Increased Rx use offsets medical services costs in Medicare

Analysis shows a link between changes in Rx drug use and changes in the use of and spending for medical services.

Analysis shows a link between changes in Rx drug use and changes in the use of and spending for medical services.

A new report by The Congressional Budget Office (CBO) recognizes the effect of medicines in offsetting medical services costs for people with Medicare.

Based on their analysis of the costs and use of prescription drugs and other medical services covered through Medicare, the CBO plans to incorporate the offsetting savings associated with prescription drug use in budget estimates of policies affecting Medicare.

Going forward, CBO will assume that any policy that would result in a 1 percent increase in the number of prescription drugs filled in Medicare would correspondingly decrease the spending on medical services in the program by 0.2 percent.

“Previously, when estimating the budgetary effects of legislation regarding prescription drugs, CBO found insufficient evidence of an “offsetting” effect of prescription drug use on spending for medical services” said CBO. “But recently, more analysis has been published that demonstrates a link between changes in prescription drug use and changes in the use of and spending for medical services.”

The CBO has confirmed that this change will only affect those involved with the Medicare program. Further research is necessary to determine whether or not such an offset would be beneficial to other programs such as Medicaid.

To read more on this topic:

  • The CBO report, “Offsetting Effects of Prescription Drug Use on Medicare’s Spending for Medical Services,” is available online here.
  • This blog post by the Pharmaceutical Research and Manufacturers of America (PhRMA) said that this historic change to CBO methodology represents a significant step forward in evaluating health care policy and reaching common goals of better outcomes and lower costs.
  • An op-ed by a Wisconsin aging advocate examines some of the potential changes to the Medicare prescription drug benefit currently being debated.
  • AstraZeneca’s most recent posts on Medicare may be found here and here.