Waste in Cancer Drugs Costs $3 Billion a Year, a Study Says
By: Gardiner Harris (NY Times) March 2016
WASHINGTON — The federal Medicare program and private health insurers waste nearly $3 billion every year buying cancer medicines that are thrown out because many drug makers distribute the drugs only in vials that hold too much for most patients, a group of cancer researchers has found.
The expensive drugs are usually injected by nurses working in doctors’ offices and hospitals who carefully measure the amount needed for a particular patient and then, because of safety concerns, discard the rest.
If drug makers distributed vials containing smaller quantities, nurses could pick the right volume for a patient and minimize waste. Instead, many drug makers exclusively sell one-size-fits-all vials, ensuring that many smaller patients pay thousands of dollars for medicine they are never given, according to researchers at Memorial Sloan Kettering Cancer Center, who published a study on Tuesday in BMJ, formerly known as the British Medical Journal.
Some of these medicines are distributed in smaller vial sizes in Europe, where governments play a more active role than the United States does in drug pricing and distribution.
Velcade, a drug used to treat multiple myeloma and lymphoma, is sold in the United States only in 3.5-milligram vials that sell for $1,034 and have enough medicine to treat a person who is 6 feet 6 inches tall and weighs 250 pounds. Credit Matt Roth for The New York Times
“Drug companies are quietly making billions forcing little old ladies to buy enough medicine to treat football players, and regulators have completely missed it,” said Dr. Peter B. Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering and a co-author of the study. “If we’re ever going to start saving money in health care, this is an obvious place to cut.”
The researchers analyzed the waste generated by the top 20 selling cancer medicines and concluded that insurers paid drug makers $1.8 billion annually on discarded quantities and then spent about $1 billion on markups to doctors and hospitals.
Some non-cancer drugs also generate considerable waste, including Remicade, an arthritis drug sold by Johnson & Johnson for which an estimated $500 million of the drug’s $4.3 billion in annual sales comes from quantities that are thrown away, researchers found. But such non-cancer drugs were not included in the study’s estimates of total waste.
In one example, the study said that in the United States Takeda Pharmaceuticals sells Velcade, a drug for the treatment of multiple myeloma and lymphoma, only in 3.5-milligram vials that sell for $1,034 and hold enough medicine to treat a person who is 6 feet 6 inches tall and who weighs 250 pounds. If a patient is smaller, then a quantity of the precious powder is thrown away.
Lena Haddad, 53, of Germantown, Md., who has been living with multiple myeloma for four years, now gets a weekly dose of 1.8 milligrams of Velcade. On a recent day at Ms. Haddad’s doctor’s office in Bethesda, Md., a nurse, Patricia Traylor, took a vial of Velcade from a large drug cabinet. She injected a syringeful of saline into the vial and shook it, pushed a needle into the vial and withdrew about half the contents. Then she threw out the vial with the remaining medicine.
“You can’t use the remainder for the patient the next time she comes in or use it on another patient, so it has to be discarded as waste,” Ms. Traylor said.
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Safety standards permit nurses to use drug leftovers in other patients only if used within six hours and only in specialized pharmacies.
Told that she was using only about half of the drug that was purchased, Ms. Haddad said she was shocked.
“No wonder my premiums keep going up,” she said.
Medicare and many private insurers charge patients drug co-payments of as much as 20 percent, which can add up to tens of thousands of dollars annually for the latest drugs; much is spent on cancer medicines that patients never receive, according to the study.
Dr. Dixie-Lee Esseltine, vice president for oncology clinical research at Takeda, wrote in an email that the pharmaceutical firm “worked closely with the F.D.A. to establish the Velcade vial size of 3.5 mg to ensure that one vial of Velcade would provide an adequate amount of the drug for a patient of almost any size.”
Velcade is sold in Britain in both 1-milligram and 3.5-milligram vials.
Takeda is expected to earn $309 million this year on supplies of Velcade that are discarded, an amount that represents 30 percent of the drug’s overall sales in the United States, the cancer researchers estimated. If Takeda provided an additional vial size of 0.25 milligram, waste would be slashed by 84 percent, also reducing Velcade’s sales in the United States by $261 million annually, the researchers calculated.
