CBO: more scripts filled, less healthcare spending

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Fourth quarter has been awash in numbers about adherence: Capgemini Consulting reported last month that non-adherent patients are costing the pharmaceutical industry $188 billion in additional sales in the US, and $564 billion a year worldwide.

ExpressScripts also chimed in with staggering numbers in its 2011 Drug Trend Report, in which it found that eliminating nonadherence “can cover the cost of healthcare for 44.8 million Americans.” The pharmacy benefits manager broke down adherence levels by conditions. Among their findings: the top specialty category is inflammatory conditions, but that 49% of these patients, who can be treated with an array of drugs that have an average annual prescription price of close to $2,100, don't keep up with their medications. Multiple Sclerosis, which ranked the second highest specialty spend, scored a 33% non-adherence rate, along with a diminishing use rate, rising only 4.8% in 2011, compared to a 6% jump between 2009 and 2010.

But now the nonpartisan Congressional Budget Office is offering something different: a financial accounting that goes beyond what pharma's missing ($188 billion domestically) and what patients are actually doing (overestimating how great they are about taking their meds).

The CBO's findings: increasing the number of prescriptions a Medicare patient fills by 1% reduces the cost of medical expenses by about two-thirds of a percent (.006 for the number crunchers), or if there is an increase in associated costs, that bump is one third of one percent (.003).

The CBO wrote that this new math, which takes offsets into account, is going to be the new standard for how it assesses the impact rising drug prices have on the healthcare continuum. For example, the agency wrote that a policy promising to reduce federal drug spend by $4 billion through increased Medicare prescription copays would scarcely save Medicare anything, and at a high cost to patient health. The reason: higher copays means fewer filled prescriptions, and fewer filled prescriptions means new add-on conditions that require previously untapped medical services. The fallout is that were patients to reduce the number of filled prescriptions by 1%, the cost of the necessary medical services to compensate for that lack of condition management would knock down the savings from the promised $4 billion to $3.5 billion.

The CBO also used the Medicare Part D coverage gap to show how things will work. The current plan is that Medicare beneficiaries will be paying less over the next eight years and the number of drugs available to them will also be increasing. CBO said the net result is that Part D plans will pay 25% of the cost of brand name prescriptions and 75% of the cost for generics, promoting an “increase in total annual consumption of prescription drugs.” For cost-cutters who are wary of increases, the CBO said the fallout will be as follows: the Feds will be spending an additional $86 billion on Part D between 2013 and 2022, but will end up slashing the amount it pays for medical services by $35 billion. Using offsets, this means the net spending increase would be $51 billion, which is achieved by closing the coverage gap through manufacturer's discounts as opposed to tweaking federal subsidies.
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