Thursday, March 3, 2016

Simple Math, Big Media Visibility: The New Study on Drug Wastage & Costs

Traditionally, Medicare and other payers compensate doctors for unavoidable wastage from single dose vials.   For example, the patient needs 80 mg of drug but only vials of 100 mg are sold. Single use vials are labeled "not for reuse" and generally do not contain preservatives for refrigeration and reuse.  In other cases, components may be brought up from powder to saline and not be stable in liquid form.

Peter Bach of Memorial Sloane Kettering published an article on the national mathematics of this in the BMJ (British Medical Journal) and it was immediately picked up by the New York Times.  Links follow.

Bach's article is online and open access at BMJ (here) while a detailed story appeared in the weekly Tuesday health section of the New York Times (here).  The web version has a catchy live-interactive section with pull-down boxes that calculates in front of your eyes.

The math is pretty simple.  Let's say the average patient weight is 150 pounds and would require an 75 mg dose of a drug that comes in 100 mg vials for $4000.  That is 25% or $1000 wastage.  Multiple by the number of patients treated with the drug & the number of treatments (e.g. monthly for six months).  In this case six months x $1000 or $6000, times let's say 100,000 patients, of $600M.

Medicare has elaborate manualized rules on drug wastage which sometimes result in eye-crossing audits or even court cases; here, section 40.  Compliance is intricate (here) (here) (here).

What caught my eye, and what I pointed out to some junior colleagues in consulting, adding relatively straightforward, high school sophomore level math makes the story newsworthy.  Simple describing what is wasted - 100 mg vials here, 80 mg drug needed there - isn't a news story.  Doing the math and multiplying out to expected patients per year times published Medicare drug prices plus total costs is not rocket science, but makes the story a news story for the New York Times and a publication for the BMJ.  The spark is having the general idea, then a quick forward looking vision to how the math would stack up, and then "doing it and getting it done."

According to subscription journal Law360, Sen. Angus King of Maine, Sen. Bernie Sanders, and Sen. Durbin of Illinois, together with some other Democratic senators sent a letter about Bach's article to both the FDA and CMS.

Additional trade press at Business Insider (here).