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$3 billion in cancer drugs wasted every year due to packaging

The pharmaceutical industry stands to make $1.8 billion on wasted drugs because of packaging practices, and doctors and hospitals make an extra $1 billion on markups over bulk prices they pay.
By Stephen Feller   |   March 1, 2016 at 12:34 PM

NEW YORK, March 1 (UPI) -- In the United States, drug companies and hospitals are making billions of dollars on cancer drugs that are thrown away, wasting both money and medicine, a new study reveals.

Reseachers at Memorial Sloan Kettering Cancer Center and the University of Chicago determined one-third of some drugs, or more, is not used because pre-packaged doses are too large and safety regulations require them to be thrown away most of the time.

If a patient needs 60 milligrams of a drug, and the drug only comes in 50 milligram vials, doctors are required to open two vials but will be throwing away 80 percent of one of the vials because the patient does not need it. In some cases, the remaining 40 milligrams could be used within six hours and for certain patients, but this often does not happen.

Overall, drug prices in the United States tend to be much higher than in other parts of the world. The new study suggests if single dose vials came in smaller, or a wider array of, sizes, less would be wasted.

The researchers estimate that drug companies, hospitals, and doctors, all of whom profit from use of the drugs, will bill more than $1 billion for leftover cancer drugs. Those profits would not exist if companies sold vial sizes more in line with the needs of patients, researchers suggest.

While the problem is not unique to cancer drugs -- the researchers mention an asthma drug often wasted -- it is somewhat unique to the United States, or at least more frequent. For several drugs, manufacturers offer smaller vial sizes in countries where governments have more power to negotiate drug prices and they are not as high.

"You have these incredibly expensive drugs, and you can only buy them in bulk," Dr. Leonard Saltz, who leads the pharmacy and therapeutics committee at Memorial Sloan Kettering Cancer Center, told the New York Times. "What's really interesting is they're selling these drugs in smaller vials in Europe, where regulators are clearly paying attention to this issue."

For the study, published in the British Medical Journal, reseachers looked at the top 20 cancer drugs dosed by body size and packaged in single doses, which represent 93 percent of cancer drugs sold. They calculated the amount left over based on Medicare claims that included dosages not equal to the full contents of the vial, compared with the cost of the unused portions of vials.

Based on this, researchers estimate that 10 percent of drug companies' projected 2016 revenue of $18 billion, or $1.8 billion, will come from cancer drugs that are thrown away, with doctor and hospital markups adding another $1 billion spent on wasted drugs.

The proportion of wasted drugs ranges from 1 percent to 33 percent. For specific drugs, the researchers estimate that 7 percent of rituximab revenue and 33 percent of carfilzomib sales, among others.

Small percentages of leftover drugs often represent more money than expected, such as the 7 percent of leftover ipilimumab generating $2,000 of the $29,000 cost per vial sold.

In some cases, larger vial sizes are unique to the United States, such as the 3.5 milligram vials of bortezomib, used to treat multiple myeloma, which is much larger than the 2.5 milligram average dose and leaves about 27 to 30 percent of the drug thrown away. In England, the drug is available in 1 milligram vials.

Drug companies clearly make the most money on wasted drugs, but hospitals and doctors also benefit from billing for drugs they throw away based on reimbursement rates for drugs used with patients. Medicare allows for drug price markups of 6 percent, but commercial insurance pays markups to doctors and hospitals between 22 percent and 142 percent over bulk prices charged by manufacturers.

The researchers call on the U.S. Food and Drug Administration to clarify rules on drug-sharing, but emphasize requiring companies to provide vial sizes that better reflect doses given to patients. They call on the agency to do something -- for the safety and pocketbooks of patients -- despite recognizing revenues in the drug and healthcare industries could drop by more than $1 billion.

"Regularly and systematically discarding expensive drugs is antithetical to efforts to reduce spending on healthcare services that provide no value," researchers write in the study. "Policy makers should therefore explore approaches that would reduce or eliminate paying for leftover drug."

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