Economists Refute Relation Between Size of Cancer Drug Vials and Healthcare Costs

In a blogpost on Health Affairs, 2 economists have challenged the claim made by researchers that packaging expensive, patented chemotherapy drugs into multiple vial sizes could reduce wastage and in turn significantly reduce healthcare costs.

A study published in the British Medical Journal in March this year claimed that manufacturers usually package expensive chemotherapeutic agents in single-size vials, which are then administered to patients of all body sizes. Following a weight-based dose administration, the excess drug left in the vials is discarded for safety. Using Medicare claims data for the top 20 cancer drugs that together account for 93% of sales in the United States, the authors estimated that drug companies will collect about $1.8 billion in extra revenue in 2016 from unused portions of these drugs.

Based on their findings, the authors of the BMJ paper recommended distributing these drugs in multiple vial sizes and also refund the costs of the discarded drugs to private and federal health plans.

But Sherry Glied, PhD; and Bhaven Sampat, PhD, disagree with these claims, calling it a shortcut solution. In their blog, the 2 economists claim that the proposed solution might only increase production costs but will not impact payers or patients. Agreeing with the high cost of drug wastage argument presented in the paper, Glied and Sampat argue that production cost is not determined by vial size, which is the marginal cost. They claim that the cost of the product is determined by everything but, which includes product development, marketing, distribution, testing, packaging, and labeling.

They also suggest that the analysis includes a significant pricing error. Patent monopolies mean manufacturers can seek the highest “willingness to pay” price for a drug—independent of vial size, but more driven by documented outcomes following treatment. “When the marginal cost of the drug material is high, that might mean shipping in multiple sizes of vials; when the marginal cost is low, as it is for most cancer drugs, it might be least costly to ship in a limited number of vial sizes and allow the excess drug material to be wasted,” the authors write in their blog.

Ultimately, variable vial sizes may only impact production costs for the manufacturers and may not even make a dent in the price that consumers and payers end up paying for the drug.