Inmar Intelligence | November 17, 2014

All Dressed Up and Nowhere to Go — Solving the $16 Billion Hidden Costs of Med Nonadherence

New idea: Reduce costs and generate revenue while adherence efforts are still gaining momentum

Would you spend a bunch of money on some new clothes for a date if you weren't even sure your date was coming? Silly as that sounds, each year more than a billion prescriptions get all dressed up, sit there on the shelf and no one shows up to take them to the dance. At an estimated $16 billion a year in costs to pharmacies, according to figures published online by the National Community Pharmacists Association (NCPA), that's one expensive outfit.

Medication nonadherence is a huge problem, to the tune of billions of dollars in costs and losses to the pharmacy industry, and an estimated $290 billion in avoidable costs each year to the healthcare industry as a whole, according to a 2009 study by the New England Healthcare Institute. The scramble is on for pharmacies' efforts to meet the Center for Medicare and Medicaid Services (CMS )regulations regarding nonadherence, but meanwhile it's costing money.

While med adherence initiatives work to gain momentum, pharmacies and drug makers continue to struggle with the costs they incur in filling prescriptions that never get picked up. What if I told you there is a way to almost completely eliminate those costs, and even generate additional revenue in the process?

First, let's take a quick look at the problem:
The National Community Pharmacy Association (NCPA), in its 2013 National report Card on Adherence, estimated that up to 30 percent of prescriptions are never even picked up. Meanwhile, pharmacies spend money on time, labor and supplies to prepare those medications, only to have them sit there like a dressed-up teen waiting for a prom date that never shows up. And Daddy spent a lot of money on that dress.

It's hard to fathom the idea that someone would choose not to pick up a medication their doctor has told them they need. But the undeniable reality is that patients face issues with affordability, fear of undesirable side effects, forgetfulness among the elderly, lack of awareness of a refill needed, and the list goes on.
You might say, so what? It's a no-harm-no-foul situation, and the medications can be put back into stock and still sold. Perhaps, but consider the following costs:

  • Time and resources it takes for a pharmacist to fill a prescription (estimated cost of $11.53 per prescription, in a 2011 study by the State of Maryland)
  • Cost of pill bottles, bags, labels and printer ink
  • Time and labor to remove and restock

Are bag and label costs really that big a deal? Absolutely. With about 4.8 billion prescriptions written in the U.S. each year according to CMS, 30 percent of that is 1.44 billion bags, labels and printer ink.

Let's take that a step further. If, for instance, the average cost to fill one prescription is $11.53 as estimated above, pharmacies might spend more than $16 billion each year on dispensing those 1.44.billion prescriptions that are never picked up. That money doesn't have to be spent.

Consider also how much the risk of diversion increases when drugs enter the supply chain, outside the security-rich environment of licensed practitioners, providers and pharmacists. We tend to think mainly about narcotics and other drugs with value in for abusers and illicit markets, but drug diversion in the supply chain covers almost all categories when you consider the black market for drugs across national borders. The U.S. Drug Enforcement Agency estimates that pharmaceuticals valued at more than $700 million a year have entered the United States from Canada.

Earlier I said we can better manage those costs and generate revenue, while initiatives work toward improving patient adherence. There is a lot we can do. With health records, pharmacy systems and payment and reconciliation solutions now being handled digitally, we have data available. There are scads of data — currently just sitting there — that can help our pharmacy clients not only eliminate these costs, but actually find an opportunity to generate revenue in the process.

Inmar does this with shopper data every day for retailers, but healthcare hasn't quite latched onto using these analytics with patients. The time has come.

Here's one way: Retailers and pharmacy financial management providers like Inmar could collaborate to create a nonadherence scoring system, simply by sharing data and shaking it out. This scoring system eliminates the hidden costs of primary nonadherence, and opens an opportunity for additional purchases in the store.

Here's how: For patients who score a low likelihood of prescription pickup, the pharmacy can place the prescription on hold — and avoid devoting resources to filling and restocking or returning a prescription we know has a low likelihood of being picked up.

If the patient does show up, the pharmacist tells them their prescription isn't ready yet, but gives them a $5-off coupon for use in the front of the store for any other items they need, as long as they use it in the same visit in which they pick up their prescription.

In that simple scenario, we completely avoid the unnecessary cost of labor, bags, labels and returns, and send the customer on a spend-more-money adventure in the store. Aside from the gain in only devoting resource costs to a script that gets picked up, the cost of the $5 discount vaporizes when you avoid spending the $11.53 on countless no-show patients.

That's not the only scenario. There are a lot of ways to work it. More and more, patients are willing to share information when they get something in return for it. Targeted opportunities can be constructed for patients who self-identify as income-challenged as a source of their non-compliance. Helping them with discounts on items they buy that you sell will get them buying from you, and help them more easily afford their medications. Partnering with manufacturers to help those patients could be a huge boost. But we have to share the data to do it.

This is possible now. HIPAA compliance is a factor that must be carefully considered, but it can be navigated with the right constraints in place. The next step is bringing together retailers, pharmacists, health systems and manufacturers to work out the best parameters for access rights to the data. How often do we have the opportunity to collaborate on something that improves patient outcomes and improves the bottom line? Not often enough. That reminds me of the words of one of the great innovators in all of human history, Thomas Edison: "If we all did the things we are really capable of doing, we would literally astound ourselves."

Can we boost savings and leverage growing adherence for more front-store customer purchases? What do you think? Agree? Disagree? Please share your thoughts in the comments section below.


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    Holly Pavlika
    SVP, Corporate Marketing
    (336) 770-3596