Medicaid Pharmaceuticals

Does increased use of prescription drugs lower medical costs?

There is a belief that providing better care can reduce cost, at least somewhat.  For instance, some claim that better primary care can avoid unnecessary hospitalizations.  But can increased use of prescription drugs lead to decreased medical spending?  This is exactly what a paper by Roebuck et al. (2015) find.  They write:

We found that a 1 percent increase in overall prescription drug use was associated with decreases in total nondrug Medicaid costs by 0.108 percent for blind or disabled adults, 0.167 percent for other adults, and 0.041 percent for children. Reductions in combined inpatient and outpatient spending from increased drug utilization in Medicaid were similar to an estimate for Medicare by the Congressional Budget Office.

Prescription drugs are expensive; nevertheless, in aggregate they are likely to reduce non-drug medical spending and improve health.


  • Christopher Roebuck, J. Samantha Dougherty, Robert Kaestner, and Laura M. Miller. Increased Use Of Prescription Drugs Reduces Medical Costs In Medicaid Populations. 10.1377/hlthaff.2015.0335 HEALTH AFFAIRS 34, NO. 9 (2015): 1586–1593

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