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.


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