Insight News

Feb 11th

Medicines can save money and lives

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You hear a lot these days about how we have to cut spending on medicines, especially in the Medicaid program. You hear a lot these days about how we have to cut spending on medicines, especially in the Medicaid program. But the truth is that medicines can save money as well as lives, and the most cost-effective as well as the most humane things to do is to give people access to the medicines they need to get well and stay well. Various studies and demonstration programs back up this proposition. Here are some examples:

•A $1 increase in spending on prescription drugs saves nearly $4 in avoided hospital costs, according to a study by Columbia University economist Frank Lichtenberg. And switching patients from older drugs to newer medicines yield even greater savings, Lichtenberg found. For example, if you use a 5-year-old instead of a 15-year-old drug to treat a condition, the cost of the drug will increase by $18, but other medical spending, such as doctor and hospital costs would decrease by $129.

•A leading medicine that reduces cholesterol levels costs about $3 a day. Reducing cholesterol can cut the risk of heart attacks by about one third and can help people avoid cardiac bypass surgery –which can cost up to $75,000 and require a long recovery time. In the U.S., 1.1 million hear attacks occur each year in 460,000 deaths.

•Lower cholesterol levels could mean 366,000 fewer heart attacks and more than 150,000 lives saved.

A program that included increased drug spending for Medicaid asthma patients saved $285,500 in one state alone by keeping people well and out of emergency rooms and urgent care centers.

A study in Health Economics found that costs declined by $822 per treated employee when depressed workers were treated with prescription medicines. Savings from improved productivity and the reduction in work loss and medical costs far outweighed the cost of the drug.

Increased use of medicines helped save both dollars and lives in a yearlong disease management program for 1,100 patients with congestive heart failure. Pharmacy costs increased by 60 percent while hospital costs declined by 78 percent. The net savings were $9.3 million. In addition, the patients’ ability to perform the activities of daily living went up 15 percent and the death rate dropped from the expected 25 percent to 10 percent.

A study sponsored by the National Institute of Health (NIH) found that treating stroke patients promptly with a clot-busting medicine nets an average saving of $4.400 per patient by preventing brain damage and reducing the need for hospitalization, rehabilitation and nursing home care. According to NIH, greater use of this medicine could save the health care system more than $100 million a year.

Giving patients access to innovative new AIDS drugs saved the Department of Veterans Affairs $18 million in one year by reducing hospital costs.

These are only a few examples of how modern medicines can save money as well as lives –and a few good reasons why legislators and policy makers should think twice about cutting drug expenditures.

Larry Lucas Associate Vice President of the Pharmaceutical Research and Manufacturers of America (PhRMA).

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