerns about balancing the therapeutic actions of a drug against its toxic side effects. When a dosing regimen based on body size (e.g., body surface area or weight) is used in pivotal studies as part of the drug development process, or submitted for registration by an individual or an entity that pays for a clinical trial and collects and analyzes the data, then that regimen will be approved by the U.S. Food and Drug Administration (FDA). Pivotal trials are intended to provide the evidence and data that FDA ultimately uses to decide whether to approve a potential new medicine. Alternatives to weight-based dosing might be just as safe and effective, but weight-based dosing is seldom compared with alternative dosing in pivotal trials. Trials that consider different dosing strategies (e.g., weight-based versus fixed-dose) early in the drug development process could help to determine if dosing based on a patient’s body size provides greater benefit than a fixed dose for a given therapeutic agent.
RECOMMENDATION 2-1: The U.S. Food and Drug Administration should require sponsors of pivotal trials for new or extended therapeutic indications to use fixed dosing for a given clinical indication unless safety and efficacy would be compromised. Manufacturers of products already in the market should consider conducting additional studies after approval so that these drugs can, when indicated, be converted to fixed dosing.
Different U.S. agencies have settled on different approaches to single-dose vials. The major reason for not using vials for multiple patients is concerns about compromised sterility and cross-contamination or storage issues once the seal on the container has been broken. Currently, the safety concerns from FDA, CMS, and the Centers for Disease Control and Prevention (CDC), which motivate the regulatory guidance on administering and repackaging of single-dose drugs—that is, dividing the content of a single-dose vial into multiple individual doses—are in conflict. CDC suggests that vials labeled by the manufacturer as single-dose or single-use should only be used for one patient and that repackaging is not acceptable, while FDA and CMS allow for repackaged doses if each one is used only for a single patient. The situation would be greatly improved if the current inconsistent regulatory guidelines were harmonized—and, preferably, modeled on successful protocols in other countries that allow vials to be used for multiple patients.
A number of other Organisation for Economic Co-operation and Development (OECD) countries have well-established clinical and operational approaches that allow for delivering medication to multiple patients from a single vial through vial sharing. Several other countries have promoted standardized doses. For example, dose banding, a system in which drug doses that fall within predefined ranges established through clinical calculations are rounded up or down, is widely used in the United Kingdom and other parts of Europe. Such upward or downward rounding is typically designed to allow use of a complete vial, without discarding any medication.
RECOMMENDATION 2-2: The Secretary of the U.S. Department of Health and Human Services should direct the Centers for Medicare & Medicaid Services, the U.S. Food and Drug Administration, and the Centers for Disease Control and Prevention to work with the United States Pharmacopeia and other nonfederal partners, pharmacists, and infectious disease experts to review and harmonize existing policies and guidelines on drug administration and repackaging. These policies and guidelines should be informed by the successful experiences from other industrialized countries in reducing the amounts of discarded drugs.
RECOMMENDATION 4-1: The Secretary of the U.S. Department of Health and Human Services should direct the Centers for Medicare & Medicaid Services, the U.S. Food and Drug Administration, and the Centers for Disease Control and Prevention to initiate a partnership with other agencies, including the U.S. Department of Defense and the U.S. Department of Veterans Affairs, to work with health care and other organizations with expertise in areas such as industrial design and systems engineering to identify and implement technological systems that allow single-dose vials to be used safely across multiple patients.
RECOMMENDATION 4-2: The Secretary of the U.S. Department of Health and Human Services (HHS) should develop and implement policies that require drug manufacturers to produce injectable and infused drugs in multi-dose vials when it is safe to do so. The Secretary of HHS should routinely review and evaluate the impact of such policies.
Goal 2: Implement an Efficient and Effective Reimbursement System for Clinician Administration of Infused or Injected Drugs
Under the current system for producing, administering, and paying for drugs, health care providers do not have incentives that encourage the efficient use of infused or injectable drugs from single-dose vials. They receive payment for the amount of drug indicated on the label of a single-dose vial, including that which is discarded. This lack of incentives could discourage efforts to reduce the amount of discarded drugs. Also, when patients are responsible for drug cost-sharing, their share is based on the full content of the single-dose vial even if they received just a portion of it.
