​America's $3 billion cancer drug problem

American consumers are familiar with the phenomenon of package-shrink, when food manufacturers pack less coffee or sugar into a container but charge the same price. What happens when that strategy is flipped on its head by a life-saving but costly industry?

Look no further than the pharmaceutical sector to find out. Some drugmakers are packaging expensive cancer medicines in doses that are too large for many patients, which leads to $3 billion in wasted cancer medicines annually, according to new research published in the BMJ, which was formerly known as the British Medical Journal.

In essence, the researchers found, drugmakers are boosting their profits by creating large single-dose vials that create leftover drugs and leave patients to foot the bill.

Tellingly, the packaging issue isn't universal. The researchers found that the same medications are available in smaller dosage sizes in Europe, which helps medical professionals there administer drugs with less waste.

The question of how oversize packaging leads to waste and overspending was prompted by Keytruda, a lung-cancer and melanoma drug, said Dr. Peter Bach, the director of Memorial Sloan Kettering's Center for Health Policy and Outcomes, who wrote the report with colleagues Leonard Saltz, Rena Conti, Raymond Muller and Geoffrey Schnorr.

Keytruda, which is manufactured by Merck (MRK), can cost $150,000 for a full-year of treatment for one patient. One of its most famous beneficiaries is former President Jimmy Carter, who recently used it as part of his cancer treatment plan and announced last year that he was cancer-free.

"It's very beneficial to patients, and it came on the market with a single vial size of 50 mg," which already meant there would be waste, Bach said. "We thought we had to look at how common is this, that manufacturers are mis-sizing packaging and how much money are we looking at. Then in the middle, Merck took the 50 mg vial off the market and introduced the 100 mg vial. As the vial gets larger, the amount of waste that's introduced gets larger."

Unlike some other medications, cancer drugs are administered based on body size, with bigger doses required for bigger people, and vice versa, which means they aren't all one-size-fits-all. In the case of Keytruda, a 154-pound patient would need 140 mg per treatment, the report notes. When the drug was sold in 50 mg vials, it meant 10 mg would be wasted. By going to 100 mg vials, the patient is now paying for an extra 60 mg of Keytruda that's not needed.

And as the researchers point out, the amount of revenue and profits enjoyed by the drugmaker gets larger. By the researchers' estimates, Merck's decision to double the dosage in one vial of Keytruda will bring in an additional $1.2 billion in revenue over the next five years. The report notes that Keytruda continues to be sold in smaller 50 mg vials in Europe.

In a statement, Merck said because Keytruda was brought to market relatively quickly, the company made manufacturing decisions "years in advance." It added that the doses "were based on the uncertainty of which of the two doses being studied would be approved." Merck said it plans to introduce a new dosage, a 200 mg fixed dose, which it said "will eliminate wastage."

Is the packaging strategy an intentional means to boost revenue? Bach said that while the study doesn't assign emotional or ethical labels on for-profit industries, he believes pharmaceutical companies aren't making these choices by chance.

"These are serious companies with a great deal of sophistication," Bach noted. "It is nearly impossible that no one at Merck thought about the impact of revenue by changing the vial size. It just seems unlikely to me that they didn't say, 'What would this do to the math?'"

The downside for patients? Higher costs at a time when they're already dealing with life-or-death treatment questions. Patients who are on Medicare make drug co-payments of 20 percent, which means they may be paying for thousands of dollars in medication that's simply thrown away because of the wasteful packaging. Other patients whose drugs are covered by insurance are still footing the bill, given that it comes back through higher premiums.

"You are paying for it, and so are the rest of us," Bach said.

Patients have little recourse at the point of care, but Bach and his co-authors have suggestions for policy changes, such as allowing for vial-sharing, which would cut back on waste. Another idea is to require drugmakers to accept leftover drugs for refunds, through a certified disposal and a virtual return service.

The paper also notes that regulators could also require pharmaceutical companies to sell drugs in sizes that would reduce waste.