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PARA's Congressional Submission |
APPENDIX II: COST SAVINGS
FROM CURING CROHN'S DISEASE (CD)
Our evaluation disclosed that a minimum of $3.2 billion annually can be saved in medical costs by curing Crohn's disease (CD). Moreover, considering newer, more expensive maintenance treatments for CD, this estimate could be increased by an additional $190 million annually beginning in CY 2000, resulting in a total annual estimated cost savings exceeding $3.4 billion (see Calculations I and II below).
Furthermore, since most CD patients develop the disease between the ages of 15 and 25, and since Crohn's is chronic and progressive, many live miserably in pain and illness requiring a lifetime of multiple maintenance treatments for perhaps as long as 45 to 50 or more years. Consequently, the cost of CD for each individual patient over a lifetime can be staggering. Even using data from today, without adjusting for future inflation, the cost of Crohn's over a single patient's lifetime on average can easily exceed $375,000 (see Calculation III below).
The above cost estimates relate only to the measurement of the financial aspects of CD. The most devastating cost -- that measured in human misery, suffering, and lives destroyed, cannot be calculated.
Discussion of our Calculations:
Estimate of Prevalence and Incidence.
Our calculations are extremely conservative. First, because CD is not a reportable disease, the prevalence and incidence in the population has never been precisely determined. The best estimate of prevalence and incidence available, and that used in our calculations, can be found in the Olmsted County study performed by the Mayo Clinic (1). However, as stated in the Mayo Clinic Olmsted County paper, the calculated prevalence/incidence in this paper is "likely understated." We attempted no adjustment of the data for this admitted "likely understatement." Instead, we chose to err on the conservative side and utilized the most conservative, reliable and current prevalence and incidence data available. Therefore, it is likely that we have understated, and possibly significantly understated, the prevalence/incidence/number of Crohn's patients in the United States resulting in understating, and possibly significantly understating, the cost savings from curing CD.
Dramatically Increased Cost of New Crohn's Treatments.
Our "Estimated Annual Cost of Crohn's/Annual Cost Savings From Curing Crohn's Disease (Excluding Newer and More Expensive Treatments)" totaling $3.2 billion does not take into account "revolutionary" new drugs which treat the symptoms of CD such as the new mono-clonal antibody, Remicade. In 1999 -- the first full year of Remicade's availability -- use of Remicade dramatically increased each month. The cost of each infusion of Remicade is $1,400. Since the drug only lasts in the body for six (6) to eight (8) weeks and because this drug is not a cure, but, as with all other widely available Crohn's treatments today, treats only symptoms, multiple infusions must be done on many patients. Further, due to the dangers of this treatment, Remicade must be infused in a hospital setting under the care of a physician and numerous medical professionals, resulting in additional hospital, physician and hospital staff costs. Excluding the cost of medical care, and assuming that only one-third of Crohn's patients opt to try this new treatment, and assuming that each patient has only one infusion, this new treatment will, using the most conservative estimates, increase the total annual cost of Crohn's by an additional $190 million [rounded] (See Calculations II and III below).
Our Calculations, followed by Explanatory Notes, are set forth below:
CALCULATION I
Estimated Annual Cost of Crohn's/Annual Cost
Savings From Curing
Crohn's Disease (Excluding Newer and More Expensive
Treatments)
| Notes | ||
| 1999 -- Estimated Crohns Patients in U.S. | 409,400 | Note a |
| Estimated Annual Cost Savings from Curing Crohn's per Patient | $ 7,867 | Note b |
| Annual Cost Savings from Curing Crohn's | $3,220,749,800 | Note c |
Explanatory Notes:
Note a. Study -- "Crohn's Disease in Olmsted County, Minnesota, 1940-1993: Incidence, Prevalence, and Survival" (1). We used this study to determine prevalence extrapolated to the 1990 US population of 278,000 CD patients, and incidence of 14,600 per year to get an estimate of total CD patients in the US in 1999 of about 409,400 (278,000 + (14,600*9 years).
Note b. Study -- "Inflammatory bowel disease: medical cost algorithms" (2). This study determined that the "...average annual medical cost per patient with Crohn's disease was estimated at $6,561..." in 1990. We used the Consumer Price Index (CPI) for all urban consumers published by BLS -- CPI 138.6 in 1990 and CPI 166.2 in 1999 (May) to determine a 19.9% (166.2-138.6)/138.6) increase from 1990 to 1999. We adjusted the 1990 cost estimate as follows: $6,561 x 1.199 = $7,867, to determine an average annual medical cost per patient with CD of $7,867 in 1999.
