Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Express Scripts Holding Company (ESRX) & Seven States Wasting the Most Money on Medications

Page 1 of 2

Are your neighbors throwing away tons of money? Express Scripts Holding Company (NASDAQ:ESRX) says that they probably are. The giant pharmacy benefits manager, or PBM, recently published information that shows how much each state wastes the most in unnecessary medication-related costs.

Express Scripts Holding Company (NASDAQ:ESRX)’ definition of wasteful spending included three categories. First, some patients use costly prescription drugs when less expensive but clinically comparable alternatives exist. Similarly, patients who don’t use home delivery and specialty pharmacies when appropriate can forego significant cost savings. Lastly, patients who fail to adhere to medication therapies rack up unnecessary medical expenses.

Here are the seven most wasteful states on a per capita basis for medication spending in 2012:

Source: Express Scripts

Common denominators
One thing that immediately jumps out is that all seven of the most wasteful states when it comes to medication spending are in the South.

These states have something in common other than geography, though. The Centers for Disease Control and Prevention conducts surveys routinely to determine the health status of Americans. All seven of the states identified by Express Scripts Holding Company (NASDAQ:ESRX) as most wasteful with regards to medication spending rank near the bottom in the CDC’s health status survey.

Source: Centers for Disease Control and Prevention

Several of the states also share another common denominator. All but Texas rank among the lowest states with regards to median household income.

Source: U.S. Census Bureau

The states that rank among the most wasteful when it comes to medication spending are highlighted in red on both charts — and there is plenty of red as you can see. So why would health status and household income levels impact medication spending waste?

Higher consumption of any product provides more opportunities for inadvertent waste. It stands to reason that states with fewer residents reporting good health would also have more residents taking prescription drugs. The more prescription drugs taken creates more potential for waste.

Linking household income to higher levels of wasteful medication spending is a little trickier. One possibility is that Americans with lower incomes don’t have access to the information that could help them make more cost-effective choices regarding prescription drugs. For example, many insurance companies provide information about generic drug alternatives online. However, if individuals don’t have Internet access, that information doesn’t help them.

Trash to treasure?
What difference do these factoids make for Motley Fool readers looking for investing ideas? I think these findings actually point to some good stocks to consider.

Total wasteful spending in 2012 amounted to around $418 billion. This means that there is great potential for reducing these costs. Companies that can help achieve this potential should do well in coming years.

Page 1 of 2
Loading Comments...