Study: Prescription-only PSE legislation carries a significant cost burden

WASHINGTON — Prescription-only pseudoephedrine laws result in well more than $278 million in additional burdens to taxpayers, according to a study published by Matrix Global Advisors on Monday. 

"With any public policy that restricts access to a product that is good for some people but misused by others there are inherent distortions, costs and loss of consumer welfare," author Alex Brill wrote. "A policy decision based solely on a concern about the diversion of PSE medicines to meth production is shortsighted because it only considers one side of the issue — the thousands of meth cooks and their domestic meth labs — and not the 18 million families who legitimately need PSE medicines for relief from colds and allergies.

The study broke down many of the costs prescription-only PSE polices accrue, including: 

  • The extra doctor visits necessary to get a PSE prescription contribute $59 million in additional costs to the government, consumers and private insurance companies in the first year following the policy’s implementation;
  • For those consumers who forego a trip to the doctor, the lack of symptomatic relief will likely result in more absenteeism and lost work productivity, adding to the estimated $25 billion annually in lost productivity already attributed to the common cold;
  • PSE consumers may realize some sticker shock as prices for PSE medicines are increased once the cost of adjudicating a prescription is factored into the pricing formula;
  • Health insurance premiums may increase due to additional doctor visits and higher PSE drug costs; and
  • Overall government services may be curtailed as an estimated loss of $219.2 million in state tax revenues is amortized over 10 years. 

And all that additional cost wouldn't even guarantee a reduction in methamphetamine abuse, the study noted. "On top of creating financial burdens, a prescription-only PSE policy would not be 100% effective at eliminating PSE diversion because it does not address theft and fraudulent prescriptions for these medicines," noted Brill. "In fact, many prescription drugs are heavily abused, despite their prescription status, to the extent that the U.S. Centers for Disease Control has labeled prescription drug abuse a 'public health epidemic.' According to the 2011 National Drug Threat Assessment, deaths from prescription drug overdoses outnumber deaths due to cocaine, heroin and meth combined." 


But the primary direct economic burden of making PSE medicines prescription-only arises from the extra doctor visits the policy change necessitates, Brill said. Brill referenced a 2011 Avalere Health study that found there was an estimated 579,315 additional doctor visits in the first year after implementation of the policy. "Using a per-visit estimate for private insurance, Medicare and Medicaid of $94, $76, and $70 per physician visit, respectively, Avalere estimated $32.4 million in additional costs for private and public payers," Brill noted. 

The study was supported by a grant from the Consumer Healthcare Products Association. 


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