Improper Drug Use Wastes $200B a Year

In 2012, an estimated $213 billion in health care spending in the United States was wasted on improper and unnecessary use of medicines. Those avoidable costs could have paid to insure 24 million Americans.

This article published with permission from The Burrill Report.

An estimated $213 billion in 2012 health care spending in the United States was wasted on improper and unnecessary use of medicines — equivalent to 8% of the nation’s total health care spending in 2012 — a new report finds.

The report from IMS Institute for Healthcare Informatics, details unnecessary and avoidable costs in six key areas, presents case studies of innovative programs around the nation aimed at lowering these costs and increasing efficiencies, and recommends priorities for promoting responsible use of medication.

“Those avoidable costs could pay for the health care of more than 24 million currently uninsured U.S. citizens,” says Murray Aitken, executive director, IMS Institute for Healthcare Informatics, which issued the report. “Reaching a meaningful level of consensus and alignment among stakeholders, based on measured and proven success models, is a key step to unlocking the $200 billion opportunity identified in our study.”

Nearly half of the wasted cost — $105 billion — is attributed to patients either not taking medicine appropriately or not taking it at all. Non-adherence can cause complications that might be more expensive than the original medications and can also worsen health outcomes, IMS says. Adherence is particularly important for chronic diseases, such as hypercholesterolemia, hypertension, type 2 diabetes, and osteoporosis.

Considering the one caveat of the IMS study, that it is based on data from commercially insured patients less than 65 years of age, these costs — as well as others discussed in the report — are only expected to increase as the population ages.

Delays in delivery of medicines to patients ($39.5 billion) and misuse of antibiotics ($35 billion) represent another major source of waste. Though antibiotic prescriptions for colds and flu, which are caused by viruses, is declining, over-prescription of antibiotics in other instances is still prevalent and is driven by pressures on physicians from patients, payers, and concerns over litigation should a patient take a turn for the worse.

Both doctors and patients are responsible for delayed treatments, according to the research. Doctors fail to diagnose and prescribe appropriately, and patients fail to report to their doctors in a timely manner and fail to follow-up with non-prescription medicines as directed. Diabetes is most heavily impacted by delayed treatment, accounting for $35 billion of the $39 billion in avoidable costs contributed by the four major diseases of type 2 diabetes, coronary heart disease, hepatitis C, and atrial fibrillation.

In addition to non-adherence to drug regimens, delays in getting medicines to patients for maximum outcomes, and misuse of antibiotics, the remaining three areas identified as the biggest wasters of healthcare monies are medication errors, suboptimal use of generics, and mismanagement of patients taking multiple medicines at the same time.

Progress is being made, however, in many of these areas. In 2011, CareFirst launched its Patient-Centered Medical Home program and has saved $40 million in costs by reducing unnecessary hospital admissions and emergency room visits by patients with chronic diseases. The program provides incentives to physicians such as higher reimbursements, fees for creating and maintaining customized patient care plans, and bonus payment for achieving better cost and quality outcomes. The program is the largest of its type in the country with one million CareFirst patients and 3,600 primary care physicians participating.

Improving communication between pharmacists and patients also proves to be an effective way to reduce costs. Thrifty White, a drug store chain with 89 locations in the Midwest, launched several programs to allow pharmacists to engage patients and take a larger role in improving their health outcomes. MedSync provides automated phone calls to remind patients about prescription refills or changes, and HealthyPackRx Compliance Packaging for multi-dose prescriptions simplifies the way patients take their medications and reduces error. From 2011-2012, the program increased patient adherence 26% in each of the three chronic diseases of high cholesterol, diabetes, and hypertension. The program has 45,000 patients participating, with nearly 40% of them on an average of four concurrent medications. Additional case studies also point to the power of engaging pharmacists as well as multiple stakeholder teams to improve care and reduce waste.

IMS suggests several principles that can help improve care while cutting costs. These include such things as focusing on high-risk patients, engaging patients as responsible and capable partners, rigorous assessment of the return on investment of interventions, and alignment of compensation models with new delivery models.

“There are many things U.S. health care stakeholders can do to promote the responsible use of medicines, to improve health outcomes and ultimately reduce avoidable health care costs,” the report concludes. “Most of these actions require the involvement of multiple health care stakeholders.”

Copyright 2013 Burrill & Company. For more life sciences news and information, visit The Burrill Report.