Diabetes Research and the Public Good: Federal Support for Research on Type 1 Diabetes
Diabetes is one of the most common, life-threatening medical conditions in the United States today. Nearly 26 million Americans had diabetes in 2011, up from 24 million in 2007, according to the Centers for Disease Control and Prevention (CDC).2 All told, more than 8 percent of all Americans have some form of the disease. As alarming is the fact that the prevalence of diabetes is increasing faster than the population.
From 2001 to 2009, type 1 diabetes (T1D) among youth increased 23 percent, and type 2 diabetes (T2D) among youth increased 21 percent. Epidemiologists estimate that by 2020, nearly 12 percent of Americans or 39.2 million people will have diabetes, including 28.7 million diagnosed cases and 10.5 million undiagnosed cases. The impact of diabetes is enormous.
According to the CDC, diabetes is the underlying cause of death of over 70,000 Americans a year and a contributor to an additional 160,000 deaths. People with diabetes are two-to-four times more likely than other people to die of heart disease. Diabetes is the leading cause of kidney failure, accounting for 44 percent of all new cases, and it is the leading cause of new cases of blindness in adults. The consequences of diabetes extend beyond the toll it takes on those with the disease and their families and friends. Diabetes also exacts a major toll on the U.S. economy. This study analyzes these economic effects and assesses whether continuing the Special Diabetes Program, which funds research into treating and curing type 1 diabetes through the National Institutes of Health (NIH), could materially contribute to ameliorating the adverse economic impacts associated with diabetes.
Our key findings:
- Treating people with diabetes cost Americans $128 billion in 2007 6 or about 0.9 percent of GDP. By 2020, these medical costs are expected to reach $410 billion7 or an estimated 1.8 percent of a projected GDP of $23.4 trillion in 2020.
- Diabetes also imposes large, non-medical costs on the economy. There are productivity losses associated with missed work, permanent disabilities and premature deaths from diabetes and its complications. These non-medical costs totaled some $65 billion in 20079 which equaled 0.5 percent of U.S. GDP in that year. Based on people’s average earnings in 2007 ($44,458), we estimate these costs would have covered the wages and salaries of an additional 1,462,054 full-time workers.
- By 2020, these non-medical, economic costs are expected to reach $196 billion11 or more than 0.8 percent of a projected GDP of $23.4 trillion in that year. Assuming historical trends in earnings, we estimate the foregone economic production related to diabetes in 2020 would cover the wages and salaries of 2,644,824 full-time workers in that year.
- All told, the medical and non-medical costs of diabetes came to $193 billion in 200712 or 1.4 percent of GDP. By 2020, these total costs are expected to reach $606 billion13 or 2.6 percent of projected GDP in 2020.
- The NIH currently provides $150 million per-year in such support through the Special Diabetes Program (SDP), as well as additional funds through other grant programs. The SDP has supported the establishment of new research infrastructure and funded new research programs that already have advanced our basic knowledge of diabetes and its causes, led to improved treatments and screening for T1D, and advanced research into potential cures.
- With 15 years of NIH support for T1D research, the likelihood of additional breakthroughs will increase if the program is renewed. If those advances can reduce the incidence and severity of T1D by just 10 percent by 2020, we estimate that the savings in medical costs would exceed $2.6 billion per-year, including $1.9 billion in savings for Medicare and Medicaid, plus another $2.2 billion in annual non-medical economic savings, for a total savings of $4.8 billion a year. In this scenario, we estimate the advances will produce an annual rate of return of 163%, year after year.
- If spillovers from these advances reduce the incidence and severity of T2D by just 5 percent in 2020, we estimate that would save nearly $17.4 billion per-year in medical costs, including more than $12.3 billion per-year in Medicare and Medicaid costs, plus nearly $7.5 billion per-year in non-medical economic costs.
- The estimated annual savings from a 5 percent reduction in the incidence and severity of T2D by 2020 would be more than 8.5 times the total projected NIH funding for SDP funded research over 22 years.
- NIH support for T1D research is also critical to the progress of the diabetes R&D programs of private pharmaceutical firms: Researchers have found that a one percent increase in NIH-funded basic research leads to a 2.5 percent increase in private R&D spending, with a seven-year lag. Based on this analysis, we conclude that not continuing the SDP for research in type 1 diabetes would be highly ill-advised and ultimately very costly for both the millions of Americans suffering from the disease and U.S. taxpayers.