At your local grocery store, ketchup, mayonnaise and flour come in a convenient array of sizes.
So why doesn’t the same logic apply to drugs?
The answer, in many cases, is because drugmakers have much to gain by packaging products in inefficient containers. When excess drug is left over in a vial after treatment, it's discarded at the expense of the payer after the drugmaker has already recorded a sale.
It's a subject that has come up routinely in pharma over the years, and now a prominent drug pricing expert is spotlighting the packaging waste for Biogen's controversial Alzheimer's drug Aduhelm.
In a new Health Affairs analysis, Peter Bach, M.D., the director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, says the company's widely cited $56,000 annual price undercounts what he expects the drug to cost in reality. Instead, Bach argues the average annual cost per Aduhelm patient will likely fall between $61,000 and $62,000.
That's because the "average" patient weight Biogen used in its estimate is a weight that can be efficiently dosed given the standard size of Biogen's vials, Bach says. Many other patient weights will likely feature more waste.
Biogen disputes Bach’s numbers, saying its pricing estimate is based on Alzheimer’s patient weight data from an NIH database.
“We believe the analysis is flawed based on the weight data it references and overestimates the amount of potential waste,” a Biogen spokesperson wrote in an email. “Biogen works with physicians to ensure efficient use of vials to minimize wastage.”
Different weights, more waste
For his part, Bach argues Alzheimer's patients weigh more on average than Biogen claims.
"Increased BMI in middle age is a strong risk factor for Alzheimer’s," Bach wrote in an email. "So if anything, using a [population] level database underestimates the true price of the drug."
Aduhelm comes in vial sizes of 300 milligrams and 170 milligrams and is dosed at 10 milligram per kilogram of a patient's weight. In coming up with its annual price for Aduhelm, Biogen used an example of someone who can be dosed with little waste, Bach says.
RELATED: Biogen’s $56K price tag on Aduhelm? Think again, ICER says, calling for discounts of around 90%
Biogen's calculations were based on an average weight of 74 kg (163 pounds) drawn from the NIH database. At that weight, a patient would require two 300 mg vials and one 170 mg vial per month, with just 30 mg of wasted drug substance.
Dosing patients of different weights produces widely varying levels of waste. The Aduhelm dosage for a person weighing 84 kg (185 pounds) would produce 60 mg of waste per month, while the dosage for a person of 94 kg (207 pounds) would result in 130 mg of waste, Bach figured.
In the opposite direction size-wise, dosing for a person weighing 64 kg (141 pounds) would result in 130 mg of wasted drug monthly. The dosage for someone weighing 54 kg (119 pounds) would produce 60 mg of waste.
$2 billion worth
The annual pre-discount price of Aduhelm for a person weighing 82 kg (180 pounds) would be $61,880, the analysis found. For a patient weighing 91 kg (200 pounds), it would be $68,430.
While Bach admits that examining this sort of waste sounds “nit-picky,” it adds up to a significant sum. In Aduhelm's case, Bach says the waste could total $2 billion in annual revenues on unused drug left in vials. That's based on an assumption that the treatment will reach 500,000 patients per year, and a conservative waste estimate, he said.
Underestimating the cost of drugs for public consumption is a common practice in the industry, Bach says, with companies either failing to account for drug substance waste or trying to downplay it.
In 2016, plaintiffs took Roche and Genentech to court for allegedly overfilling vials with cancer drug Herceptin and reaping profits. The following year, a report accused Merck of boosting profits for cancer treatment Keytruda by establishing a flat dose for all patients regardless of their weight.
Separately, a report from Medicare insurance broker MedicareAdvantage.com found that the federal government spent $1.4 billion from 2017 to 2018 on wasted Medicare Part B drugs. Much of the waste came from vials that contained more drug than was prescribed.
Lawmakers previously sought to remedy the waste issue by requiring providers to account for discarded drugs. But in a new report, the National Academy of Medicine concluded that Congress should allow companies to keep the money they gain by packaging their drugs this way, citing an age-old economic theory of “willingness to pay.” The idea is that how much a consumer pays for a product is how much they value it.
It was a conclusion that stunned Bach.
"The entire premise, that drug prices inclusive of waste reflect drug value as assessed by society, is empirically nonsense," Bach wrote in an email. "It defies basic logic that society accepts prices as reflecting a product’s value when the companies actively mask the true prices."