Discarded Drugs In Single-Dose Vials: Can Payers Recoup Payment?

Many medications are typically dosed according to a patient’s weight or other measure of body size. These medications frequently come in uniform, single-dose vials intended for one treatment, but because patients vary in these characteristics, not all of the medicine in each vial is used. Each week, physicians’ offices and hospitals discard volumes of weight-based drugs that are packaged in single-dose vials. This has led to concern among policy makers and clinicians that valuable medicines—for debilitating or life-threatening conditions such as rheumatoid arthritis or cancer—are being wasted and that as a result, health care dollars are being unnecessarily spent on these discarded drugs.

Motivated by this concern, Congress mandated that the Centers for Medicare and Medicaid Services (CMS) commission a study by the National Academies of Sciences, Engineering, and Medicine. National Academies leadership convened the Committee on Implications of Discarded Weight-Based Drugs, whose charge was to examine federal health care costs, safety, and quality concerns relating to discarded weight-based drugs in the Medicare program. The committee paid particular attention to the question of the economic value of the discarded drug. The report, Medications in Single-Dose Vials: Implications of Discarded Drugs, resulted from the committee’s work. 

In this blog post, we discuss the committee’s conclusions regarding a specific, important issue raised in the report: whether public payers such as CMS could recoup the cost of discarded drugs in single-dose vials and whether efforts to reduce the amount of discarded drugs could result in more patients being treated without additional cost to public payers. The committee concluded that the answer to both questions is no. However, weight-based drugs in single-dose vials could still be delivered more efficiently.

Economic Value Of Discarded Drugs In Single-Dose Vials

Imagine if a single-dose vial that contains enough of a weight-based drug for a 250-pound patient is opened and used for a patient who weighs 150 pounds. Because the dosage of drug is calculated based on the patient’s weight and because leftover drug is not intended for use in other patients, a significant amount of the drug in the vial is unused and thrown away, rather than being preserved for use in another patient. It may seem natural to assume this unused drug was wasted and paid for unnecessarily by the health care payer. After all, if safe, the leftover drug could have been used in another patient. Using this logic, one could compute the per-milliliter price of the drug and multiply that by the discarded volume to determine the amount seemingly overpaid for the discarded drug.

Analyses of this form have been applied to the top-selling weight-based, single-dose vial drugs in the US to estimate an annual overpayment of approximately $3 billion by Medicare for discarded drugs. This figure is obviously large and, if correct, might suggest that Medicare could require refunds for the portion of drug in single-dose vials that is discarded, that is, for which it “overpaid.”

Of course, discarded drugs from single-dose vials wouldn’t be an issue for drugs that are inexpensive, but many weight-based drugs—a significant proportion of which are cancer therapies—cost many thousands of dollars per course of treatment. Adding this value across all discarded weight-based, single-dose vial drugs might suggest substantial overpayment by public payers and provide an impetus for them to recover this potential overpayment.

This logic is, however, incomplete because it does not explicitly consider how biopharmaceuticals are priced. As the economists Sherry Glied and Bhaven Sampat have noted, simply dividing the total price of the vial to a payer by the number of milliliters in that vial to calculate the overpayment for the discarded drug and then determining the amount that might be economically recoverable is incorrect. The reason is that the prices of branded biopharmaceuticals—which are the primary concern for discarded drugs—are based on the willingness to pay for better health by patients and payers, not for the volume of drug in the vial.

For example, when purchasing a treatment for rheumatoid arthritis, patients are paying for the better health that the treatment provides, irrespective of whether the treatment is administered in a volume of 200 milliliters or 300 milliliters. Similarly, prices of suits, which vary in their size and the amount of fabric used to make them, are likely to be the same, irrespective of whether a suit is size S or XL. The reason is because the price of the suit is primarily determined by what consumers are willing to pay for a certain style, not the amount of fabric used. 

