HealthTrust-led research points to substantial reduction in drug waste

New rules from the Centers for Medicare & Medicaid Services (CMS) require drug manufacturers to refund CMS if certain medications are discarded in significant amounts. This has prompted innovative research by Pharmacy Services team members at HealthTrust that could stem this waste and reduce spend by millions of dollars.

Under the new provision, which went into effect on Jan. 1, 2023, manufacturers will need to refund CMS when 10% or more of an outpatient Part B single-dose medication is discarded. The amount of waste is determined using a JW modifier, a billing code that reports how much of a drug is not administered to the patient. On July 1, a second billing code, a JZ modifier, will require physicians to report if no drug portion is wasted.

CMS estimates the new rule would garner about $141 million in refunds from manufacturers.

Matthew Sherman, PharmD, MBA

A pair of HealthTrust subject matter experts—with prior experience researching this topic—viewed the CMS rule as an opportunity to tackle the problem of drug waste on a broader scale. Matthew Sherman, PharmD, MBA, Clinical Management Fellow in Drug Information, teamed with Grant Teague, PharmD, MBA, Senior Manager of Pharmacy Strategic Market Access and Reimbursement, to undertake research that identified strategies that would reduce waste by up to 67%.

“Upon review of JW billing code data, Medicare recognized that it had been reimbursing for entire vials of a single-dose medication when only a portion was administered to the patient,” Sherman says.

Grant Teague, PharmD, MBA

“CMS decided to enact legislation that would create consequences for vials with excess medication,” adds Teague.

Problem-solving tactics

Assuming that pharmaceutical manufacturers, in response to the new rule, might modify drug vial sizes to minimize waste, Teague and Sherman set out to identify optimal package sizes of medications that are frequently billed for waste.

The effort would point to savings Medicare would garner as a result of optimized package sizes.

To accomplish this, the duo compiled data from published literature that included Medicare claims data, noting which outpatient single-dose injectable drugs were wasted in amounts of 10% or more and had $2 million or more in JW modifier claims. They determined common dosing ranges for the drugs using recommended dosages on package inserts and major drug compendia.

The information helped them determine optimal vial sizes for each selected medication. By using optimal vial sizes, Sherman and Teague calculated that an average of $2,826 per dose could be saved.

“To avoid having to pay CMS large refunds, we anticipate some manufacturers will introduce new vial sizes to the market,” Sherman says.

“Our goal was to find package sizes that aligned better with the most commonly administered doses,” Teague adds.

A depth of understanding

As pharmaceutical manufacturers undertake changes to drug vial sizes to minimize waste, they will likely reach out to physicians and healthcare systems, Teague explains. “We hope this research raises awareness of this CMS legislation. We want HealthTrust members to be more informed and prepared to help manufacturers consider the operational and clinical impacts new vial sizes would have on the hospital or physician office space,” he adds.

“One of the advantages of our role at HealthTrust is that we have relationships with both the integrated delivery networks and the manufacturers,” Sherman says. “We can accurately represent our members’ perspectives to manufacturers—everything from the operations and payor side to the patient safety level. We can be that conduit of information and strategy.”

For more information on how new CMS legislation could impact your pharmacy operations, email, with the subject “CMS Drug Waste Reduction.”

Share Email