Study finds $200 billion in avoidable health care costs

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Medication misuse, nonadherence, errors contribute to wasteful spending

Health care costs caused by improper and unnecessary use of medications exceeded $200 billion in 2012, amounting to an estimated 10 million hospital admissions, 78 million outpatient treatments, 246 million prescriptions, and 4 million emergency department visits annually, according to a new report from the IMS Institute for Healthcare Informatics.

This amount, representing 8% of the nation’s health care spending that year, “could pay for the health care of more than 24 million currently uninsured U.S. citizens,” said Murray Aitken, IMS Executive Director, in a news release announcing the report, Avoidable Costs in U.S. Healthcare: The $200 Billion Opportunity from Using Medicines More Responsibly.

These avoidable costs arose when patients failed to receive the right medications at the right time or in the right way, or received them but failed to take them, according to the report. Improvement is necessary in six areas: medication nonadherence, lag in adoption of evidence-based treatment practice, misuse of antibiotics, medication errors, suboptimal use of generics, and mismanaged polypharmacy in older adults.

The report, which updated existing published research, found that progress is being made to address some of the challenges that drive wasteful spending. For example, medication adherence among large populations of patients with three of the most prevalent chronic diseases—hypertension, hyperlipidemia, and diabetes—has improved since 2009 by about 3%. The proportion of patients diagnosed with a cold or the flu who inappropriately received antibiotic prescriptions has fallen from 20% to 6% since 2007. For diseases where lower-cost generic medications are available, use of generics reached 95% in 2012.

Key findings

The report included the following key findings:

  • Medication nonadherence drives the largest avoidable cost, with patients experiencing complications that led to an estimated $105 billion in annual avoidable health care costs. While the underlying reasons for nonadherence are varied and longstanding, the growing use of analytics and collaboration among providers, pharmacists, and patients appears to be advancing both the understanding and effectiveness of intervention programs.
  • Delays in applying evidence-based treatment to patients led to $40 billion in annual avoidable costs. The study analyzed four disease areas in which either patients are not diagnosed early or treatment is not initiated promptly. The largest avoidable impact is seen in diabetes, where such delays increased outpatient visits and hospitalizations. A reduction in this source of avoidable costs is possible if insurance coverage is expanded and at-risk patients are able to receive appropriate screening and diagnostic testing.
  • Some signs of improvement are evident in the responsible use of antibiotics. The misuse of antibiotics contributes to antimicrobial resistance and an estimated $34 billion each year in avoidable inpatient care costs. An additional $1 billion is spent on about 31 million inappropriate antibiotic prescriptions that are dispensed each year, typically for viral infections. There are encouraging signs that efforts to drive responsible antibiotic use are paying off, particularly in the declining number of prescriptions for the common cold and flu.

Greater role for pharmacists

Recent public and private sector initiatives that seek to improve patient health outcomes while reducing the cost of care involve a greater role for pharmacists, according to the report. Six case studies in the report highlight innovative interventions and activities, including CareFirst’s Patient-Centered Medical Home, CMS’s medication therapy management programs, Thrifty White’s community pharmacy programs, the National Consumers League’s Script Your Future campaign, Walgreens’s chronic disease diagnosis and management services, and CVS Caremark’s Pharmacy Advisor program. Each case study covers more than a single area of suboptimal medicine use and targets high-risk patients with chronic diseases.

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