A Congressional Budget Office memo about the offsetting costs of Medicare Part D concludes that a 1 percent increase in the number of prescriptions filled leads to 1 percent reduction in Medicare spending in the absence of prescription drugs.
So I did some rough calculations: According to CMS the percent increase in Rx filled per year in Part D from 2007 -2009 was 5.6 percent. That lead to an increase in part D spending of about 5.7 billion. Assuming a 5.6 percent decline in the rate of medicare spending I come up with a savings of $30 billion. (The additional spending that would have occured in the absence of drug utilization.) That means every dollar spent on Part D saves about $6 in Medicare spending. Lichtenberg estimates $1 dollar of drug spending on new drugs saves $7. This is a bit below his estimate (few new drugs were introduced since 2006) but now CBO has essentially "blessed" the offset
So I did some rough calculations: According to CMS the percent increase in Rx filled per year in Part D from 2007 -2009 was 5.6 percent. That lead to an increase in part D spending of about 5.7 billion. Assuming a 5.6 percent decline in the rate of medicare spending I come up with a savings of $30 billion. (The additional spending that would have occured in the absence of drug utilization.) That means every dollar spent on Part D saves about $6 in Medicare spending. Lichtenberg estimates $1 dollar of drug spending on new drugs saves $7. This is a bit below his estimate (few new drugs were introduced since 2006) but now CBO has essentially "blessed" the offset
