CBO links more Rx filled to less medical spending

Agency changes methodology for medical estimations

The use of medications can lower the costs of related medical services, according to a new report from the Congressional Budget Office (CBO) that represents a change in the agency’s estimating methodology.

Based on a review of recent research, a 1% increase in the number of prescriptions filled by Medicare beneficiaries would cause Medicare spending on medical services to fall by roughly 0.2%, CBO announced November 29.

When estimating the budgetary impact of future legislation or proposals that have a direct impact on Medicare prescription drug use, the agency will first estimate a proposal’s effect on prescription drug costs and then estimate the effect on the number of prescriptions filled and any resulting offsetting effect on spending for medical services.

The new way of analyzing drug costs stopped short of suggesting any positive benefits of pharmacists’ clinical services.

Pharmacy weighs in

“APhA is pleased that CBO recognizes some of the benefits of paying for medications,” said Thomas E. Menighan, BSPharm, MBA, ScD (Hon), FAPhA, APhA Executive Vice President and CEO. “Now, we have to help them recognize the benefits of making sure those medicines are used effectively by patients. That’s a key component of our advocacy agenda for 2013.”

“The CBO study is a step forward in recognition of the value of drug therapy in preventing, controlling, and treating disease,” J. Lyle Bootman, PhD, ScD, Dean of the University of Arizona College of Pharmacy, told Pharmacy Today. “However, this all assumes that all of the appropriate steps in the prescribing, distribution, and patient use of the medication actually occur. Pharmacists’ clinical services—which are not routinely provided due to reimbursement issues—can potentially increase the value of drug therapy beyond that recognized in the recent report.”

Bootman is also Professor of Pharmacy, Medicine, and Public Health, as well as Founding Executive Director of the Center for Health Outcomes & Pharmacoeconomic Research, at the University of Arizona. He is a former APhA President.

The National Community Pharmacists Association (NCPA) released a statement from NCPA CEO B. Douglas Hoey, BSPharm, MBA, that commended the new CBO analysis but called it the “tip of the iceberg in terms of the savings independent community pharmacists can produce for Medicare and other health plans.” Hoey noted that CBO focused only on the quantity of prescriptions filled, but not on the quality resulting from “strong patient–pharmacist relationships in helping patients take their medication appropriately” as demonstrated in private research.

Details of the report

CBO explained the effects of prescription drug use on Medicare’s spending for health care services. “Most often, pharmaceuticals have the effect of improving or maintaining an individual’s health,” the agency wrote. “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.”

Before the announcement, CBO didn’t include an offsetting effect on medical services in estimates involving changes to prescription drug policies, according to the report. For example, CBO didn’t include an offset for the 2003 law establishing Medicare Part D. “At the time, there was little evidence of a relationship between prescription drug use and spending for medical services,” the agency wrote. “However, a body of research has since developed that demonstrates a connection between prescription drug use and the use of medical services.”

CBO analyzed recent research to determine whether and how to include the offsetting effect. To illustrate the offset, the CBO report applied the change in methodology to the budgetary impact of the gradual closing of the Part D doughnut hole under the 2010 health care reform law. Using the revised methodology, the agency estimated that the net cost of implementing the law’s provisions closing the coverage gap will be $51 billion, rather than the $86 billion estimated previously. (See page 57 for more information on the closing of the coverage gap.)