Medicare Spent $1.4 Billion On Discarded Drugs in 2017 and 2018

Wasted Medicare dollars could be better spent on medication for seniors, women and people with cancer

Updated August 19, 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.

Medicare spending on discarded drugs listed by drug usage

Why Is So Much Money Wasted on Discarded Drugs?

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.

List of drugs ranked by highest increase in wasted units from 2017 to 2018

Valuable Cancer Drugs Are the Most Commonly Discarded and Account for Highest Costs of Waste

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. 

List of drugs with more than 20 percent of total units wasted in 2018

  • More than 1 out of every 4 units of the cancer-treating drug Velcade (generic name Bortezomib) reimbursed by Medicare in 2018 were discarded. The cost to Medicare for these discarded units added up to more than $122.5 million in 2018.

  • The amount of wasted money spent on discarded Velcade in 2018 could have paid for an additional 3 million doses, or enough to treat another 6,000 cancer patients.

  • More than 20% of Medicare spending on each of 6 chemotherapy and cancer treatment drugs — Velcade, NPlate (Romiplostim), Jevtana (Cabazitaxel), Azacitidine (Azacitidine), Dacogen (Decitabine) and Hycamtin (Topotecan) — was wasted in discarded units in 2018. The combined cost of those discarded units was more than $228 million, or roughly 15% of the total wasted Part B drug spending for the year.

  • Wasted spending on discarded units of the cancer drug Herceptin (Trastuzumab) more than doubled from $34 million in 2017 to nearly $78 million in 2018.

  • For every $3.68 Medicare spent on the prostate cancer drug Jevtana in 2018, $1 ended up being discarded as waste. This totaled $10,068 in wasted spending per beneficiary.

  • Nearly $2.3 million was wasted on the cancer drug Folotyn (Pralatrexate), despite the drug being given to only 168 beneficiaries. Medicare wasted $32.14 on each single dosage unit of Folotyn in 2018, at a cost of roughly $13,600 per beneficiary who received the drug (see table below).

List of Medicare drug spending waste per beneficiary by drug

Necessary Women’s Health Treatments Could Have Reached More People With Wasted Funds

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.

  • Medicare spent over $77.7 million on discarded dosage units of the breast cancer drug Herceptin. That wasted money could have covered the Medicare spending to treat close to 2,000 additional women with Herceptin in 2018.

    Medicare similarly wasted over $37.9 million on discarded units of Abraxane, which is also used to treat breast cancer. That wasted amount could have covered the Medicare spending for the Abraxane treatment of 2,340 additional women.
  • The blood disorder drug Panhematin (Hemin) is used to help women who experience acute porphyria related to their menstrual cycle. Wasted Medicare spending on discarded units of Panhematin totaled $14,435 per beneficiary who received the drug in 2018 alone.
  • According to a report from the Centers for Disease Control & Prevention (CDC), women are twice as likely as men to take antidepressant drugs. More than 2.5 million Medicare Part D beneficiaries were prescribed the antidepressant medication Sertraline or its name brand equivalent Zoloft in 2018, at a total cost to Medicare of $145 million.

    The $725 million in wasted 2018 Medicare Part B spending could have covered the Medicare cost of covering Zoloft or Sertraline for an additional 12.8 million beneficiaries – which we can assume would equal at least 6 million women.

  • Medicaid and Medicare combined to spend a total of over $358,000 on the osteoporosis treatment drugs Actonel, Boniva, Fosamax and Reclast in 2018. Medicare wasted over 2,000 times that amount on discarded Part B drugs in the same year.

  • Medicare spent over $458 million covering various menopause treatment drugs for close to 200,000 women in 2018 through Medicare Part D. It also wasted over 1.6 times this amount on discarded Part B drugs, the cost of which could have covered menopause drugs for an additional 320,000 women covered by Part D.

Putting $1.4 Billion Into Perspective: Opioid Addiction, COVID-19 Treatment and Public Health

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.

  • Over 111,300 Medicare Part D beneficiaries were prescribed the drug Suboxone or its generic form Buprenorphine/Naloxone in 2018 to treat the symptoms of opioid withdrawal. The wasted Medicare Part B drug spending from the same year alone would cover the Medicare spending for Suboxone opioid-addiction treatment for over 250,000 Americans.

  • The $1.4 billion Medicare spent on discarded drugs in 2017 and 2018 could pay for 87,000 hospital ventilators, or nearly 16 ventilators for every hospital in the U.S., including prison infirmaries.1

  • $1.4 billion could buy more than 1.1 billion N95 surgical masks, or roughly three for every person in the U.S.2

  • $1.4 billion would cover the cost of 31.6 million flu shots (more than enough for every person in each of the five largest cities in America).3

  • $1.4 billion could pay for the total annual household health spending for over 113,000 families of four on an employer health insurance plan.4

  • Medicare’s wasted $1.4 billion could cover a years-worth of insulin for over 3.3 million Medicare Part D beneficiaries with diabetes.5

  • The $725 million Medicare wasted on discarded Part B drugs in 2018 is more than the 2018 GDP of 9 countries.6

Wasted Medicare Spending Impacted by COVID-19

According to data provided to Reuters, prescribed use of the anti-inflammatory drug Tocilizumab skyrocketed 30% among COVID-19 patients in July. In 2017 and 2018 combined, Medicare spent over $13.4 million on discarded units of Tocilizumab.

It can be assumed that a 30% spike in use of Tocilizumab could result in a correlating spike in wasted Medicare spending. If such a drastic increase in use of the drug continues through the rest of 2020, the money Medicare wastes on discarded units of Tocilizumab alone could total anywhere from $7 million to over $9 million for the year. 

Medicare spending on discarded drugs ranked by spending amount

How Much Money Has the Government Wasted on Unused or Discarded Drugs?

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.

Conclusion

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:

  • Require pharmaceutical companies to make more appropriate vial sizes
  • Require drugmakers, hospitals and physicians to refund the federal government’s expenses for discarded drugs

Data notes

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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