Medicines Play a Key Role in Improving Health While Reducing Avoidable Costs

Pharmaceutical Research and Manufacturers of America

Overview

Poor medication adherence = higher overall healthcare costsResearch shows that treatment gaps and lack of adherence to physician-prescribed medications lead to higher spending on otherwise avoidable medical care.

Proper medication adherence saves patients money on healthcarePotential cost savings from appropriate use of medicines can be significant, especially for the growing number of Americans with chronic health conditions.

Prescription medicines play a key role in:• Maintaining health• Reducing mortality• Preventing emergency room visits/hospitalizations• Improving worker productivity

Proper medication adherence lowers overall healthcare costs due to offsets in related costs (i.e., hospitalization, emergency care visits)

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How does access and adherence to medicines affect health outcomes and medical costs?

Medicare Part D Improves Access to Medicines & Lowers Costs

Medicare Part D has increased access to medicines for patients while lowering out-of-pocket costs.

For seniors who

previously had

limited Rx

coverage,

spending declined

by $1,200 for non-

drug medical

services in 2006

and 2007

Part D coverage has led to spending reductions in Medicare for hospitalsand nursing homes.

Research suggests that

more reductions in

medical savings could

come as the Part D

coverage gap is filled

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Read More: J.M. McWilliams et al. “Implementation of Medicare Part D and Nondrug Medical Spending for Elderly Adults With Limited Prior Drug Coverage.” Journal of the American Medical Association, July 27, 2011.

Prescription Medication Use Reduces Hospitalization Costs

According to a 2009 study, adherent use of prescription medicines significantly reduced Medicare spending for inpatient hospitalizations.

Each additional

prescription filled reduced

inpatient costs by $104, or

about 5% on average.

Study authors say their finding “suggests that drugs are not only cost-effective but actually save money for Medicare beneficiaries.”

The average cost of a

prescription medicine in the

study was $47 – that’s an

overall net savings of $57.

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Read More: B.C. Stuart et al. “Assessing the Impact of Drug Use on Hospital Costs.” Health Services Research, February 2009.

Key Medication Adherence Facts:• Each additional prescription drug fill reduces hospital

costs by about 0.5% (when measured at the mean level of Medicare payments in 2000)

• The average cost of beneficiaries experiencing at least one inpatient hospitalization in 2000 was $10,425 per person hospitalized

Key Access to Medicines Facts:• Medicare beneficiaries with little to no prior drug benefits

increased their use of medicines after enrolling in Part D• Part D enrollees in this category increased monthly drug

spending by $27, but decreased overall monthly medical spending by $46

Access to Medicines Results in Significant Medicare Savings

.A recent Harvard study in JAMA found that Part D saves Medicare about $1,200 per year in hospital, nursing home and

other costs for each senior who previously lacked comprehensive prescription drug coverage.

Medicare Part D implementation

resulted in nearly 11 million

seniors gaining comprehensive

prescription drug coverage.

According to other experts, this finding led to overall savings to Medicare of $13.4 billion in 2007, the first full year of Part D. This represents more than one quarter of Part D’s total cost

during that time.

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Read More: C.C. Afendulis and M.E. Chernew. “State-Level Impacts of Medicare Part D.” American Journal of Managed Care, October 2011 Supplement. http://jama.jamanetwork.com/article.aspx?articleid=1104150

Medication Adherence Lowers Overall Patient Costs

Even though patients who adhere to their medication schedule spend more on prescription medicines, additional spending is more than offset by substantial reductions in spending on other medical care.

Every additional dollar

spent on medicines

generated between $3

and $10 in savings on

medical care – a 200%-

900% return on

investment.

Adherence can lead to significant reductions in emergency department visits and inpatient hospital days for patients with four chronic conditions.*

Every additional dollar

spent on medicines by

seniors generated between

$4 and $14 in savings on

medical care, a 300%-

1300% return on

investment.

* Congestive heart failure, hypertension, diabetes and dyslipidemia

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Read More: M.C. Roebuck et al. “Medical Adherence Leads to Lower Health Care Use And Costs Despite Increased Drug Spending.” Health Affairs, January 2011.

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Highly adherent patients with hypertension have substantially lower total healthcare costs than non-adherent patients, and costs increase as adherence decreases.

Total costs for

highly adherent

patients were

$1,246 lower over

a one-year span

than total costs of

care for patients in

the lowest

adherence

category.

Medication Adherence Leads to Lower Overall Healthcare Costs

How does adherence lower costs for hypertension?

Read More: D.G. Pittman et al. “Antihypertensive Medication Adherence and Subsequent Healthcare Utilization and Costs.” American Journal of Managed Care, August 2010.

Medication Adherence Leads to Lower Overall Healthcare Costs

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Commercially insured patients with high rates of adherence to statins had significantly lower healthcare costs and lower risks of cardiovascular disease.

According to a

Medco Health study,

increasing

adherence to statins

has the potential to

save over $3 billion

annually on health

care costs.

How does adherence lower costs for cardiovascular disease?