The committee identified additional problems with the current reimbursement system for clinician administration of infused or injected drugs. For example, Medicare and private payers reimburse health care providers based on the drug’s average sales price plus a percentage add-on for administering it. Because the dollar amount of the add-on is larger when the drug price is higher, this system may incentivize clinicians to prescribe more expensive drugs. Addressing these issues will require realigning incentives for clinicians’ selection and administration of infused or injected drugs.
RECOMMENDATION 2-3: The Secretary of the U.S. Department of Health and Human Services should require the Centers for Medicare & Medicaid Services (CMS) to uncouple add-on payments to clinicians for infused or injected drugs under Medicare Part B from the drug average sales price, focusing the add-on payment instead on CMS’s assessment of the time and complexity of drug management and safety monitoring.4
RECOMMENDATION 2-4: The Secretary of the U.S. Department of Health and Human Services should require the Center for Medicare & Medicaid Innovation to design and evaluate new payment models that reimburse health care providers by treatment episode rather than by the volume or cost of a drug vial. Findings from the demonstrations should be disseminated widely to other relevant federal agencies, private payers, purchasers, clinicians, and consumers.
In theory, the use of the JW modifier should enable CMS to track the amounts of various drugs discarded from single-dose vials. In practice,
4 The text in this recommendation was modified since the prepublication release of this report to improve technical accuracy of the language around payments to clinicians for infused or injected drugs under Medicare Part B.
however, a number of limitations exist. The level of compliance with JW coding is highly variable. Not all health care providers use the JW modifier, and among those health care providers that use the modifier, the JW modifier is not reported consistently. Compliance with the JW modifier requirement would enable CMS to track the amount of drug that is discarded from single-dose vials but does not offer practical ways to reduce the amount of discarded drugs. Some observers have argued that enforcing the requirement for using the JW modifier would lead to increased transparency regarding payments for discarded drugs. Others, however, argue that the JW modifier provides an economic incentive for discarding drugs and hinders efficient ways to distribute or administer drugs because it still allows health care providers to be reimbursed regardless of whether all of the drug is actually used. In addition, there are many situations in which drugs are discarded but the JW modifier is not applicable, such as when a drug is administered in a rural health center or a federally qualified health center, because such institutions are generally not separately payable under Part B. In short, the use of the JW modifier appears to be neither consistent nor universal, which makes it impossible to accurately determine the total amounts of discarded drugs or their associated payments each year.
RECOMMENDATION 3-1: While the current Medicare Part B drug reimbursement system is in place, the Centers for Medicare & Medicaid Services should discontinue the use of the JW modifier.
Several versions of draft congressional legislation focused on discarded drugs from single-dose drug vials have proposed rebates from manufacturers to health care providers and payers for discarded drug amounts. However, most bills do not propose refunds directed to patients, who would continue to have cost-sharing responsibilities for portions that were not used in their care. Based on the committee’s assessment, it is not feasible to use rebates for discarded drugs to recoup significant funds that could be spent on other health care services, so manufacturer rebates for unused drug are unlikely to achieve the intended aim. Also, given the variety of ways that drugs are priced and reimbursed, a rebate system for clinician-administered drugs would likely be quite complex. Because the committee’s assessment shows that there is limited economic value to discarded drugs from single-dose vials under the current system in which drugs are developed, administered, or paid for, a rebate strategy seems unlikely to achieve the intended goals. However, if the rebates that have been proposed in legislation are indeed implemented, the committee asserts that patients need to be included in those rebates.
RECOMMENDATION 4-3: In the event that legislation is enacted or regulatory action is taken to require rebates from manufacturers for discarded drugs, the U.S. Congress should require that rebates be directed first to cover the patient’s out-of-pocket expense for the discarded drug and thereafter to health care providers and payers.
