Medication nonadherence and less-than-optimal medication practices by prescribers are racking up over $200 billion in avoidable costs in the U.S. health care system, according to a study from the IMS Institute for Healthcare Informatics.

IMS Institute for Healthcare Informatics, medication nonadherence, medication practices, U.S. health care systems, avoidable costs, improper medication use, health care expenditures, Avoidable Costs in U.S. Healthcare: The $200 Billion Opportunity from Using Medicines More Responsibly, IMS Health, unnecessary drug costs, antibiotics misuse, medication errors, use of generic drugs, polypharmacy, Murray Aitken, Steve Anderson, National Association of Chain Drug Stores, pharmacists, medication adherence

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IMS study: Medication at center of $200B in avoidable health costs

June 19th, 2013

ARLINGTON, Va. – Medication nonadherence and less-than-optimal medication practices by prescribers are racking up over $200 billion in avoidable costs in the U.S. health care system, according to a study from the IMS Institute for Healthcare Informatics.

The IMS Health unit said Wednesday that the study estimates the avoidable costs from improper medication use and management at 8% of the nation's annual health care expenditures — and resulting in millions of avoidable hospital admissions, outpatient treatments, pharmaceutical prescriptions and emergency room visits for patients.

Titled "Avoidable Costs in U.S. Healthcare: The $200 Billion Opportunity from Using Medicines More Responsibly," the report identifies six factors driving unnecessary drug costs: medication nonadherence, delayed evidence-based treatment practice, antibiotics misuse, medication errors, suboptimal use of generic drugs and mismanaged polypharmacy in older adults.

Medication Areas Driving Unnecessary Costs

$105.4 bil.
Delayed Medicine Use
$39.5 bil.
Antibiotics Misuse
$35.1 bil.
Medication Errors
$20 bil.
Generics Underutilization
$11.9 bil.
Mismanaged Polpharmacy
$1.3 bil.
Total Cost to Health System
$213 bil.
Source: IMS Institute for Healthcare Informatics

Combined, those factors lead to avoidable use of health care resources involving about 10 million hospital admissions, 78 million outpatient treatments, 246 million prescriptions and 4 million emergency room visits each year.

"Drugs are often not used optimally, resulting in significant, unnecessary health system spending and patient burdens," Murray Aitken, executive director of the IMS Institute for Healthcare Informatics, said in a statement. "Those avoidable costs could pay for the health care of more than 24 million currently uninsured U.S. citizens. 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."

The report noted that medication nonadherence accounts for the biggest chunk of the $213 billion in overall avoidable costs. Patients not following their doctors' medication guidance had complications that led to an estimated $105 billion in annual avoidable health expenses. IMS said that while the underlying reasons for nonadherence are complex, rising use of analytics and collaboration among providers, pharmacists and patients is advancing the understanding and effectiveness of intervention programs. The study indicated that medication adherence among large populations of patients with hypertension, hyperlipidemia and diabetes has improved 3% to 4% since 2009.

Delays in applying evidence-based treatment to patients led to $40 billion in annual avoidable costs, according to the report. The study analyzed four disease areas where patients aren't diagnosed early or treatment isn't initiated promptly. The largest avoidable impact is seen in diabetes, where such delays increased outpatient visits and hospitalizations. IMS said a reduction in this area of avoidable costs is possible if insurance coverage is expanded and at-risk patients are able to receive proper screening and diagnostic testing.

Meanwhile, some signs of improvement are evident in improved use of antibiotics. The misuse of antibiotics contributes to antimicrobial resistance and an estimated $34 billion each year in avoidable inpatient care costs, the study found. Another $1 billion is spent on about 31 million inappropriate antibiotic prescriptions dispensed each year, typically for viral infections.

Yet efforts to spur more responsible antibiotics use are making headway, especially in the declining number of prescriptions for the common cold and flu — viral infections that don't respond to antibiotics. The proportion of patients diagnosed with a cold or the flu who inappropriately received antibiotic prescriptions has fallen from 20% to 6% since 2007.

Also, patients are now receiving lower-cost generic alternatives to branded medications, when available, 95% of the time, according to the study.

The report added that many efforts are under way to address the underlying causes of avoidable spending and to improve medication use, including novel interventions, critical assessments of established solutions and pioneering models of stakeholder cooperation. Many of those initiatives involve a larger role for pharmacists, an integrated approach to addressing patient issues, alignment of financial incentives, and greater use of health care informatics to guide decision-making and monitor progress, IMS said. 

"Community pharmacies have contributed mightily to the progress that the IMS Health report has found in the areas of improved medication adherence and the use of generic drugs," Steve Anderson, president and chief executive officer of the National Association of Chain Drug Stores, said in a statement. " By identifying $200 billion per year in avoidable costs, the report serves as an invitation for policymakers, private payers, employers, the entire health care delivery system and patients to better leverage the value of community pharmacy to improve health and health care affordability."

Anderson also pointed to the growth of pharmacy services aimed at driving preventive health care, such as vaccinations, health education, disease state testing, disease management and face-to-face interactions with community pharmacists.

"NACDS will work to ensure that this report, and other aspects of the mounting evidence in support of community pharmacy services to address pressing health needs, fuels additional support for the Medication Therapy Management Empowerment Act, S. 557 in the Senate and H.R. 1024 in the House of Representatives," Anderson added.