When I was at the grocery store last night, I had to go through the soda aisle to get to the bakery in order to bribe my son with a sugar cookie.
In that aisle was a multitude of packages for a single flavor of soda. There were eight and twelve ounce cans. There were half liter and twenty ounce single serving bottles, and then there were liter and two liter multi-serving bottles. There were singles of most of these packaged contains, four packs, six packs, twelve packs, and thirty packs. Each of those packaging combinations had a slightly to significantly different price per ounce. Some of the variance in the price per ounce could be due to packaging cost difference. It is plausible that aluminum cans cost more than plastic bottles or vice versa. However most of the variance is market segmentation.
I was thinking about this as I read the Vox article on cancer drug wastage:
Pharmaceutical companies will earn nearly $2 billion this year selling drugs that patients never take.
These are expensive cancer drugs that can cost upward of $13,000 per month. A new study suggests that the way drug companies package these intravenous drugs — in single-use vials that contain way more medication than an average patient needs — ends up wasting a lot of money…
One of the most striking examples of this oversizing is a drug called Velcade that treats multiple myeloma, a bone marrow cancer.
Takeda Pharmaceutical, which makes Velcade, only sells the drug in 3.5 milligram vials in the United States (the company does manufacture 1 milligram vials abroad).
The amount of medication that patients need turns out to be significantly smaller than the single dosage size. Using data on the weight distributions of cancer patients, Bach and his colleagues estimate that the average Velcade dose is 2.2 milligrams…Each vial of Velcade contains 1.3 milligram more medication than the average cancer patient needs. This disparity between vial size and patient dosage means hospitals will waste about 27 to 30 percent of the Velcade they purchase. They’ll spend $308 million on leftover Velcade that they never use.
mainsailset
Just as a farther down the chain comment, I read that salmon tested near Seattle are showing high concentrations of drugs which gets me to thinking about what happens to any drug when it enters a landfill, gets flushed or tossed. There’s lots of ways to look at costs associated with the practice you’re talking about.
bl
I totally agree. My husband had metastatic melanoma – which until recently had a very poor prognosis. There are now several new immunotherapies available that are extending life for those with metastatic melanoma and other cancers. Bristol-Myers Squibb makes 2 of them. One is given in 4 doses per treatment round, the other is given every 2 or 3 weeks for as long as 2 years. It has been shown that while each prolongs life separately; they work even better together. The cost per year for the 2 drugs (4 doses vs about 20 doses) is very similar. Since both drugs are biologics, their production cost (from the same manufacturer) ought to be about the same. Clearly BMS is pricing per treatment and not per volume of manufacturing the drug.
That bodes well for the future of immunotherapy, as the cost of the 4 dose drug and the administration plus scans, blood tests, etc was $1,000,000 for my husband. If the cost of the drug was really that high, I don’t see how the health care system could possibly pay for these new promising treatments without massively raising costs.
Mai.naem.mobile
Way more common than Velcade is Lantus insulin. This info is old so stuff may have changed. Lantus comes 1000 unit vials which are to be discarded after 28 days. Lots of people take less than 20 units daily so you are wasting about half the vial. The lantus is 1% less effective every month after the initial month. I guess the manufacturer had enough complaints from.clinicians that they started making a smaller vial but the smaller vial expired in 14 or 15 days. Why? I don’t know. FYI I think some of these issues are moot now because many people use insulin pens now.
gvg
I am guessing that these drugs lose effectiveness or safety once opened or something, because otherwise the best practice would be large containers that the infusion center measures an amount out of for each patient. When I went through treatment, they weighed me before each treatment in order to prep the right amount of 3 drugs to give me. I was scheduled for the whole series in advance so they would have known what to get for me months in advance and combined with everyone else they had, they could have ordered in large lots if they had many with the same treatment. I was treated at a large university infusion center. I don’t know if thats typical.
