Study finds use of prescription drugs tied to lower medical costs in Medicaid patients

The use of prescription drugs among Medicaid enrollees often is associated with decreases in other Medicaid costs, mostly in inpatient spending and outpatient spending, according to a recent study

For the study, which was published in the September issue of Health Affairs, the researchers looked at how changes in prescription drug use would impact medical costs. They analyzed data on more than 1.5 million Medicaid enrollees over three years in 11 states.

They found that a 1 percent increase in overall prescription drug use was associated with decreases in total nondrug Medicaid costs by 0.108 percent for blind or disabled adults, 0.167 percent for other adults, and 0.041 percent for children.

The researchers noted that reductions in medical costs differed substantially by specific medication used to treat those conditions. For instance, increased use of drugs to treat hypertension, schizophrenia or bipolar disorder and reflux disease reduced medical costs in adults. And medications to treat diabetes and reflux disease had significant reductions in medical costs for children.

The study supported the premise that pharmacotherapy plays a role in reducing morbidity and mortality and in preventing the progression of disease, and therefore can lead to decreased costs of medical services including emergency department visits and hospitalizations.

What's more, the findings suggest that policy makers should carefully look at any changes to prescription benefits for Medicaid recipients. While changes such as increased patient cost sharing and restrictions on formularies might reduce costs of Medicaid prescriptions, it could result in increases in other non-drug costs.

"Moving forward, policy makers evaluating proposed changes that alter medication use among the nearly 70 million Medicaid recipients and should consider the net effects on program spending to ensure that scarce federal and state healthcare dollars are allocated efficiently," wrote lead researcher M. Christopher Roebuck, president and CEO of RxEconomics. 

Soaring drug costs have been an issue as of late, especially considering the price of specialty prescription drugs. But, the federal government could save anywhere between $15.2 billion and $16 billion annually if it negotiated Medicare Part D prices with drug makers, FierceHealthPayer previously reported. 

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Read the study (subscription required)