Primary Care Corner with Geoffrey Modest MD: Profits From Cancer Drugs – Further Drug Company Shenanigans

By Dr. Geoffrey Modest

BMJ just had another of their many articles on drug company malfeasance, this one on mega-profits from their packaging of cancer drugs​​ (see BMJ2016;352:i788). The authors are from Memorial Sloan Kettering in New York and the University of Chicago.

Details:

• Background:
  • The issue is that cancer drugs dosed by body size are often in single-dose vials and are typically packaged in quantities larger than needed.
  • The leftover drug, which could have been used for another patient, needs to be used within 6 hours and only in specialized pharmacies.
  • Hospitals and doctors also profit by buying these meds through the “buy and bill” system (they buy the drugs, then bill the insurers but with a mark-up which can vary widely — the current Medicare mark-up is 4% but can be as high as 58% if the hospital has a 340B pharmacy (see below), for commercial insurers it is 22% for doctors and 142% for hospitals and even higher through a 340B pharmacy). And they benefit more from buying more drug than they use.
• Extent of the problem:
  • The researchers looked at the top 20 cancer drugs that are dosed by body size and packaged as single-dose vials (which they say accounts for 93% of all sales of such drugs)
  • Their methodology: estimate how often vial-sharing occurred (using Medicare claims, from which they can ascertain the amount of drug used that did not total the full vial contents); then calculate what they thought would be the most efficient packaging method based on the general US population height/weight measurements from the National Health and Nutrition Examination Survey, which they adjusted “to mirror a cancer patient population”
  • Their estimate: 10% of the drugs are discarded. But this seemingly small % translates to $1.8 billion from the $18 billion in sales. the amount discarded varies by drug (from 1-33%), for example:
    • Rituximab: 7% of $3.9 billion was discarded, for a loss of $254 million (and drug company profit of the same)
    • Carfilzomib: 33% of $697 million was discarded, for a pretty similar loss of $231 million
  • Sensitivity analyses did not provide much variation:
    • If the drugs were prescribed at the highest dose suggested by the FDA, the overall loss would be $1.4 billion
    • If every cancer patient weighed 10% lower than the survey population, the loss would be $2 billion
  • Why are there such variations in waste?
    • It really varies by drug packaging, e.g.:
      • Bendamustine (used for leukemia) is packaged in varying sized vials (25, 45, 100, and 180mg), so there can be pretty precise dosing/minimal waste
      • Bortezomib (used to treat multiple myeloma) only comes in one size (3.5 mg vial), which is much larger than the average dose of 2.5 mg, with $309 million in waste (in the UK the drug is sold in 1mg vials)
      • ​Pembrolizumab was initially marketed as 50-mg vials, then was changed so that 100-mg vials were the only ones made in the US (vs continuing the 50-mg vials in Europe). The average 70 kg patient needs 140mg of drug (ie three 50-mg vials, with minimal waste, or two 100-mg vials with lots of waste). So, the net effect of the repackaging is an extra $1.2 billion for the company over the next 5 years.
    • Hospital and doctor billing, and the effects on patients
      • As above, there are considerable markups by hospitals and doctors, which is projected to translate to > $1 billion in 2016
      • In terms of patient costs, about 1/2 of cancer patients have Medicare B, which has 20% copay and no upper limit, and 14% of them have no additional coverage for their coinsurance.
    • Other diseases:
      • Infliximab (one of largest selling drugs in the US at $4.3 billion in 2015, used for a variety of inflammatory conditions) is only available as 100mg single dose vials, which by above type of calculations leads to $500 million in extra revenues for the drug company.
      • ​Omalizumab (for asthma), used in 75 mg dosing increments, is available only as 150 mg vials
    • Conflicting regulations
      • One issue is conflicting regulations: e.g.
        • FDA: encourage drug companies to package drugs responsibly to minimize waste
        • Medicare: okay to share open vials with other patients, if precautions taken
        • ​But, CDC: only use single dose vials for one patient.

So, a few points:

• Yet again we are confronted with drug companies making huge profits by manipulating the system. The Feds deserve some credit/blame for not having a consistent directive on using leftovers of these extremely expensive drugs, as I do all the time with leftover lidocaine or immunizations from multi-use bottles (there may be issues of shelf-life that vary with different drugs, of course). But the bigger regulatory let-down is that, unlike almost all other countries, we have no regulatory restraints on the drug industry. They can charge whatever they want. As we see again and again. For example, when the new drug for hepatitis C infection Harvoni came out, there was not even the pretense that the price reflected drug company reported costs (however inflated they might be), but instead were considered “reasonable” given the cost of treating the complications of otherwise untreated hep C.
• The 340B program began in 1992 to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” The goal of the 340B pharmacy act was to make meds more available at a lower price in areas of need, not to allow larger profits for hospitals and doctors.
• The magnitude of these profits is shocking/mind-numbing (and, remember, the $2 billion/yr is only for the top 20 cancer drugs). Just think how many more uninsured/underinsured people in the US could receive accessible, affordable care if the $$ were channeled there instead of drug company coffers…..