Mike J
@mainsailset: That’s how we keep ’em coming back. Next year we’ll be introducing beurre blanc to the sound to save a step when cooking.
amygdala
Something is out of balance, given ongoing concomitant drug shortages. Nothing like being on inpatient service and getting emails advising not to use normal saline “unless absolutely necessary.” Not some exotic IV fluid, but normal friggin’ saline. Or being out of IV thiamine when alcoholism is an issue for many of your patients. It seems to happen without warning or clear idea when stocks will again be adequate.
You find ways of adjusting, but it’s not good for patients when already overextended nurses have to adjust constantly to unfamiliar substitutes. Plus sometimes there aren’t great workarounds.
Also, I read somewhere that caffeine concentrations are high in the Puget Sound. Hyperactive Orca will be the name of my next band.
NJDave
@gvg: Experience has shown that using one large vial for several patients is a very bad idea. Sooner or later you contaminate all patients whose were treated from one vial. The case that comes to mind is a clinic that used large vials of propoful (Diprivan) for several patients. They all contracted HepC, IIRC.
gvg
@NJDave: oh dear.
Daulnay
Our current system of IP remuneration really doesn’t work very efficiently. Companies have to get repaid for their innovation and investment in IP somehow, but granting a monopoly to do that results in very distorted economics.
The problem is coming up with a better system.
WarMunchkin
@mainsailset: Apparently this is also a problem with large amounts of birth control hormones getting past water treatment facilities. At least that’s what a biologist told me; I haven’t seen measurements for myself.
amygdala
@NJDave: Also, it’s easy to make dosing errors, especially for kids or renal failure patients who need nonstandard lower doses or for any med (such as chemo) in which dosing goes per weight, surface area, etc.
If there are only so many mg (or units or whatever) in a single-patient vial, it is at least somewhat harder to give most patients way too much of the drug.
Roger Moore
Given how strict the packaging and labeling rules are, it’s not obvious that switching to smaller vials would actually lower the price. It might actually make it more expensive because of the need to make several times as many packages. And it’s quite likely that the biggest wastage is that the manufacturer makes batches that exceed demand, so that more of the drug winds up being discarded because it’s past expiration than gets used. A former coworker who went on to work at Allegan told me that they could make a year’s supply of Botox for the whole world from one 5 liter fermentation; you can bet that a lot of that wound up being disposed of because it was past expiration.
D58826
@Daulnay: Actually the system works very well, if you are the CEO.
Ukko
After buying several different injectables for my son as the doc “tried stuff” to see if anything could help him I know the packaging is nothing. I remember paying like $8 for 30 ampules of one of his meds. That was a happy surprise. (If the med is less than the copay then they just charge us retail. )
Ruckus
Going back to the soda bottle theme and tying it in to medical packaging, decades ago about 70% of my business was packaging, specifically making molds for the food packaging industry. The packaging cost for some food products, especially liquids is usually higher than the cost of the contents of the bottle. But both of those are small compared to the overall cost to put the product in consumer hands. Medical products do cost more and frequently the volume makes it rather expensive per unit but it would still astound me if in the vast majority of cases, the contents of the vile or bottle/can on the shelf was the most expensive part of the process. I also know several people who work in a large biotech firm that specializes in rare genetic diseases and they spend a lot of capital to make the product. But once that capital is spent, the actual cost of production is not nearly as high. But they have hundreds of employees and last I saw about 25% of them worked in FDA compliance. So there are costs that have to be paid for other than the CEO benefit or the cost of the actual product. But they are valid costs that can’t be skipped if it is to be done safely.
C.V. Danes
They are pricing based on what the market (cancer patients and their families) are willing to pay to live a couple more months.
Prescott Cactus
@C.V. Danes:
Difficult to put your faith, trust and essentially your life in the hands of an oncologist and then ask to see the invoice of a 5FU, Cisplatin & Leucovorin combo they are going to “give” you at their office.
