Most wasteful healthcare spending results from poor adherence, study finds

IMS report touts role of pharmacy, generics

PARSIPPANY, N.J. — More responsible use of drugs could save the U.S. healthcare system more than $200 billion per year, according to a new study by the research arm of IMS Health.

The IMS Institute for Healthcare Informatics found that better adherence, more careful prescribing of antibiotics and increased generic use could reduce the country's total annual health expenditures by 8%. The study, "Avoidable Costs in U.S. Healthcare: The $200 Billion Opportunity from Using Medicines More Responsibly," looked at six areas contributing to higher-than-necessary cost, namely medication nonadherence, delayed evidence-based treatment practice, misuse of antibiotics, medication errors, less-than-optimal use of generics and poor management of older patients using multiple drugs. Together, these lead to an estimated 10 million hospital admissions, 78 million outpatient treatments, 246 million prescriptions and 4 million emergency visits per year.

"As our study makes clear, drugs are often not used optimally, resulting in significant unnecessary health system spending and patient burdens," IMS Institute executive director Murray Aitken said. "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."

While medication among patients with cardiovascular disease and diabetes has improved somewhat over the past four years, it continues to be the largest problem, with nonadherence driving about $105 billion in avoidable costs. While the problem has multiple and complex causes, the use of analytics and collaboration between pharmacists, providers and patients appears to be helping.

Meanwhile, $40 billion came from delays in evidence-based treatments. The study focused on disease states where patients are either not diagnosed early or don't start treatment immediately, with the largest avoidable effects seen in diabetes; for diabetes patents, delays increase outpatient visits and hospitalizations.

Misuse of antibiotics causes about $34 billion in costs and contributes to bacteria resistant to them. Another $1 billion is spent on inappropriate antibiotic prescriptions, often given to patients with viral infections. But there are signs that efforts to drive responsible use of antibiotics are helping as well.

A large number of efforts are underway to address the causes of avoidable spending, including giving pharmacists a greater role, new kinds of interventions and greater collaboration between patients, healthcare professionals and others.

Coinciding with the release of the IMS report was the Department of Labor's release of its monthly Consumer Price Index data for 2013, which showed a 0.7% decrease in drug costs, the largest one-month drop on record. The IMS Institute had found in May that drug spending dropped for the first time in more than 50 years in 2012, to $325.8 billion.

"Both of these findings point to the importance of the billions of dollars in consumer savings from generic medicines," Generic Pharmaceutical Association president and CEO Ralph Neas said. "Today's CPI report on drug cost reductions reinforces the need to preserve every possible avenue for drug manufacturers to bring affordable generic medicines to market, including patent settlements with consideration. The findings are particularly timely in light of the recent Supreme Court decision on FTC v. Actavis, which provides a lawful pathway for companies to resolve disputes through settlements."

Meanwhile, the National Association of Chain Drug Stores heralded the release of the IMS Institute report, saying it validated the role of retail pharmacies.

"As the face of neighborhood health care, 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," NACDS president and CEO Steven Anderson said. "By identifying $200 billion per year in avoidable costs, the report serves as an invitation for policymakers, private payers, employers, the entire healthcare delivery system and patients to better leverage the value of community pharmacy to improve health and healthcare affordability."

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