Each year as many as 1.5 million Americans suffer illness, injury or death because of mistakes made in prescribing, dispensing and taking prescription drugs, according to a report by the Institute of Medicine.

The reports says medication errors are so common in hospitals that, statistically, a patient will be subjected to a medication error each day of their stay.

While the study found that data on the costs associated with medication errors is limited, one study estimates the cost in the hospital setting alone at $3.5 billion. Another study estimates the cost for Medicare beneficiaries in an outpatient setting at $887 million.

To reduce medication errors, IOM recommended improving communication between patients and providers, enhancing the resources to support consumer-oriented drug information and medication self-management, increasing access to patient information by clinicians and consumers, improving drug product naming, labeling, and packaging, establishing standards for drug-related health information technologies, and providing incentives for the adoption of practices and technologies that reduce medication errors.

"I appreciate this comprehensive report from the Institute of Medicine. While our healthcare system is the envy of the world in many ways, clearly there is room for improvement. This report outlines an ambitious agenda for increasing the safety of the medication use process," said Sen. Charles Grassley (R-IA), Chairman of the Senate Committee on Finance.

The report recommended the Food and Drug Administration and others develop guidelines to make drug labels less cluttered and confusing. Grassley said action on that point should come sooner rather than later.

"Of particular interest to me as the chair of the Finance Committee, which has jurisdiction over Medicare, is the Institute of Medicines assertion that almost nothing is known about the benefits and risks of medications for people over age 80 and those taking medications for multiple conditions," Grassley said.

Addressing this point, the report calls for an increase in clinical trial studies as well as giving access to trial data to patients, providers, health insurers, researchers, and regulators. The report also concluded that many medication errors could be avoided if doctors adopted electronic prescriptions, hospitals instituted a standard barcode system for identifying drugs, and if patients were better educated about the drugs they were taking.

The IOM report was mandated by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.