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Express Scripts Holding Company (ESRX): Seven States Wasting the Least Money on Medications

There’s always a flip side to any coin. I recently wrote about seven states that pharmacy benefits manager Express Scripts Holding Company (NASDAQ:ESRX) identified as the most wasteful when it comes to medication-related spending. Since that article focused on the negative side, it’s only fitting that I also highlight the states that are doing the best on this front.

Express Scripts Holding Company (NASDAQ:ESRX) looked at several areas in identifying potential waste. One involved cases where patients purchased higher-cost medications when lower-cost alternatives were available. Another focused on times when patients could have gone with a lower-cost pharmacy, such as a specialty pharmacy or home delivery. The last category of waste related to patients not adhering to medication treatments.

Around $418 billion was wasted in 2012 in these ways, according to Express Scripts Holding Company (NASDAQ:ESRX)’ research. While all states were guilty of wasteful spending, some performed much better than others. Here are the seven states wasting the least amount per capita on medication spending.

Source: Express Scripts

Birds of a feather
A quick look at the map reveals that these seven states cluster in one of two areas. Vermont, New Hampshire, and Massachusetts are all neighbors in the Northeast U.S., while Minnesota, South Dakota, North Dakota, and Wisconsin form a block in the North Central U.S.

This geographic proximity for the two groups is interesting, because a similar phenomena was seen with the seven most wasteful states — all of which were located in the South. However, as with the most wasteful states, my hunch is that other commonalities provide a better explanation for why these states are among the least wasteful.

One common denominator among six of the seven states relates to education attainment. All but Massachusetts ranked in the top 15 states with the highest percentage of residents graduating from high school or receiving additional education. Massachusetts came in 19th among all states in this category.

Source: U.S. Census Bureau.

I don’t think that higher high school graduation rates per se make a state less likely to be wasteful. However, increased education attainment could correspond with increased awareness of ways to control costs most effectively.

An even stronger common theme is health status. All seven of the states wasting the least on medications ranked in the top 15 states with the most residents reporting good health.


Source: Centers for Disease Control and Prevention.

The logic behind why health status ties to medication spending wastefulness is straightforward. Better health should correlate with lower volume of prescription drugs taken. Less money spent on prescription drugs presents fewer opportunities for wasteful spending.

There could be other common denominators among these seven states that partially explain why medication spending is less wasteful than elsewhere. However, I don’t think that the patterns of the states ranking at the bottom on wasteful medication spending and near the top for education attainment and health status are coincidental.

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