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» Using Pharmacogenomics to Prevent Adverse Drug Effects and Reduce Health Plan Costs

February 16, 2022

Business Strategies, Digital Health, Health Equity, Healthcare Innovation, Healthcare Spending, Prescription Drugs, Self-Funding

While we trust our health system and providers to do their best to take care of us, bad things do happen. Anyone who has watched an episode of Grey’s Anatomy, ER, House, or countless other dramas has seen fictionalizations of medical errors. Unfortunately, these aren’t fantasy – accidents do happen in medicine.

By various accounts, adverse drug effects (ADEs) are a leading cause of death in the US. Some sources state it to be our third, fourth, or sixth leading cause of death in the US. This puts it right in the company of pulmonary disease, diabetes, AIDS, pnuemonia, accidents, and automobile deaths. It possibly trails just heart disease and cancer in the number of lives it claims per year.

There are various reasons for this but a key issue that employers should know about is probably a new term to you – Pharmacogenomics. This is the study of the impact our genes make in how our bodies respond to drugs. Each person has a unique genetic makeup that affects things such as their eye color and hair; so it shouldn’t be surprising that we also respond uniquely to drugs. And this impacts our health outcomes and healthcare spending, in some cases, dramatically so.

The Health and Financial Impact of Adverse Drug Events

Health plans are managed with the twin aims of quality outcomes at the lowest possible cost. So the health and financial impacts of Adverse Drug Effects are important to understand so we can address their root causes.

It’s estimated that over 180,000 people die each year from ADEs and that ADEs cost over $180 billion dollars per year among the adult population. This is due largely to the fact that over 90 percent of the US population has at least one gene variation that affects how they respond to drugs. Of those genes, over 74 percent can be identified through pharmacogenomic testing.

While we think of prescription drugs working the same way for everyone, this one size fits all approach results in injuries, complications, deaths, and costs every year.

Study on the impact of a pharmacogenomic approach to prescription drugs

A study was completed by the University of Utah in 2015 that showed noticeable results in using pharmacogenomics to inform drug treatment for patients. Patients in the study had multiple prescriptions and presented in an ambulatory environment over four months. The researchers found the following results through this genetics-informed approach:

  • Hospital readmissions were reduced by 39 percent
  • Emergency visits were reduced by 79 percent
  • The mortality rate decreased 85 percent
  • Savings of $4,382 per patient per year

Using pharmacogenomics to reduce adverse drug effects and improve outcomes

Once we understand how adverse drug effects can be mitigated through the use of pharmacogenomics, we need to put it into practice.

The unfortunate reality is that about 80 percent of doctors have no idea how to use genomics and pharmacogenomics to assess a treatment plan with medication. However, this analysis can yield useful information in cancer genomics, diabetes, Parkinson’s, Alzheimer’s, nutrition, and more. Genetic analysis can identify both drug interactions and drug reactions within patients.

Savings opportunities in using pharmacogenomics in a health plan

A health plan will typically see a Pareto distribution in claims among members – this refers to the 80/20 rule in which 80 percent of occurrences will be found with 20 percent of the sample. In health plan claims, 20 percent of members will account for 80 percent of claims, and even just 4 percent of members will account for over half of all claims.

Given the financial impacts of adverse drug effects we’ve discussed previously, health plans have a number of savings opportunities in reducing pharmacy spending and medical spending among members.

  • Increased Effectiveness of Medications: Dose adjustments, alternative medication, elimination of ineffective medications, and reduced adverse drug effects all result in reduced spending and better outcomes.
  • Increased Patient Compliance: Patients do not follow treatment plans as closely when there are side effects like bloating, pain, and more. A patient is more likely to take drugs that don’t make them feel bad. By reducing these adverse effects, patients stick to their treatment plan, improving outcomes and reducing costs.
  • Decreased Hospital and Offices Visits: Patients are happier to not go to the doctor so much and fewer visits are fewer claims.

Vendors in the market can conduct genetic testing on the highest spending subset of your employee population, and we see positive ROIs if the subset is properly defined and the members are equipped to act on their pharmacogenomic findings. A vendor can quickly analyze claims data to identify the members with the greatest opportunity and begin a process of communicating and testing those members.

As genetic testing and awareness increases, this is another great savings opportunities for groups and their health plans.

Click here for a complimentary discussion with a benefits consultant to see if pharmacogenomic testing may be right for your group!

Posted by in Business Strategies, Digital Health, Health Equity, Healthcare Innovation, Healthcare Spending, Prescription Drugs, Self-Funding