Academic Literature

What A Waste! The National Academy Of Medicine’s Report On Oversized Vials Of Expensive Drugs

Why Congress should not follow the National Academy of Science, Engineering, and Medicine’s recommendation to remove the JW modifier.
Originally published on 07/09/2021 in Health Affairs Blog

Pharmaceutical companies are frequently leaving out the cost of excess drug in their pricing announcements – leaving consumers, policy makers, and researchers with an inaccurate sense of how much new drugs cost.

Excess spending from drugs packaged in single-dose vial sizes costs the U.S. healthcare system billions. In 2017, the Centers for Medicare and Medicaid Services (CMS) began requiring that providers track the amount of drug that is paid for but ultimately discarded using a claim code known as the JW modifier. Congress commissioned the National Academy of Science, Engineering, and Medicine to study and recommend policy solutions to combat concerns regarding the high cost of discarded weight-based drugs.

In a surprising conclusion, the National Academy recommends the JW modifier be dropped – they argue that the price of these drugs reflects what they are worth to us, not how much drug is used. All this while companies continue to provide misleading price signals, such as Biogen’s annual cost of $56,000 for Aduhelm, that do not accurately account for the cost of wasted drug. The true annual cost of Aduhelm is somewhere between $61,000 and $62,000, depending on assumptions about the gender and age distribution of Alzheimer’s patients. Assuming a conservative market estimate of only 500,000 patients per year, the difference in price between the announced and true price will result in $2 billion in additional annual revenue for Biogen.

Peter Bach proposes that policymakers think again about removing the JW modifier requirement, the only way of tracking how much Medicare is paying for discarded drugs, and consider other policy solutions to combat the system-wide cost of drug waste.

Read the full piece here.

Share

Research & Insights

We conduct non-partisan, independent research, and make our work accessible and informative to policymakers and the general audience alike. Browse our featured research or explore our work by article type.

Overspending Driven by Oversized Single Dose Vials of Cancer Drugs
Drug companies will make $1.8 billion this year by using package sizes that promote waste.
BMJ 03/01/2016
Production Plus Profit Pricing (P-quad) FAQ
08/17/2021
What A Waste! The National Academy Of Medicine’s Report On…
Why Congress should not follow the National Academy of Science, Engineering, and Medicine’s recommendation to remove the JW modifier.
Health Affairs Blog 07/09/2021
Medicare Must Study Unproven, Expensive Alzheimer’s Drug
Medicare cannot indiscriminately cover the cost of Aduhelm for the treatment of Alzheimer's disease without first evaluating whether it truly works.
Bloomberg Opinion 06/15/2021
Value-Based Management of Specialty Drugs: Practical Considerations and Implications for…
Not all approaches are suited to meeting policy makers and health plans’ goals of managing specialty drugs based on their value. Researchers conducted a qualitative study with Blue Cross Blue Shield plans interested in implementing value-based specialty pharmacy management to observe the plans’ objectives, strategies, and factors influencing their ability to execute on these strategies.
AJMC 05/13/2021
The Drugs at the Heart of Our Pricing Crisis
The US drug pricing system is broken, but not irreparable. For large-molecule biologic drugs, enter: Production Plus Profit Pricing (P-quad, pronounced like Ahab's seagoing vessel).
NYTimes 03/15/2021
Biosimilars: Market Changes do not equal policy success
Numerous articles and reports have trumpeted biosimilar market growth, but it's critical we do not lose sight of the sole objective for creating the biosimilar market: to reduce the cost of older biologic drugs for society and taxpayers.
Drug Pricing Lab 03/15/2021
Instead of debating 'first-shot' vs 'set-aside' vaccine approaches, hospitals' study…
Hospitals could start studies of their own employees to answer important questions, including whether the first-shot approach has downsides when compared to the set-aside strategy.
STAT 01/04/2021
After 4 Years of Trump, Medicare and Medicaid Badly Need…
Many promising ideas won't work as expected, and that's all the more reason for CMS to evaluate how medical care is delivered to its patients.
NYTimes 12/01/2020
Trump's Drug-Pricing Ideas Would Cost Taxpayers a Bundle
Meanwhile, pharmaceutical companies would stand to make a lot more money.
Bloomberg Opinion 09/29/2020
We can't tackle the pandemic without figuring out which Covid-19…
There may be several Covid-19 vaccines by winter, but there will also need to be a study comparing the viruses to one another as part of rolling out widespread vaccination.
STAT 09/24/2020
CMS's Proposed Medicaid Best Price Loophole for Value-Based Purchasing of…
The administration has proposed a loophole in the Medicaid Best Price rules that would dismiss linking the drug's effectiveness to its price.
HA Blog 07/06/2020
Newsletter

Stay up to date on our work and news