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Medicaid Patients’ Prescription Drug Use Can Lower Medical Costs

A 1% increase in prescription use was associated with a 0.2% decrease in medical costs

Prescription drugs can have a positive impact on reducing other medical costs in the Medicaid program, according to an article in Health Affairs

“Proper use of prescription medications is paramount in helping to improve patient health, especially for those with chronic conditions,” said Steve Anderson, president and CEO of the National Association of Chain Drug Stores (NACDS). “This research is further evidence of the impact of taking medications as prescribed — both in helping patients manage their chronic conditions and reducing emergency or catastrophic medical costs associated with medication nonadherence.” 

The article found that when prescription drugs are taken appropriately as prescribed by a physician, there is a reduction in other medical costs for certain Medicaid populations.  

Using data on more than 1.5 million Medicaid enrollees to examine the impact of changes in prescription drug use on medical costs, the research found a 1% increase in overall prescription drug use was associated with decreases in nonprescription drug medical costs for three distinct groups of Medicaid beneficiaries. These nondrug costs included inpatient, outpatient, and other Medicaid spending.

Among blind or disabled adults, a 1% increase in drug usage was associated with a 0.108% decrease in total nondrug costs; for other adults there was a 0.167% decrease; and for children, there was a 0.041% decrease. 

These patients had one or more of the following eight chronic noncommunicable disease conditions that are treated with prescription medications:  hypertension, dyslipidemia, diabetes, asthma or COPD, depression, schizophrenia or bipolar disorder, seizure disorder, and gastroesophageal reflux disease.  

Reductions in combined inpatient and outpatient spending from increased drug utilization in Medicaid were similar to an estimate by the Congressional Budget Office that, for the Medicare population, a 1% increase in prescription utilization was associated with a one-fifth of 1% decrease in medical expenditures. 

The article was co-authored by Laura Miller, NACDS senior economist; Christopher Roebuck, president and CEO of RxEconomics; Samantha Dougherty, senior director for policy and research at Pharmaceutical Research and Manufacturers of America (PhRMA); and Robert Kaestner, professor of economics at the University of Illinois at Chicago. 

Sources: National Association of Chain Drug Stores; September 9, 2015; Health Affairs; September 2015.

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