Diabetes Research and the Public Good: Federal Support for Research on Type 1 Diabetes

Diabetes is one of the most common, rapidly-growing life-threatening medical conditions in the United States today: Nearly 26 million Americans had diabetes in 2011, up from 24 million in 2007; and epidemiologists estimate that by 2020, nearly 12 percent of Americans or 39.2 million people will have diabetes. Diabetes is the underlying cause of death of over 70,000 Americans a year and a contributor to an additional 160,000 deaths. Diabetes also exacts a large 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 (T1D) through the National Institutes of Health, could contribute to meaningfully ameliorating the adverse economic effects associated with diabetes. We found that treating people with diabetes cost Americans $128 billion in 2007 or about 0.9 percent of GDP; and we estimate that by 2020, these medical costs will reach $410 billion or an estimated 1.8 percent of a projected GDP of $23.4 trillion in 2020. We further estimate that the productivity losses associated with missed work, permanent disabilities and premature deaths from diabetes and its complications totaled $65 billion in 2007 or 0.5 percent of U.S. GDP in that year. We further estimate that by 2020, these non-medical, economic costs will reach $196 billion or more than 0.8 percent of projected GDP in that year. The NIH currently provides $150 million per-year to support research into T1D, as well as additional funds through other grant programs, and we cannot know if this research will ultimately produce better treatments for the disease. However, after 15 years of NIH support for T1D research, the likelihood of additional breakthroughs should increase if the program is maintained. We further project that if such those advances reduce the incidence and severity of T1D by 10 percent by 2020, 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, the advances would produce an annual rate of return of 163 percent year after year. We also estimate that if spillovers from these advances reduce the incidence and severity of Type 2 Diabetes (T2D) by 5 percent in 2020, 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. Based on this analysis, we conclude that federal support for research in T1D should continue.