INTERDEPENDENCIES OF RECOMMENDATIONS
The nation’s biopharmaceutical sector—including the researchers who develop and test drugs, drug manufacturers and distributors, pharmacies, the hospitals and health care providers who administer the drugs, the payers (such as Medicare and private health plans), and the various agencies that regulate drug development, manufacture, use, and reimbursement—is a complex, interconnected system. Changes in one part of the system inevitably affect other parts, often in unanticipated or even undesirable ways. Those looking to implement the recommendations in the report should keep this in mind and be aware of how a proposed change in one area may also affect other areas.
Policy makers should also note that this report’s recommendations are interdependent, although their interrelationships vary. In some cases, two or more recommendations are designed to have similar effects, such as the multiple recommendations intended to move the system away from the current standard practice of discarding whatever drug is left in a vial after a single patient has been treated with a portion of the drug rather than sharing the vial among patients. In other cases, recommendations may focus on different issues. The ultimate goal of Recommendation 2-4, for instance, is to create a more equitable payment system. If this goal is met, Recommendation 4-3 may not be necessary. But until that payment system is achieved, the recommendation to cover patients’ out-of-pocket expenses with manufacturer rebates is intended to keep the system as fair as possible so that patients are included among those who would benefit from such rebates (see Figure S-1).
Also, consider Recommendations 2-1 and 4-2. Both strive to promote the effective use of infused or injectable drugs in efficient and safe ways but feature different approaches. The ultimate goal of Recommendation 2-1 is to reduce the proportions of the content of vials that are discarded. Fixed doses reduce the proportion of drugs that are discarded but would not completely eliminate leftover drug. For example, in the case where different amounts of fixed doses are used for different indications of a drug that is available only in a vial that is sized for one of those indications, some drug may still be discarded. However, weight-based dosing results in a wide range in doses and amount of drug needed per patient. Consequently, it is almost certain that there will be remaining drug in
the vial. The goal of Recommendation 4-2 is to reduce the proportions of drugs discarded by allowing the content of a vial to be used for more than one patient. If this recommendation is implemented, Recommendation 2-1 may not be necessary.
Policy makers need to be aware of and prepared for the possibility of unintended consequences of implementing new policies. For example, as long as drug manufacturers have near-total freedom to set drug prices, they will likely react to policies that reduce their profits. Thus, if Recommendation 4-3 is adopted, and rebates from manufacturers for discarded drugs are directed to patients to cover their out-of-pocket expense, manufacturers may respond by increasing the price of individual vials so that the profit margins they realize from a particular drug remain approximately the same. Another potential unintended consequence is that the widespread use of multi-dose vials envisioned in Recommendation 4-2 could give an advantage to larger medical centers, where there are more likely to be multiple patients who need the same drug at approximately the same time and thus can jointly receive the contents of a multi-dose vial. Smaller centers would be less likely to benefit due to vials’ expiration between recipients.
While the committee’s recommendations aim to achieve greater efficiencies in the manufacturing, distribution, and use of injected or infused drugs, it is not possible to predict how much, if any, financial savings might be associated with implementing those recommendations in the absence of additional data for economic analyses. The case for these recommendations is based mainly on nonfinancial considerations, such as safety and equity and overall efficiency.
The Pervasive Issue of Drug Pricing
One of the clearest lessons to be learned from this investigation into weight-based drugs is the burden that these costly drugs places on many patients who rely on these drugs to extend or save their lives. Regardless of whether some portion of a drug vial is discarded, the resulting economic hardship for many Americans due to the prices of these expensive drugs is important. High prescription drug costs are particularly burdensome for older Americans in the Medicare population who often have multiple chronic conditions, such as cancer, rheumatoid arthritis, multiple sclerosis, and other immune disorders, as well as for individuals who are unfortunate enough to develop a disease whose treatment requires more expensive drugs.
Ultimately, ensuring drug affordability will require a much broader and more sustained effort, of the sort described in the 2018 National Academies report Making Medicines Affordable: A National Imperative, which
put forward a range of proposals to help prevent biopharmaceutical expenditures from spiraling out of control without discouraging continued innovation in drug development. This committee endorses the proposals in that previous National Academies report. In short, the set of recommendations offered in this report would yield significant results if they are leveraged with other strategies aimed at lowering drug prices. Because of various factors such as our aging society and the rising cost of health care, it is more important than ever that the United States act now to address these issues.