Note c. Finally, we took the estimated CD patients in the US in 1999 totaling 409,400 times the estimated average annual medical cost per patient with CD of $7,867 in 1999 for a Grand Total Annual Cost of CD/Annual Cost Savings that could be realized by curing CD of $3,220,749,800 or $3.2 billion [rounded].
Additional Comment -- Although our calculation is based upon only two studies, it is our understanding that this is the best available information. Moreover, as stated in the Olmsted paper, the calculated prevalence is "likely understated." Consequently, it is PARA's opinion that the above estimate is conservative and based upon the best available information.
CALCULATION II
Estimated Annual Cost of Crohn's/Annual Cost
Savings From Curing
Crohn's Disease Including Newer and More Expensive
Treatments
| Notes | ||
| Total Crohn's patients taking newer and more expensive maintenance treatments for Crohn's... | 135,467 | Note a |
| ...times cost of one dose of newer and more expensive maintenance treatments per year | $1,400 | Note b |
| Additional annual cost savings from nonuse of newer and more expensive maintenance treatments for Crohn's. | $189,653,800 | Note c |
| Add annual cost savings from curing Crohns Excluding newer and more expensive treatments. |
$3,220,749,800 | Note d |
| Total estimated annual cost savings from curing Crohn's disease (including newer and more expensive treatments). | $3,410,403,600 | Note e |
Note a. -- Our calculation assumes that one-third of Crohn's patients will be treated with the newer and more expensive maintenance treatments. Total estimated Crohn's patients 409,400 (from Calculation I above) divided by 3 equals an estimated 135,467 Crohn's patients will be treated with newer and more expensive maintenance treatments such as Remicade
Note b. -- Although these newer maintenance treatments such as Remicade last only six (6) to eight (8) weeks in the body and are approved for multiple treatments, for the most conservative estimate, we will assume only one treatment per year at a cost of $1,400 (cost of drug only -- excludes cost of hospital and medical professional services) will be given each patient
Note c. -- To determine total "Additional Annual Cost Savings From Nonuse of Newer and More Expensive Maintenance Treatments for Crohn's" totaling $189,653,800 or $190 million [rounded], we took the total patients developed as described in Note a., times the cost of one dose of the newer and more expensive treatments from Note b
Note d. -- Add, Annual Cost Savings From Curing Crohn's Excluding Newer and More Expensive Treatments totaling $3,220,749,800 (from Calculation I above)
Note e. -- We conservatively estimate that the "Total Estimated Cost Savings From Curing Crohn's Disease Including Newer and More Expensive Treatments" is $3,410,403,600 or approximately $3.4 billion annually
CALCULATION III
Average Cost of Crohn's disease
/Cost Savings from Curing Crohn's disease
over a Single Patient Lifetime
| Notes | ||
| Total estimated annual cost savings from curing crohn's disease (including newer and more expensive treatments) | $3,410,403,600 | Note a |
| Divided by total estimated Crohn's patients | 409,400 | Note b |
| Total estimated annual medical cost per Crohn's patient in 1999 | $8,330 | Note c |
| Estimated average survival years after diagnosis | 45 | Note d |
| Average cost savings from curing Crohn's disease over a single patient lifetime | $374,850 | Note e |
Explanatory Notes:
Note a. -- $3,410,403,600 (from Calculation II above), Total Estimated Annual Cost Savings From Curing Crohn's Disease (Including Newer and More Expensive Treatments)
Note b. -- Estimated total CD patients in the U.S. in 1999 of 409,400 (from Calculation I above).
Note c. -- Total Estimated Annual Cost Savings From Curing Crohn's Disease (Including Newer and More Expensive Treatments) divided by Estimated Total CD patients in the U.S. in 1999 yields Total Estimated Annual Medical Cost Per Crohn's Patient in 1999 of $8,330.
Notes d. -- Most Crohn's patients are diagnosed between the ages of 15 and 25. The disease is chronic and progressive requiring a lifetime of medical treatments and frequently multiple surgeries. For estimating purposes, we assumed that patients lived an average of 45 years after diagnosis, during which time they will require multiple medical treatments. We believe that this is conservative because of the young age of diagnosis and the maintenance treatments which substantially prolong life, if not quality of life.
Note e. -- Total Estimated Annual Medical Cost Per Crohn's patient of $8,330 times 45 years yields an Average Cost of Curing Crohn's disease over a single patient lifetime of $374,850 or approximately $375,000 [rounded]. This amount is extremely conservative since it does not take in to account future escalation.
Footnotes