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More Rx drug use cuts Medicare costs, says US CBO

World News | December 04, 2012


Lynne Taylor

More Rx drug use cuts Medicare costs, says US CBO

Greater prescription drug use by people enrolled in Medicare, the US federal health programme for seniors, reduces the programme's overall spending on medical services, the Congressional Budget Office (CBO) has reported.

After reviewing recent research, the Congressional spending watchdog says it estimates that a 1% increase in the number of prescriptions filled by Medicare beneficiaries would cause the programme's spending on medical services to fall by "roughly one-fifth of 1%."

That estimate, which applies only to policies that directly affect the quantity of prescriptions filled, represents a change in the agency's estimating methodology. "Consequently, in estimating the budgetary impact of future legislation that directly affects the use of prescription drugs by Medicare beneficiaries, CBO will project an offsetting effect on Medicare's spending for medical services," it says.

Overuse of inappropriate use of prescription drugs may raise the risk of adverse reactions but, most often, pharmaceuticals have the effect of improving or maintaining an individual's health, says the agency. For example, "taking an antibiotic may prevent a more severe infection, and adhering to a drug regimen for a chronic condition such as diabetes or high blood pressure may prevent complications. In either of those circumstances, taking the medication may avert hospital admissions and thus reduce the use of medical services." 

However, the CBO notes that, in the past it has not been able to find sufficient evidence of an offsetting effect for prescription drug use. Therefore, its cost estimates for initiatives such as the Medicare Prescription Drug, Improvement and Modernization Act of 2003 - which established the Medicare Part D prescription drug benefit - did not include such an offset. Nor did its estimates of the cost of President Barack Obama's Affordable Care Act (ACA), which includes provisions closing the Part D coverage gap - also known as the "doughnut hole."

However, a recent review of "dozens" of newer studies now shows that there is such a link. Therefore in future, when estimating the budgetary impact of legislation or proposals that would directly affect prescription drug use in Medicare, the CBO says it will first estimate a proposal's direct effect on prescription drug costs, and then the effect on the number of prescriptions filled and any resulting offsetting effect on spending for medical services.

For example, a policy that increased prescription drug copayments for certain Medicare beneficiaries might save $4 billion in federal drug costs in a given year but reduce the number of prescriptions filled that year by 1%, and that reduction in use would result in a one-fifth of 1% increase in the affected population's total spending for medical services, it suggests.

"If that total spending would otherwise be $250 billion in that year, then those costs could increase by $0.5 billion. The net effect of the policy, combining the savings on drug costs and the costs of increased use of medical services, would be a savings for the federal government of $3.5 billion in that year," it adds.

The National Community Pharmacists Association (NPCA) says it commends the CBO for acknowledging "the growing body of evidence verifying what community pharmacists have known for some time. Namely, that the more patients have their prescriptions filled and adhere to medications their doctors prescribe, the healthier they will be and the likelihood of costlier interventions including hospitalisations diminishes - reducing health care costs."

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