Analysis: $1.4B could have gone to better uses than discarded Medicare drugs

In a recent two-year period, Medicare Part B alone spent more than $1.4 billion on drugs that never got used. The authors of a new report analyzing the waste suggest two possible solutions the government might consider enacting:

Make drugmakers, hospitals and doctors refund CMS for discarded drugs or require pharma companies to right-size drug containers.

A third way might be to do both.  

The analysis and commentary come from the Medicare seller TZ Insurance Solutions via its consumer-facing website MedicareAdvantage.com.

Much of the wasted taxpayer money paid for unused units of chemotherapy and cancer-treating drugs, the authors report. These medications had to be tossed because they were in single-dose dispensers containing more drug than needed for the average patient case.

Allowing that $1.4B isn’t a massive amount compared to overall Medicare drug spending—Part B covers only 16% of Medicare’s total drug tab—the authors put the amount in context by looking at justifiable bills matched to the analyzed amount.

Going forward, they suggest, $1.4 billion might:

  • Buy more than 1.1 billion N95 surgical masks—roughly three for every person in the U.S.,
  • Cover the cost of 31.6 million flu shots—more than enough for every person in each of the five largest cities in America, or
  • Pay for the total annual household health spending for more than 113,000 families of four on an employer health insurance plan.

The authors note that access to the figures was made possible by the Trump Administration’s efforts to “increase price transparency, lower prescription drug list prices and prevent drug wastage.”

“Research suggests that, due to the ‘buy and bill’ drug supply model, drug manufacturers are actually incentivized to produce medication quantities that are more likely to wind up discarded when single-dose vials or containers include higher doses than are necessary,” they write. “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.”

Read the full report.