Potential Unintended Consequences For Reducing Discarded Drugs

Payers seeking to reduce spending on discarded drugs are limited in a few ways. First, any systematic attempt to quantify and seek repayment for discarded drugs would be expected to result in compensatory price increases for single-dose vials. This is because the price charged by the manufacturer reflects the value to the patient, which is based on improvements in health, not the volume of drug administered. As a result, attempts by public payers to recoup overpayments are unlikely to be successful since they may simply end up paying higher prices per unit volume of drug that is actually administered, such that the total payment per person treated is unchanged. Also, a mechanism to accurately do this would be complex, if not impossible, to implement and enforce.

Secondly, any systematic attempt to use single-dose vials (intended to treat one person) to treat multiple people would also be expected to lead manufacturers to simply increase the price of the vial. An analogous scenario occurred recently in Europe with the Pfizer COVID-19 vaccine that was produced and sold in multidose vials. When the European Medicines Agency said it could get six doses out of a five-dose vial, Pfizer said its contract was for a number of doses (that is, persons treated), not a number of vials, so it would provide fewer vials for the same cost, keeping the cost per dose the same. This response suggests that drug manufacturers pay attention to the price of treatment, not the per vial price. More broadly, this point implies that efforts to improve the technology of drug administration—for example, developing sterile processes that allow leftover drugs in single-dose vials to be used multiple times—would likely be met with price increases by drug manufacturers since the actual “product” patients are demanding is better health, not a specific volume of a drug.

Selected Recommendations From The Report, ‘Medications In Single-Dose Vials: Implications Of Discarded Drugs’

With these and other issues in mind, the National Academies report presented several recommendations. First, as discussed above, trying to recoup payments associated with discarded drugs is not only an impractical way to lower expenditures on pharmaceuticals but is unlikely to result in savings to payers to the extent that drug manufacturers would respond by increasing prices. Instead, drug developers, health care providers, policy makers, payers, and other relevant parties in the biopharmaceutical supply chain should focus on reducing inefficiencies in drug development, drug delivery, and drug payment systems, which are substantive drivers of excess costs for both the health care system and for patients. Broader issues related to the pricing of drugs were discussed in a previous National Academies report, Making Medicines Affordable: A National Imperative.

Second, CMS should discontinue the use of the “JW modifier,” an administrative billing code that is currently used to track the unused portions of single-dose drugs by the Medicare program. Since the hypothesized savings from reducing the “waste” of weight-based drugs are illusory, there seems little reason to keep track of the discarded amounts. Additionally, the clerical work required by the JW modifier—which is rarely used by health care providers, and inconsistently if so—places more administrative burden on health care systems.

Third, outside of the issue of whether payers can be expected to recover savings from discarded drugs, the committee identified substantial disagreement amongst relevant federal agencies—including the Food and Drug Administration (FDA), CMS, and the Centers for Disease Control and Prevention (CDC)—as to how surplus drugs in single-dose vials should be used. CMS, for example, permits health care providers to administer repackaged doses to multiple patients, provided that each repackaged dose is used for a single patient, while the CDC states that vials labeled by the manufacturer as single dose should be used only for one patient and that repackaging is not acceptable. The report recommended that the relevant agencies and other stakeholders should collaborate to review and harmonize existing policies and guidelines on drug administration and repackaging, an issue primarily of drug safety and efficacy, as opposed to a way to reduce drug spending. Based on the experience of other industrialized countries, the report also recommended that CMS, the FDA, the CDC, and other agencies work together to identify and implement technological systems that allow single-dose vials to be used safely across multiple patients. Drug manufacturers should produce injectable and infused drugs in multiple-dose vials when it is safe to do so, the report recommended.

Broad, Coordinated, And Sustained Effort

The way drugs are priced and paid for in the United States makes any effort to recoup payments for discarded drugs in single-dose vials unlikely to result in savings for patients and could have unintended consequences within the current context of drug pricing, delivery, and payments in this country. Ultimately, ensuring prescription drug affordability for patients will require broad, coordinated, and sustained efforts by drug manufacturers, health care providers, policy makers, payers, and patients.

Authors’ Note

The views expressed in this post are the result of a National Academies consensus process and do not necessarily reflect those of sponsoring organization or institutional affiliations of the authors.