Medication adherence math

Everyone agrees that better medication adherence is good for patients. But how good is it economically?

In 2012, the Congressional Budget Office published a report titled “Offsetting Effects of Prescription Drug Use on Medicare’s Spending for Medical Services.” The core idea is straightforward: when patients take the right medications they stay healthier and often avoid expensive care later, such as emergency room visits, hospitalizations, and other medical services. These savings are known as “medical offsets.”

After reviewing the research, CBO concluded that policies increasing prescription drug use can partially pay for themselves through reductions in other healthcare spending. For budgeting purposes, CBO assumes that a 1% increase in prescriptions filled is associated with roughly a 0.2% decrease in spending on other medical services.

What does that mean in practice?

Medicare covers roughly 67 million people and spends about $839 billion annually. For simplicity, assume average adherence across the population is 50%. If a simple intervention—like reminder packaging—improves adherence by 10% on a relative basis (from 50% to 55%), CBO’s ratio implies a 2% reduction in other medical spending (10% × 0.2).

Two percent of $839 billion is approximately $16.8 billion in annual savings. This is only for Medicare - imagine if implemented across other government and private programs - the numbers start to really add up!

While non-adherence has many causes, prescription packaging is one of the simplest, most scalable levers to pull—and potentially one of the most economically powerful.