What's Happening?
The use of advanced analytics-driven forecasting is being explored to improve the management of oncology drugs, aiming to reduce waste and associated costs. This approach seeks to enhance the accuracy of demand predictions by incorporating real-world
treatment changes, such as therapy switches and patient drop-offs, rather than relying solely on historical averages. The current system often results in significant drug wastage due to fixed, single-dose vials that do not align with patient-specific dosing needs. This wastage not only impacts pharmaceutical companies financially but also increases costs for patients, as billing is typically based on the full vial rather than the administered dose. The Centers for Medicare and Medicaid Services (CMS) has implemented the Discarded Drug Refund Program, requiring manufacturers to refund for discarded amounts above a certain threshold, adding pressure to improve forecasting and reduce waste.
Why It's Important?
The implementation of advanced analytics in drug forecasting is crucial for reducing the estimated 30% of oncology drugs discarded annually, which represents over $2 billion in costs in the U.S. alone. For pharmaceutical companies, reducing waste can improve revenue realization and decrease the financial burden of refund obligations under federal policies. For patients, more accurate forecasting can lead to lower out-of-pocket expenses and insurance premiums. Additionally, improved forecasting can help manufacturers better align production with actual demand, particularly for high-cost biologics, reducing the risk of stockpiles and ensuring timely availability of drugs. This approach not only promises cost savings but also supports a more sustainable healthcare system by minimizing unnecessary drug production and disposal.
What's Next?
As forecasting models mature, they are expected to extend benefits beyond oncology, enhancing drug usage visibility across various therapy areas, including specialty biologics and rare diseases. The integration of real-time dashboards and intelligent planning cycles can further improve drug management. Stakeholders in the biopharma industry are encouraged to adopt these advanced models to build a more adaptive and responsive healthcare system. The success of these initiatives will depend on the willingness of organizations to align with diverse regulatory frameworks and data environments, ensuring comprehensive adoption across geographies.
