Medications in Single-Dose Vials Implications of Discarded Drugs (2021) / Chapter Skim
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5 Discarded Weight-Based Drugs in Single-Dose Vials
5 Discarded Weight-Based Drugs in Single-Dose Vials
Pages 93-108
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From page 93... ...
In particular, it is not at all clear that a successful effort to reduce perceived drug waste would result in the sort of cost savings implied by such a simple calculation -- or any cost savings at all. This chapter discusses how the issue of discarded drugs falls within the larger context of drug pricing, makes the economic case for why waste is not the right construct to analyze discarded drugs, offers a different way of 93
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From page 94... ...
. Introducing generics can lead to price competition, where the developer of the branded drug typically drops its 1 A biosimilar is a biological drug that is very much like another biological drug (called the reference drug)
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From page 95... ...
. While the high cost of developing drugs may be offered as a justification for high drug prices and certainly imply that biopharmaceutical companies would not keep developing new drugs if they did not expect to be paid well for their efforts, the research and development costs actually explain only a part of the high costs of drugs in the United States.
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From page 96... ...
drug prices are the product of a complex and confusing system, one in which many of the components are hidden from outside observers. While the main forces at work are clear -- the high cost of research and development, patent protections, new drugs' real or perceived value, and the willingness of payers, including health insurers and patients, to pay -- how these factors and others interact to determine the price of a particular drug is far from clear.
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From page 97... ...
They act as agents for insurance companies and large employers to negotiate drug prices with manufacturers and retail phar macies and manage formularies on behalf of payers. These factors and many others interact in complex and often nontransparent ways to influ ence drug costs, and it is not at all clear how to go about lowering drug prices in the United States without unintended consequences, such as potentially slowing down the drug development pipeline (NASEM, 2018)
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From page 98... ...
Congress should direct the Centers for Medi care & Medicaid Services to modify the designs of plans offered through Medicare Part D and governmental health insurance exchanges to limit patients' out-of pocket payments for drugs when there is clear evidence that treatment adherence
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From page 99... ...
Congress should direct the Centers for Medi care & Medicaid Services to specify that when patient cost-sharing is calculated as a fraction of drug prices in insurance policies through Medicare Part D and governmental health insurance exchanges, this calculation should be based on net prices, not list prices. All state and private prescription drug plans should be encouraged to follow this approach.
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From page 100... ...
This leads to a fundamental question BOX 5-2 Select Draft Bills Related to Drug Negotiation S 62, Empowering Medicare Seniors to Negotiate Drug Prices Act of 2019: This would allow the Centers for Medicare & Medicaid Services (CMS)
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From page 101... ...
Thus, each additional vial size that is offered raises the overall cost of providing the drug, and drug companies look to balance the cost of the discarded drug versus the cost of offering multiple vial sizes.
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From page 102... ...
Put differently, because manufacturing costs do not drive drug prices, the quantity of a drug that a patient receives also does not drive pricing. In general, a patient cares only about getting a correct dose of the drug for a treatment.
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From page 103... ...
The fixed cost includes developing the drug and getting it approved, building a manufacturing plant, and creating the associated packaging and marketing materials. The marginal costs are important because the price that a manufacturer charges for a drug depends mainly on two things: marginal costs and willingness to pay for the treatment.
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From page 104... ...
How would that change the thinking about discarded drugs? In this situation, each patient would pay the same amount for a given treatment no matter how much of the drug was required -- and the drug company would r eceive exactly the same amount for each patient, just like a clothing company selling coats.
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From page 105... ...
Basic economic theory would predict that drug companies are not going to keep the same pricing because they know that payers and patients are willing to pay $5,000 per treatment, so they increase the price to $7,500 per vial; now two vials cost $15,000, and it is back to $5,000 per treatment for three patients. However, in the real world, drug prices depend on multiple factors, including payers' negotiating power and public policies.
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From page 106... ...
This is the basic economic challenge with efforts to save money by cutting back on the perceived waste or designing payment policies that are focusing on reimbursing manufacturers per volume unit of drug dispensed. In the beginning, as long as only a few clinicians are able to reduce discarded drugs through vial sharing or some other clinical practice and that does not affect drug company revenue, the drug companies may be comfortable with it, but if the practice ever becomes widespread, including federal policy or policy by large health care payers, the drug companies would likely respond.
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From page 107... ...
Successful efforts may eventually trigger drug companies to raise the prices to derive constant or increased revenue for their products. Approaches to reducing discarded drugs from single-dose vials would need to leverage other strategies aimed at lowering drug prices, including allowing the Secretary of the U.S.
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From page 108... ...
branded drug prices and spending compared to other countries may stem partly from quick uptake of new drugs. Health Affairs 32(4)
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