Prescription Drug Use Lowers Costs within Medicare

Recently, the Congressional Budget Office (CBO), the nonpartisan agency that provides the federal legislative branch with economic data and analysis, announced a change to how they estimate costs within Medicare. The CBO made this revision because of growing evidence that shows increases in prescription drug use leads to reductions in spending for medical services. What this means to Medicare specifically, as CBO estimates, is that a one percent increase in the number of prescriptions filled through Medicare Part D leads to a roughly .20% reduction in spending on medical services.

In some ways, this change reflects common sense. As the CBO explains when summarizing their change in methodology, "pharmaceuticals have the effect of improving or maintaining an individual's health. Taking an antibiotic may prevent a more severe infection, and adhering to a drug regimen for a chronic condition such as diabetes or high blood pressure may prevent complications. In either of those circumstances, taking the medication may avert hospital admissions and thus reduce the use of medical services."

When Medicare spends hundreds of billions of dollars a year to provide care for beneficiaries, any reduction in costs is significant. Medicare Part D has already proven to be less expensive than estimated and now the CBO agrees that increased use of prescription drugs among Medicare beneficiaries is reducing costs within Medicare.

According to many studies, the creation of Medicare Part D increased the use of prescription drugs by more than 10%. And with the Affordable Care Act helping close the Part D "donut hole" it's expected that prescription drug use within Medicare will increase further - which will reduce medical spending further.

Washington and Congress should not consider any proposals which would alter such a successful program that is already lowering spending in other parts of Medicare. Make sure Congress understands how important Part D is and sign our petition.