Report: Pharma loses $637B annually due to medication nonadherence

By Heather Mack

Around the world, pharmaceutical companies are losing $637 billion in revenue per year from a multifaceted, but common problem: people with chronic conditions are not adhering to their medication.

In a research paper by medication adherence company HealthPrize Technologies and consulting company Capgemini, the issue was described as “one of the most serious problems in healthcare,” affecting all parties and causing more than just financial drawbacks.

“For insurers, employers, and patients, non-adherence significantly increases healthcare costs as a result of disease-related complications,” the authors wrote. “For pharmaceutical companies, pharmacies, and pharmacy benefits managers, non-adherence significantly erodes profit due to prescriptions never filled and medications not taken often enough … non-adherence is also to blame for immense personal and societal costs beyond the financial, in the form of poor health outcomes, untimely death, lost productivity, and compromised quality of life.”

The problem isn’t new, nor is it getting smaller even though people are more aware of its impact, the report found. Globally, revenue loss has increased from $564 billion in 2012, and US-based losses alone increased from $188 billion four years ago to $250 billion in 2015.

 “Medication nonadherence is a serious global health issue that needs to be addressed immediately,” Tom Kottler, CEO of HealthPrize Technologies said in a statement. “It also happens to be a critical business issue for pharmaceutical companies, and represents the ‘final frontier’ for them – the only area of their business where they can generate significant top- and bottom-line growth, improve outcomes, and create substantial savings for the healthcare system – all at the same time.”

What pharmaceutical companies need to do to address that, Kottler said, is to shift their focus from physicians to patients. While the physician has long been thought of as the customer, the evolving healthcare industry has become increasingly focused on the patient. Consumerization of the industry means more personalized products, addressing more complicated chronic conditions, in smaller patient populations.

Reaching all those different patients means learning more about their behaviors and what helps them adhere to their medications, the report found. Designing tools and methods for medication adherence with patients in mind – rather than the physician who prescribes the drugs – should feature heavily in pharmaceutical companies’ business strategy.

“The tremendous human toll that results from nonadherence has been known for some time, but until we did the report with Capgemini, the business cost to the life science industry was not,” Kottler stated. “With our updated analysis, we have shown that this business challenge continues to grow for pharmaceutical companies, while at the same time presenting them with their most significant opportunity to simultaneously support patients and shareholders.”