Published July 24, 2020
Our analysis of data provided by the Centers for Medicare and Medicaid Services (CMS) shows that more than $1.4 billion was wasted on discarded units of drugs in 2017 and 2018 alone.
The majority of this wasted taxpayer money was spent on unused units of chemotherapy and cancer-treating drugs that were thrown away and unavailable for treating other patients in need of the drugs.
Most of this medication and financial waste is due to single-dose vials or containers of medications that include higher doses than are necessary to treat the average patient.
We identified key areas related to cancer treatment, women’s health and general public health (including COVID-19 treatment and prevention) that could benefit in drastic ways if given the amounts of money Medicare has wasted on discarded drugs.
In 2017, Medicare spent $695 million on discarded drugs. In 2018, this figure rose to $725 million.
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.
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.
Medicare wasted more than $1 million per drug on discarded doses of 49 different drugs in 2018, most of them vital chemotherapy and cancer treatment drugs.
The money Medicare wasted on doses of drugs that were thrown away could have covered all or at least large portions of the costs many women face when getting treatment for breast cancer, menopause, depression and other conditions.
To further illustrate the amount of taxpayer money that was wasted on discarded Medicare Part B drugs in 2017 and 2018, we compiled a list of ways this amount of money could be put to use for a number of public health issues, such as building hospitals, providing N95 surgical masks to all Americans, treating opioid addiction and more.
The wasted $1.4 billion only accounts for discarded drugs that were covered by Medicare Part B, the medical insurance component of federally provided Original Medicare. Part B drug spending is just 16% of total Medicare drug spending.
The discarded drug units report was first made publicly available as part of President Donald Trump's administrative efforts "to increase price transparency, lower prescription drug list prices and prevent drug wastage."7
“The Trump Administration’s commitments to price transparency and reducing the costs of prescription drugs are historic. The continued public release of what Medicare and Medicaid pay for prescription drugs puts manufacturers on notice: the public is watching what you are charging patients. Accountability – the consequence of greater transparency in drug pricing – is an important component of the Trump Administration’s efforts to lower prices and empower patients with the information they need to make informed decisions.” - CMS Administrator Seema Verma7
In 2018, Medicare spent $168.1 billion on medications through Medicare Part D prescription drug coverage. There is no available data on Part D spending on wasted or unused drugs. Medicare has only provided publicly available data on Part B discarded drug reimbursement since 2017.
Although the total amount of Part B spending on discarded drugs is high, it actually only accounts for about 2% of total Part B drug spending.
To address this wasted spending and to significantly impact both the cost and care outcomes for millions of Americans, two possible changes could be implemented:
Our analysis is based on data made available through CMS.gov.
We compiled drug spending amounts and beneficiary counts using the 2018 Medicare Part B Drug Spending Dashboard, the 2018 Medicare Part D Drug Spending Dashboard, the 2018 Medicaid Drug Spending Dashboard and the Medicare Part B Discarded Drug Units Reports from 2017 and 2018. These are the most recent data available.
Drug usage was categorized by a drug’s primary use.
For the graphic titled, “Total Dollars Wasted on Discarded Drugs”, the amount wasted per beneficiary was calculated as such: total dollars wasted/total beneficiaries receiving the drug.
For the graphic titled, “Drugs With The Highest Percent Increases of Waste From 2017-2018”, percent increase was calculated as such: (2018 waste value-2017 waste value)/2017 waste value*100.
1 Based on the cost of ventilator production according to the Department of Health and Human Services contract with General Motors under the Defense Production Act. Total number of U.S. hospitals (minus nonfederal psychiatric hospitals) according to the most recent data from the American Hospital Association.
2 Based on the per-mask cost of the 3M 1860 N95 respirator mask.
3 Based on the median cost of $45 per flu shot in 2017 according to the Kaiser Family Foundation.
4 Using the Household Health Spending Calculator provided by Kaiser Family Foundation.
5 Based on 2021 insulin copay requirements for Medicare Part D plan carriers.
6 According to figures from the International Monetary Fund published October 2019.
7 CMS. (Dec. 19, 2019). CMS Releases Enhanced Drug Dashboards Updated with Data for 2018 [press release]. Retrieved from www.cms.gov/newsroom/press-releases/cms-releases-enhanced-drug-dashboards-updated-data-2018.
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