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Health Affairs Study: Want to save money in Medicaid? Increase adherence.

September 11, 2015
At BIO, we have long argued that the use of prescription medicines can yield substantial savings to other areas of the healthcare system by reducing costly hospitalizations, surgeries, visits to the emergency room and other non-drug drivers of health spending. A study published in Health Affairs this week further bolstered that point and quantified the potential savings that Medicaid could realize from better prescription drug adherence among beneficiaries.

The authors found that increasing the number of prescriptions filled in Medicaid by 1 percent reduces the spending on inpatient and outpatient medical care by about .20 percent. That’s the same savings rate that the Congressional Budget Office uses for estimates relating to the Medicare Part D prescription drug benefit.

The study examined data on more than 1.5 million Medicaid beneficiaries to estimate the effects of prescription drug use on total nondrug, inpatient, outpatient, and other Medicaid spending. Specifically, the authors looked at medications to treat eight chronic, noncommunicable diseases among three distinct population groups within Medicaid: blind or disabled adults, other adults, and children. Among blind or disabled adults, a 1 percent increase in prescription utilization was associated with a .207 percent decrease in blended inpatient and outpatient medical spending. For other adults, that number was 0.197 percent, and for children, 0.069 percent.

Together with the CBO’s established offset estimates for prescription drug use among Medicare enrollees, these findings strengthen the argument that prescription drugs – in additional to the incredible life-saving and life-enhancing benefits they bring to patients – are also responsible for reducing costs in other areas of the healthcare system. That’s a fact we should all bear in mind in current discussions about how best to spend scarce healthcare dollars – and how much value we ought to place on innovative medicines.