C.V. Danes
@Prescott Cactus: And that is part of the problem, and why this is something that the free market is not equiped to manage. When asked what they would pay to spend a couple more months alive, most people would respond with “everything I have.”
Buycans
Plastic bottles are plastic. Cans are infinitely recyclable and sold in portion contolled units that get colder faster and stay colder longer. #buycans
Armadillo
Is this why new cancer drugs seem to be targeted to amazingly narrow market segments, e.g. “for the treatment of large cell lung cancer that has previously failed treatment with chemotherapy administered by a doctor whose last name rhymes with ‘Orange.'” Or is that just because of the general trend toward ‘individualized medicine.’
PhoenixRising
@Armadillo: nope.
New drugs that target a particular gene in a particular cancer by switching the RNA inside the cells to teach the patient’s immune system to see the malignancy and attack it…cost a lot because you have to find the gene, find the switch, then test the drug on a lot of sick people who have the “cancer” (a term so broad that it like “race” has no meaning at the gene level) it flips the switch of.
Lab times are long and cost a lot.
Poisoning and cutting and burning can be done without regard to what kind of lump you have in your [body part], so they’re relatively cheap.
amygdala
@Armadillo: FDA approves drugs for specific indications defined in the studies submitted by pharmaceutical companies in the application for drug approval. That’s so-called “on label” use. Docs and other practitioners can prescribe drugs for other indications (“off-label” use), but insurance companies don’t always cover that. Advertising for drugs is restricted by FDA to on-label use. This is not to say that companies don’t edge up to pushing off-label use, but they tend to avoid it because FDA can and does crack down on that.
So the issue is who decides what the clinical indications will be for those studies FDA requires for approval. Sometimes the companies primarily sponsor the studies, but even when the research is sponsored by, say, NIH, the companies are involved, if for no other reason that they provide drug and placebo, in order to carry out the clinical trial.
In choosing their indications, they’re obviously going to try to set these up so that the study shows benefit, within the other requirements of study design as set by FDA. On the one hand, the more patients who might be eligible to receive the drug, the merrier, but on the other, human trials are extremely expensive. They’re aiming to balance what the science supports, profit, and feasibility, not necessarily in that order. This is why it can be hard getting drugs tested for diseases that are very rare (small market) or common in poor countries (who can’t pay). There’s a fairly steady pipeline for HIV drugs, for example, because rich people get the infection; TB or malaria, not so much.
Ethical and methodological issues in study design also contribute to the weird indications you alluded to. Showing benefit against placebo is generally easier than showing that drug A (already shown to be superior to placebo) is better then new drug B. It wouldn’t be ethical to test drug B versus placebo and deprive patients of drug A. But you could design a study to test drug B versus placebo for folks who didn’t respond to drug A.
It works this way because that’s how the laws are written for drug approval in the US. Getting Big Pharma out of the picture would take the kind of legislative change it is hard to imagine actually occurring.
nutella
An example of one that costs considerably more than that is gleevec/glivec. A very small part of its $19000/month price, something like $10 /month, is the cost of manufacturing and distributing it. A much larger part is the cost of patent lawyers in at least two countries I know of (India and US) who spent years trying to enforce a long-expired patent by claiming that tiny later tweaks to the formula made a completely new patent. They won after years of legal battles in the US and lost after years of legal battles in India.
How much of the $19000 per month pays lawyer’s fees and how much is pure profit I’m not sure but I suspect the profit is considerably more than half.
Novartis has long since recouped its research and development costs.
This is one of the reasons why health care is wildly expensive in the US. You’ll note in the story of the Indian court case how we are using trade deals to force our crappy drug patent schemes onto the world, which means every country’s health care costs are going to go up, up, up.
Trade deals don’t just transfer manufacturing jobs out of the US to other countries. They also transfer bad US policies out of the US to other countries.
amygdala
Well, here’s a novel approach to pricey drugs: Economists float idea for prescription drug loans.
Good grief.