Health Care Costs

Proper Use of Medication Can Significantly Reduce Health Care Costs

When used appropriately, medicines can help generate savings by improving patient outcomes in many common diseases. A wide range of studies have shown that improved use of recommended medications is associated with reduced total health care costs.


In fact, the link between use of prescription medicines and spending on other health care services was recently acknowledged by the nonpartisan Congressional Budget Office (CBO). In 2012, the CBO announced a change to its scoring methodology to reflect savings in medical spending associated with policies that increased use of medicines in Medicare.

It is estimated that the cost of suboptimal medicine use including non-adherence, under-treatment, administration errors and under-diagnosis is between $100 and $300 billion annually.

The body of evidence illustrating how better use of medicines can help control overall healthcare costs is robust. For example, a 2011 study in Health Affairs found that for chronic conditions such as diabetes, dyslipidemia, hypertension and congestive heart failure, patients who had better adherence to prescribed medicines experienced savings of $3 to $10 in non-drug spending for each additional $1 spent on prescriptions—a net savings of $1,200 to $7,800 per patient per year.


Here are other examples of the medical savings resulting from better use of medicines:

  • High Blood Pressure: Treating patients with high blood pressure in accordance with clinical guidelines would result in fewer strokes and heart attacks, preventing up to 89,000 deaths and 420,000 hospitalizations annually and saving $15.6 billion a year.
  • Diabetes: Improving adherence to diabetes medicines would result in an estimated reduction of more than 1 million emergency room visits and hospitalizations annually, for potential savings of $8.3 billion each year. In a separate study, increased patient adherence to diabetes medicines saved $7 for every additional $1 spent on medicines.
  • Alzheimer’s disease: A new treatment that delayed the onset of Alzheimer’s by five years could save $100 billion annually in Medicare and Medicaid spending on Alzheimer’s patients by 2030.  
  • High Cholesterol: Research has shown that statin therapy reduces low-density lipoprotein cholesterol levels by an average of 19 percent. Over one year, this reduction in bad cholesterol was associated with roughly 40,000 fewer deaths, 60,000 fewer hospitalizations for heart attacks, and 22,000 fewer hospitalizations for strokes in the U.S. From an economic perspective, those prevented hospitalizations translated into gross savings of nearly $5 billion.


The Economic Impact of the Pharmaceutical Industry
Learn more about the potential for cost savings in treating chronic diseases.

The Cost of Non-Adherence
Find out more about how taking medication as directed could significantly reduce health care spending.

The Prescription Drug Lifecycle
Learn how the unique marketplace for prescription drugs in the U.S. balances innovation and affordability.

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