According to a recent study, Medicare spent $1.4 billion on drugs in 2017 and 2018 that ended up being discarded. More specifically, Medicare spent $695 million on discarded Part B drugs in 2017, and $725 million in 2018. Most of these wasted tax dollars went towards chemotherapy and cancer-treating drugs that were not used. Medicare now has plans for utilizing that $1.4 billion rather than wasting it.
Wasted Resources
Most of the drugs that were discarded in this two-year period were unused units of chemotherapy drugs. They ended up being disposed of because many units were single-dose vials that contained a higher dose than was needed to treat the average patient. This $1.4 billion of essentially wasted money accounts for 16% of Medicare spending, and 2% of Part B drug spending.
According to a report put forward by MedicareAdvantage.com, this amount of spending could:
- Cover a year’s worth of insulin for more than 3.3 million Part D beneficiaries
- Buy 87,000 hospital ventilators, which the country is in desperate need of due to the coronavirus pandemic
- Buy more than 1 billion N95 masks
- Cover the cost of 31.6 million flu shots
- Go towards necessary women’s health treatments
Why Is So Much Money Wasted?
The report also suggests that Medicare’s “buy and bill” drug supply model is likely to blame for the waste. In the “buy and bill” model, healthcare providers and hospitals purchase, store and administer drugs to patients, and then bill insurers or patients for the drug. All drugs purchased by providers must either be administered or thrown away after opening, which often happens because many vials contain higher doses than is appropriate for patients.
“Because of this model, drug manufacturers are incentivized to produce medication amounts that are more likely to end up discarded when single-dose vials or containers include higher doses than are necessary,” says the report on MedicareAdvantage.com. “Profits are increased by billing for the whole vial even if only a portion of it is needed and used. Doctors and hospitals also enjoy bloated profit margins under this system.”
The Government’s Considerations
The information in this study has prompted CMS to consider enacting two possible solutions:
- Require drugmakers, hospitals, and doctors to refund CMS for discarded drugs
- Require pharmaceutical companies to right-size drug containers so that no medication gets wasted/discarded
- Do both of the above
