The Cost of Medication Adherence to Pharma

A new report indicates that pharmaceutical manufacturers may lose up to $637 billion in revenue each year to due nonadherence to medication for chronic illnesses.

Nonadherence may result from financial hardships, forgetting to take the treatment, or various other reasons. Medication nonadherence can cause serious adverse events for patients, in addition to billions of dollars in avoidable costs from hospitalizations and other health care services.

Nonadherence has also been shown to cost manufacturers billions each year, which could potentially drive up drug costs, according to Health Prize Technologies, who authored the report with Capgemini Consulting.

“Medication nonadherence is a serious global health issue that needs to be addressed immediately,” said Tom Kottler, CEO of HealthPrize Technologies. “It also happens to be a critical business issue for pharmaceutical companies, and represents the ‘final frontier’ for them – the only area of their business where they can generate significant top- and bottom-line growth, improve outcomes, and create substantial savings for the health care system – all at the same time.”

The original report was issued in 2012, and since nonadherence cost these companies even more money since then, the report was updated and reissued.

Investigators found that losses experienced by pharmaceutical manufacturers worldwide have increased from $564 billion in 2012 to $637 billion in 2015.

In the United States alone, these losses increased from $188 billion in 2012 to $250 billion. In 2012, the $188 billion loss accounted for 59% of pharmaceutical revenue from 2011, and 37% of the potential yearly revenue, according to the report.

Although there has been an increase in financial losses since 2012, investigators did not find an increase in nonadherence. However, new insights into pharmacy claims-based adherence data allowed the investigators to better determine the reality behind the data, according to the report.

In a related survey, investigators asked pharmaceutical manufacturers about different adherence-related topics to determine their perceived responsibilities to increase adherence. Approximately 60% of the respondents said that adherence was a high priority for their company, while none felt that it was a low priority. Interestingly, the respondents thought that nonadherence only cost them up to $100 billion, but the new research determined the actual losses were much higher.

The investigators found that a large portion of profit losses were due to nonadherence to medications for chronic illnesses, such as hypertension, diabetes, and high cholesterol.

Specifically, 200% of the current losses are due to nonadherence of antidepressants, according to the report. Not adhering to these medications could potentially be due to a time-lag of up to 3 months from the start of treatment to when it becomes effective.

Interventions should be a high priority for pharmaceutical manufacturers, since it will be especially beneficial to them. Increasing adherence by only 10% could generate $41 billion in revenue opportunities, and $124 billion worldwide,  along with improving patient outcomes and decreasing other spending, according to the report.

Many pharmaceutical manufacturers have created adherence initiatives, but these programs include standard measurers, such as medication reminders, and are typically underfunded, as opposed to the creation of novel, innovative programs.

Given the increasing interest in adherence research, it is likely that adherence improvement initiatives will continue to advance and offset nonadherence-related costs, the report concluded.

“The tremendous human toll that results from nonadherence has been known for some time, but until we did the report with Capgemini, the business cost to the life science industry was not,” Kottler concluded. “With our updated analysis, we have shown that this business challenge continues to grow for pharmaceutical companies, while at the same time presenting them with their most significant opportunity to simultaneously support patients and shareholders.”

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