Read More: D.G. Pittman et al. “Adherence to Statins, Subsequent Healthcare Costs, and Cardiovascular Hospitalizations.” American Journal of Cardiology, June 2011.

Medication Adherence Leads to Lower Overall Healthcare Costs

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For diabetes patients, a high level of medication adherence is associated with lower disease-related medical costs.

Researchers

estimate increased

patient adherence

would yield a return

on investment of

over 4:1 to diabetes

patients

How does adherence lower costs for diabetes?

Read More: M.C. Sokol et al. “Impact of Medication Adherence on Hospitalization Risk and Healthcare Cost.” Medical Care, June 2005.

Cost of Diabetes

Medication Adherence Leads to Lower Overall Healthcare Costs

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Proper use of diabetes medicines significantly reduces the risk of disease-related complications.

Adherent diabetes

patients were half

as likely to have a

heart attack,

undergo an

amputation or

treatment for an

ulcer, or experience

an adverse renal

event potentially

leading to kidney

cancer.

In 2011, better adherence to diabetes medicines resulted in significantly lower Medicare spending on hospital and physician services, and these savings exceeded the estimated cost of the drugs.

Read More: T.B. Gibson et al. “Cost-Sharing, Adherence, and Health Outcomes in Patients with Diabetes.” American Journal of Managed Care, August 2010.

Poor Adherence Leads to Undesirable Outcomes

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Proper adherence to osteoporosis medicines greatly reduces medical costs, particularly hospitalization and long-term care costs. Similar results were seen for Medicare Advantage enrollees with low levels of adherence.

Low adherence to

osteoporosis medicines

was associated with 12%

higher all-cause medical

costs and 59% more all-

cause hospitalizations.

Medicare Advantage

patients with low medicine

adherence had 18% higher

medical costs and 34%

more hospitalizations than

adherent patients.

Key Osteoporosis Facts:• Osteoporosis fractures alone cost an estimated

$19 billion in 2005, and are projected to cost $25 billion by 2025

• Highly compliant patients cut their risk of fracture by 25%

• Patients with highest rates of adherence spent $1,273 less on total medical costs on average

How does adherence lower costs for osteoporosis?

Read More: R. Halpern et al. “The Association of Adherence to Osteoporosis Therapies with Fracture, All-Cause Medical Costs, and All-Cause Hospitalization: A Retrospective Claims Analysis of Female Health Plan Enrollees with Osteoporosis.” Journal of Managed Care Pharmacy, January/February 2011.

Capping Prescription Coverage Has Little Effect on Total Health Care Costs

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Seniors with a $1,000 benefit cap under Medicare+Choice were less likely to use medicines appropriately and experienced unfavorable clinical outcomes, including death, according to a NEJM study.

Use of medicines to treat

hypertension, high

cholesterol and diabetes

was 15%, 27% and 21%

lower, among those with

capped coverage.

Savings from lower use of medicines were almost completely offset by increases in hospitalization and emergency care costs.

Total medical costs

were only 1% lower

than those not

subject to the cap.

Read More: J. Hsu et al. “Unintended Consequences of Caps on Medicare Drug Benefits.” New England Journal of Medicine, June 1, 2006.

Appendix: Sources

Slide 4

J.M. McWilliams et al. “Implementation of Medicare Part D and Nondrug Medical Spending for Elderly Adults With Limited Prior Drug Coverage.” Journal of the American Medical Association, July 27, 2011.

Slide 5

B.C. Stuart et al. “Assessing the Impact of Drug Use on Hospital Costs.” Health Services Research, February 2009.

Slide 6

C.C. Afendulis and M.E. Chernew. “State-Level Impacts of Medicare Part D.” American Journal of Managed Care, October 2011 Supplement.

Slide 7

M.C. Roebuck et al. “Medical Adherence Leads to Lower Health Care Use And Costs Despite Increased Drug Spending.” Health Affairs, January 2011.

Slide 8

J. Hsu et al. “Unintended Consequences of Caps on Medicare Drug Benefits.” New England Journal of Medicine, June 1, 2006.

Slide 9

D.G. Pittman et al. “Antihypertensive Medication Adherence and Subsequent Healthcare Utilization and Costs.” American Journal of Managed Care, August 2010.

Slide 10

D.G. Pittman et al. “Adherence to Statins, Subsequent Healthcare Costs, and Cardiovascular Hospitalizations.” American Journal of Cardiology, June 2011.

Slide 11

M.C. Sokol et al. “Impact of Medication Adherence on Hospitalization Risk and Healthcare Cost.” Medical Care, June 2005.

Slide 12

T.B. Gibson et al. “Cost-Sharing, Adherence, and Health Outcomes in Patients with Diabetes.” American Journal of Managed Care, August 2010.

Slide 13

R. Halpern et al. “The Association of Adherence to Osteoporosis Therapies with Fracture, All-Cause Medical Costs, and

All-Cause Hospitalization: A Retrospective Claims Analysis of Female Health Plan Enrollees with Osteoporosis.” Journal of

Managed Care Pharmacy, January/February 2011.

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