E-prescribing promises quick ROI, lower medication costs

Posted: October 28th, 2009 | Author: George Getty III | Filed under: Incentives | No Comments »

One of the barriers in the swift adoption of electronic prescribing is the high switching cost associated with migrating from paper to e-format, but several studies have shown the investment is worth the potential savings in the future.

A study based on e-prescribing in Massachusetts found that doctors who used e-prescribing systems could save $0.70 per patient per month, which translates to $845,000 annually per 100,000 insured patients filling prescriptions.

The savings were linked to one of the features of e-prescribing systems called formulary decision support, which prompts prescribers to prescribe lower-cost medications. Such feature increased the prescribing of generics and other lower-cost options, researchers reported in the Archives of Internal Medicine, one of the JAMA/Archives journals.

“The potential savings increase with more availability and use of e-prescribing; for complete e-prescribing use, the projected savings are $3.91 million per 100,000 patients per year,” said lead author Michael A. Fischer of Brigham and Women’s Hospital and Harvard Medical School in Boston.

Noting that prescription drug costs account for a significant proportion of medical spending, authors suggested that a tiered copayment system could lower the cost of medication.

In the study, insurers identified preferred medications, such as generic drugs, and classified them as first-tier with the lowest copayment. Moderately priced brand-name medications were categorized as second-tier while expensive brand-name medications were designated as third-tier.

More than 1.5 million patients filled 17.4 million prescriptions during the 18-month study period. After implementation of e-prescribing, tier 1 prescriptions increased by 3.3 percent and second- and third-tier prescriptions decreased accordingly, researchers reported.

“Our results suggest that there are important economic gains achievable through the broader use of e-prescribing with formulary decision support but that merely providing e-prescribing systems to clinicians will not necessarily achieve those savings,” they said.

Several health plans have been partnering with providers of e-prescribing programs, and they expect that the increased use of generic drugs will give them initial return on investment. The Health Alliance Plan of Michigan, for instance, estimated a five-year ROI of more than $14 million by improving its generic use rate.

The study “Interoperable Electronic Prescribing In The United States” published by the Health Affairs journal said the savings are significant for Medicare, which spent $42.2 billion in 2007 for beneficiaries’ prescription drugs.

“Such savings also could become increasingly important for private insurers that are facing decreasing investment earnings and enrollment because of the recent economic crisis,” the study noted.

For more information:

Fischer MA, Vogeli C, Stedman M, Ferris T, Brookhart MA, Weissman JS. (2008). Effect of Electronic Prescribing with Formulary Decision Support on Medication Use and Cost. Archives of Internal Medicine, Dec 8;168(22):2433-9.

Friedman M, Schueth A, & Bell D. (2009). Interoperable Electronic Prescribing In The United States: A Progress Report. Health Affairs, Mar-Apr;28(2):393–403.

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