Page 1 of 1

Doctor's use of e-prescribing systems linked to formulary data can boost drug cost savings

Research Activities, January 2009, No. 341

Electronic prescribing (e-prescribing) systems that allow doctors to select lower cost or generic medications could save $845,000 per 100,000 patients per year and possibly more system-wide, according to findings from a new study. Complete use among physicians of e-prescribing system with formulary decision support could reduce prescription drug spending by up to $3.9 million per 100,000 patients per year, according to the researchers.

Insurers, policymakers, and patients are seeking ways to control drug costs and, to encourage the use of lower cost or generic drugs, many insurers are now using lists of approved prescription drugs known as formularies. Under these arrangements, patients are often charged the lowest co-payment for generic medications (tier 1), a higher sum for preferred brand-name drugs (tier 2) and the highest amount for nonpreferred brand-name drugs (tier 3). However, a major challenge to doctors' widespread use of tiered systems is the lack of current data on insurers' prescription drug formularies at the time of prescribing. Providing doctors with current lists of approved medications is challenging because the information changes frequently.

To test the cost-savings potential of an e-prescribing system that includes data on insurers' formularies, researchers at Brigham and Women's Hospital and Massachusetts General Hospital in Boston compared the change in prescriptions written in three formulary tiers before and after an e-prescribing system was launched. The study examined data collected over 18 months from two major Massachusetts health insurers covering 1.5 million patients.

Doctors using e-prescribing with formulary decision support, which accounted for more than 200,000 filled prescriptions in the study, increased their use of generic prescriptions by 3.3 percent. These changes were above and beyond the increased use of generics that occurred among all doctors and the already high rate of generic drug use in Massachusetts. Based on average costs for private insurers, study authors estimate that the use of e-prescribing could save $845,000 per 100,000 patients per year and generate even higher savings with greater use.

Researchers found that the doctors who wrote electronic prescriptions were slightly younger and more likely to be female than those who did not. In addition, internists, pediatricians, and family physicians made up nearly three-fourths of those who used e-prescribing. Of the 17.4 million prescriptions filled over the course of the study, about 212,000 were prescribed electronically. This study was funded in part by the Agency for Healthcare Research and Quality (AHRQ) (HS15175).

See "Effect of Electronic Prescribing with Formulary Decision Support on Medication Use and Cost," by Michael A. Fischer, M.D., M.S., Christine Vogeli, Ph.D., Margaret Stedman, M.P.H., and others in the December 8, 2008, Archives of Internal Medicine 168(22), pp. 2433-2439.

Editor's Note: The health information technology (health IT) initiative at AHRQ is part of the Nation's strategy to use health IT to work in health care. This strategy includes programs across the Department of Health and Human Services such as the Medicare Improvements for Patients and Providers Act of 2008, which, beginning in January 2009, provides up to a 2 percent payment incentive for clinicians enrolled in Medicare to use electronic prescriptions. Since 2004, AHRQ has invested more than $260 million in contracts and grants to more than 150 communities, hospitals, providers, and health care systems in 48 States to develop knowledge about and encourage adoption of health IT practices that improve quality.

More information on AHRQ's e-prescribing projects and reports can be found at

Current as of January 2009
Internet Citation: Doctor's use of e-prescribing systems linked to formulary data can boost drug cost savings: Research Activities, January 2009, No. 341. January 2009. Agency for Healthcare Research and Quality, Rockville, MD.