“You have these incredibly expensive drugs, and you can only buy them in bulk,” said Dr. Leonard Saltz, who leads the pharmacy and therapeutics committee at Memorial Sloan Kettering and was a co-author of the study. “What’s really interesting is they’re selling these drugs in smaller vials in Europe, where regulators are clearly paying attention to this issue.”
Christopher Kelly, a spokesman for the Food and Drug Administration, said the agency objected to companies’ proposed vial sizes only if it believed that an excessively large volume of medicine “could lead to medication errors or safety issues due to inappropriate multiple dosing.”
Patricia Traylor, a nurse in Bethesda, Md., has had to throw away vials with cancer medicines remaining in them. Credit Matt Roth for The New York Times
In other words, as long as nurses are not tempted to do anything but discard additional quantities, the drug agency is fine with extra-large, one-size-fits-all packaging. Congress has not given the drug agency the authority to consider cost in its decisions.
“Companies propose the vial sizes that they would like to market,” Mr. Kelly said.
Rising drug prices have been a concern for many years, and high initial prices and subsequent increases are an industrywide phenomenon. The last 10 cancer drugs approved before July 2015 have an average annual price of $190,217, and major drug makers routinely increase the prices of big sellers 10 percent or more each year, far above the rate of inflation.
The industry explains that high prices are needed to fund research, but companies such as Pfizer and Merck spend just 17 percent of their revenues finding new drugs, according to their financial statements. Far more goes to marketing and profits.
For decades, cancer doctors largely ignored the issue of pricing, but as their patients became impoverished, some began to speak up. In 2012, Dr. Bach and Dr. Saltz wrote an Op-Ed article in The New York Times announcing that their hospital would not purchase a new cancer drug that was twice as expensive as but no more effective than an existing medicine. The maker of the drug slashed its price.
Dr. Bach and Dr. Saltz say they have since become concerned that prices of new cancer medicines have almost no connection with their lifesaving potential. Dr. Bach recently unveiled a complex calculator of drug value.
But there was nothing complex about measuring the value of a drug that was thrown away, Dr. Saltz said, since the value to the patient was zero.
The two doctors have proposed that the government either mandate that drug makers provide medicines in enough vial sizes to minimize waste, or mandate that drug makers refund the government for wasted quantities.
Dr. Saltz first noticed the problem of waste when he was considering adding Keytruda, a new drug for metastatic lung cancer and melanoma, to the hospital’s list of drugs to be used on patients. Although a 150-pound patient would need 136 milligrams of the drug, Dr. Saltz noticed that Merck, its manufacturer, sold the medicine only in 50-milligram vials — ensuring waste.
“I thought that was really cynical,” Dr. Saltz said in an interview. “And then it got worse.”
In February 2015, Merck introduced 100-milligram vials and stopped selling Keytruda in 50-milligram vials, ensuring far larger amounts of waste. The company still sells 50-milligram vials of the drug in Europe.
Pamela L. Eisele, a Merck spokeswoman, said the company hoped to persuade the F.D.A. to approve a fixed dose of 200 milligrams of Keytruda for all patients, higher than the dose presently given to nearly all patients. In studies given to the drug agency, there was no evidence that the higher dose was more effective, Ms. Eisele said, but the fixed dose “will eliminate wastage.”
Since the extra medicine does nothing to help patients, Dr. Bach said that the company was advocating that waste be injected into patients rather than thrown away.
Under its present dosing, Merck would earn $2.4 billion over the next five years from discarded quantities of Keytruda, half of which would result from switching to 100-milligram vials, the researchers estimated.
Some cancer drugs have little waste.
Treanda, which is used to treat leukemia and non-Hodgkin’s lymphoma and is manufactured by Teva Pharmaceuticals, is packaged in four separate dosages so only 1 percent of the drug is wasted, on average.
But 18 of the top 20 cancer medicines are sold in just one or two vial sizes, so on average 10 percent of the volume of cancer drugs purchased by doctors and hospitals is discarded, the researchers say.
