Individuals' Behavior Costs Billions Annually in Pharmacy Costs

Study quantifies hidden pharmaceutical cost of common behaviors

By Stephen Miller May 4, 2010

The hidden costs of common behaviors related to prescription drugs, such as forgetfulness and procrastination, are estimated to amount to $163 billion in health care spending each year in the U.S., according to the latest Express Scripts' Drug Trend Report, which quantifies changes in drug spending on a year-to-year basis and details the costly effects of irrational behaviors on pharmacy-related costs.

"The good news is that potential savings in the pharmacy benefit are tied to one of the few variables in health care we can readily influence—behavior," commented Steven Miller, senior vice president and chief medical officer at Express Scripts, which provides pharmacy benefit management (PBM) services. "This research shows that in terms of achieving lower costs and improved outcomes, health care reform starts in the home."

The $163 billion in wasteful spending results from three key factors:

$106 billion from medical costs of non-adherence to therapy.

$51 billion in missed opportunities related to lower-cost medication alternatives, brand and generic.

$6 billion in missed opportunities related to lower-cost options for delivery of medications.

Targeting Bad Behavior

The report links market forces and behavioral factors. Overall, U.S. drug spending increased 6.4 percent in 2009, reversing a pattern of slower drug cost increases in previous years, the report says. Market forces drove the cost trend up by 8.3 percent, but improvements in behavior reduced the cost trend by nearly 2 percent. Further improving behaviors could drive down the remaining billions in unnecessary spending.

For example, within traditional prescription drugs, Express Scripts says that its clients saved $1.4 billion through the increased use of generics and lower-cost brands. More than half that savings, $790 million, came from behavior-centric programs in partnership with clients. Those savings were over and above some market factors that also helped hold down spending—such as the expiration of branded patents, which allows development of lower-cost generic drugs.

Through the lens of behavior, the study broke down behavior-related waste by therapy class. For example, more than one-third of the annual spending (35.5 percent) on high-cholesterol medication could be saved with better behavior.

"We have good cause for optimism that the behaviors causing this vast waste in health care can change," said Bob Nease, chief scientist at Express Scripts. Applying behavioral science to health care "has proved very successful in achieving behavior changes through programs that are fully voluntary," he added.

Other notable trends found in the report include:

Diabetes is the top driver of total cost increases in the traditional drug sector attributable to growth in utilization and cost per prescription.

Spending for drugs to treat viral infections increased by approximately 25 percent in 2009, primarily attributable to their increased use to treat influenza.

Stephen Miller is an online editor/manager for SHRM.

Related Articles:

Automated but Personalized Reminders Improved Medication Adherence, SHRM Online Benefits Discipline, May 2010

Splitting Pills Can Cut Costs, but Only When Appropriate, SHRM Online Benefits Discipline, May 2010

Report: Slowdown in Prescription Drug Spending, SHRM Online Benefits Discipline, August 2009

Employee Cost-Sharing Up in Prescription Drug Plans, SHRM Online Benefits Discipline, August 2009

Brand-Name Drug Costs Soar; Generics Hold the Line, SHRM Online Benefits Discipline, April 2009

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