By Surabhi Dangi-Garimella, PhD
Injectable drugs, which are usually manufactured as single-dose vials, are administered by health care providers based on a person’s body weight. Variability in body weight means there is medication left over in the vial, which has to be tossed out because of safety and regulatory concerns such as drug sterility, stability, and contamination. This leads to significant drug waste.
While the reasoning behind weight-based dosing is a discussion for another day, the fact that patients are paying a copay for an entire vial when they are administered only a part of it is concerning.
Since 2017, the Centers for Medicare & Medicaid Services has required documentation from providers on the amount of drug wasted with single-use vials using the JW Modifier code in claims. So, this information has been tracked for the past five years. Beginning January 1, 2023, manufacturers will have to pay CMS rebates on the discarded volume above 10% of the allowed amount.
When Avalere Health analyzed 2020 claims data on drug wastage to project the Part B rebates that manufacturers would have to pay, they found:
- Thirty-nine drugs with >10% waste at risk for rebates to the tune of $151 million
- Twenty two of the 39 are oncology drugs
- Thirteen drugs with 8-10% waste could be at risk for future rebates
REFUND Act to Curb Medicare Spending on Discarded Drugs
A bipartisan bill introduced in Congress in 2021 has gone a step further—the bill is aimed at reducing Medicare spending on the discarded amount from single-use vials. Provisions within the Recovering Excessive Funds for Unused and Needless Drugs (REFUND) Act would allow Medicare to demand money from pharmaceutical manufacturers on wasted medications and bring back savings to beneficiaries.
Specifically, the REFUND Act will require the Secretary of Health and Human Services (HHS) to:
- Aggregate the total discarded amount of Part B medications each quarter
- Calculate the total cost of the discarded medications, based off the Average Sales Price (or wholesale acquisition cost if ASP is not available)
- Notify the drug’s manufacturer that they are required to provide a rebate to HHS for 90% of the amount of discarded medication that was recorded. This rebate would be deposited to the Medicare Trust Fund. Failure to comply would result in penalties.
A report by the National Academies of Sciences, Engineering, and Medicine found that while discarded drugs from single-dose vials have no recoverable value, there is room for change that can reduce inefficiencies and in turn, reduce drug waste. Many of these drugs—used to treat conditions such as macular degeneration and cancer—are very expensive, and the associated co-pays could raise financial stress for patients and their families. On the provider front, getting fully reimbursed for the entire vial means there is no incentive for providers to reduce the waste associated with discarding the excess drug.
With these issues in mind, the report recommends:
- Stakeholders—manufacturers, providers, policy makers, those in the supply chain, and payers—should develop strategies to reduce systemic inefficiencies
- Eliminating the JW Modifier billing code, which is not used as much by providers but can raise administrative burden on health systems
- FDA, CMS, and CDC should harmonize their disparate recommendations on handling excess drugs from single-use vials
Surabhi Dangi-Garimella, Ph.D. is a biologist with academic research experience, who brings her skills and knowledge to the health care communications world. She provides writing and strategic support to non-profit groups via her consultancy, SDG AdvoHealth, LLC.