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Cost of Discarded Medicare Part B Drugs in 2017–2020

During 2017 through 2020, the cost of drugs reported as administered but discarded was $3.0 billion, according to an analysis of the Medicare Part B Discarded Drug Units dataset. The investigators write, “Discarded drug spending was largely concentrated among very few chemotherapy and infusion drugs; a potential remedy may be federal regulations that restrict expenditures for drug waste to below a certain percentage.”

The discarded drug amount was collected from the dataset using the JW modifier code, a Healthcare Common Procedure Coding System modifier providers and suppliers must use to document waste. The researchers mapped drugs to the Restructured BETOS (Berenson-Eggers Type of Service) Classification System (RBCS) taxonomy to calculate costs.

The results showed the following: “During the study period, 2.2% of administered drugs were reported as discarded, with an estimated cost of $3.0 billion. Chemotherapy accounted for the greatest percentage of discarded drugs and the greatest spending ($2.1 billion). Among the 20 drugs with the highest percentage discarded, discarded drug amounts totaled $971 million.

“From 2017 to 2020, the mean percentage of spending on discarded drugs increased from 1.8% to 2.3% (P  =  .001), while total spending on discarded drugs did not change. Mean annual spending per discarded drug declined for chemotherapy drugs ($1.5 million to $1.4 million, P = .03) and increased for imaging drugs ($59,893 to $118,468, P < .001). The number of drugs with more than 10% discarded increased from 22 to 39.”

Editorial: “Beginning next year, the 2021 Infrastructure Investment and Jobs Act requires manufacturers to pay rebates for spending on discarded drugs,” editorialists write. “Although the authors of the National Academies of Sciences, Engineering, and Medicine report on drug waste raised concerns that such an approach could be associated with manufacturers increasing prices, recent changes to Medicare mitigate this concern. Specifically, the Inflation Reduction Act limits the ability of industry to raise prices on therapies that are reimbursed by Medicare beyond the rate of inflation. Thus, the imposition of rebates may reduce incentives that drug manufacturers currently have that are associated with medication waste. This may lead to adjustments to vial sizes to better reflect patient need, or perhaps increasing interest in refining safety protocols to allow for patients to share vials. Alternatively, there could be a move toward paying for each treatment episode rather than for each vial. Regardless, the status quo is unsustainable, and it is incumbent on policy makers to act. Decreasing waste, one way or another, can help us to avoid throwing away Medicare’s resources, saving money and, more importantly, lives.”

Source: JAMA Internal Medicine