Medicines help cut health costs: US Budget Office

The Australian Government should adopt a new formula developed by the Congressional Budget Office in the US which shows that increased use of prescription medicines provides net savings to the health system, Medicines Australia chief executive Dr Brendan Shaw said today.

For the first time, the US agency has accepted that prescription medicines, when taken properly, generate offsetting savings in other parts of the health sector.

Having reviewed an ‘increasing body of evidence’, the Congressional Budget Office found that a 1 per cent increase in the number of prescriptions filled causes Medicare spending to drop by roughly 0.2 per cent.

“I think if the Americans are prepared to accept the positive impact of medicines on overall health expenditure, the Australian Government should be prepared to accept the same evidence,” Dr Shaw said.

“The US Congressional Budget Office has said it will build the benefit of prescription medicines it into its future costings of budget proposals.

“Innovative medicines help control health care costs by preventing the need for care at public hospitals, shortening stays in hospitals where they are required and relieving the costs of other institutional care. In short, they help offset the costs of other parts of the healthcare system.

“The US Congressional Budget Office has now accepted that ‘a body of research now demonstrates a link between changes in prescription drug use and changes in the use of and spending for medical services’.

“It is time for policymakers in Australia to think more carefully about the productivity benefits of spending on dementia medicines that keep people out of nursing homes and hospitals or reduce the care burden for families, how subsidising pain and arthritis medication help people get back to work and improve workforce participation and incomes, and the payback to society as well as the individual from all the lives saved by cardiovascular medicines.

“The Federal Government should follow the US and start accounting for the economic benefits of innovative medicines rather than focusing purely on cost.

“That the Government’s own assessment systems for health spending do not currently take broader productivity benefits into account speaks volumes for how much more work we need to do.”

Further information on the US Congressional Budget Office’s new approach can be found at:


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