Effect of Selected Dietary Supplements on Health Care Cost Reduction Study Update

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1 Effect of Selected Dietary Supplements on Health Care Cost Reduction Study Update Report Prepared for: Dietary Supplement Education Alliance Submitted by: Dobson DaVanzo Prepared By: Joan E. DaVanzo, PhD, MSW Jean Freeman, MA June 5, 2007

2 Table of Contents Executive Summary... i Key Study Findings... ii Introduction... 1 Study Methodology... 2 Identifying the Study Population... 3 Cost Estimation... 3 Study Findings... 4 Conclusions... 7

3 Executive Summary A growing body of scientific research is beginning to provide important clues about how diet choices affect health. In some areas, the relationship between specific foods or dietary supplements and particular health outcomes is fairly clear; in other cases, more research is needed to clarify important relationships. By the year 2030, there will be over 70 million people aged 65+, with half over age 75. Health care for Americans over age 65 could increase to nearly $16 trillion per year. A number of agerelated diseases among others contribute significantly to whether an older person can maintain his or her independence, including coronary heart disease (CHD), osteoporosis, and age-related macular degeneration (AMD). The purpose of this study is to provide the Dietary Supplement Education Alliance (DSEA) and its members with updates to earlier analyses of the health benefits and cost effects of daily use of selected supplements. We used Congressional Budget Office cost accounting methodology to determine the economic impact on Medicare and others that could result from daily supplement use by people with Medicare and women of childbearing age. Four supplement/disease combinations were examined and earlier estimates of cost effects were updated. 1,2 These four supplements had been selected because the rigor and validity of the available scientific literature met critical evidentiary thresholds. The supplements are: Calcium with Vitamin D Folic Acid Omega-3 Fatty Acids Lutein with Zeaxanthin In our assessment of the quality of the research and the strength of the existing evidence, the underlying criterion for use in developing valid cost estimates was the extent to which the study s design and conduct can be shown to protect against systematic bias, nonsystematic bias, and inferential error. 3 1 DaVanzo JE, Dobson A, et al. (2004) A Study of the Health and Cost Effects of Five Dietary Supplements. Falls Church, VA: The Lewin Group. 2 DaVanzo JE, Dobson A, et al. (2006) An Evidence-Based Study of the Role of Dietary Supplements in Helping Seniors Maintain their Independence. Falls Church, VA: The Lewin Group. 3 Carey T. (2002). Quality of Research and the Strength of Scientific Evidence. Presentation sponsored by the Agency for Healthcare Research and Quality (AHRQ) Evidence-based Practice Center Program. Dobson DaVanzo i

4 Key Study Findings Calcium with Vitamin D: There is considerable evidence supporting the association between taking 1200 mg of calcium with vitamin D, reduced bone loss, and fewer hip fractures in elderly people. This results in not only a reduction in the cost of hospitalization to repair the hip, but also a reduction in the post-acute care in a skilled nursing facility and associated physician costs. We estimated that cost offsets (savings) could result from the potential avoidance of approximately 776,000 hospitalizations for hip fractures over five years, and avoidance of admissions to skilled nursing facilities for some proportion of these. The five year ( ) estimated cost effect to Medicare associated with avoided hip fractures is approximately $16.1 billion. See Table 1. Omega-3 fatty acids: We estimate that over five years ( ), approximately 374,301 hospitalizations for coronary heart disease (CHD) could be avoided through daily use of 1800 mg. of omega-3 fatty acids. 4 The cost effect to Medicare resulting from reduced hospital and physician expenditures could be approximately $3.2 billion. See Table 2. Lutein with Zeaxanthin: Because the loss of central vision is widely considered to be a determinant of dependency in over-65 adults, our cost estimate is comprised of potential avoidance of the transition to dependence associated with the relative risk of AMD. Avoidance over five years ( ) of a transition to dependence by 190,927 individuals taking 6-10 mg. of lutein with zeaxanthin daily could result in $3.6 billion in savings. See Table 3. Folic Acid: Of the approximately 44 million American women of childbearing age who are currently not taking folic acid, if only 11.3 million began taking 400 mcg. of folic acid on a daily basis periconceptually, as many as 600 babies could be born without neural tube defects (NTDs), saving as much as $344,700,000 in lifetime healthcare costs for these children. Over five years, ( ) approximately $1.4 billion could potentially be saved. See Table 4. Table 1: Costs and Potential Savings from a Reduction in Hip Fractures Gross Cost of Providing Daily Calcium with Vitamin D for Adults over Age-65 (in millions) Total cost of daily calcium with vitamin D for new users (adults over age-65 not currently taking supplement) Cost offset due to avoided hospitalizations, SNF stays, and physician charges $759 $842 $931 $1,027 $1,130 $4,688 Cost Offsets from Reduced Hip Fractures $3,562 $3,737 $3,919 $4,109 $$4,307 $19,634 Net costs (savings) $2,802 $2,895 $2,989 $3,083 $3,178 $14,946 Premium offset (in millions) $190 $210 $233 $257 $283 $1,172 Potential Savings to Medicare Total cost offsets (savings) $2,992 $3,105 $3,221 $3,339 $3,460 $16,118 4 The Food and Drug Administration (FDA) recommends that consumers not exceed 3,000 mg. per day of EPA and DHA omega-3 fatty acids, with no more than 2000 mg. per day from a supplement. Dobson DaVanzo ii

5 Table 2: Costs and Potential Savings from a Reduction in CHD Gross Cost of Providing Daily Omega-3 for Adults over Age-65 (in millions) Total cost of daily omega-3 for new users (adults over age-65 not currently taking supplement) Cost offset due to avoided hospitalizations and physician charges $350 $411 $477 $555 $636 $2,429 Cost Offsets from Reduced CHD $679 $825 $982 $1,152 $1,337 $4,976 Net costs (savings) $329 $415 $505 $598 $702 $2,547 Premium offset (in millions) $88 $103 $119 $139 $159 $607 Potential Savings to Medicare Total cost offsets (savings) $417 $517 $624 $736 $860 $3,154 *Source: Dobson DaVanzo Table 3: Costs and Potential Savings from a Reduction in AMD Gross Cost of Providing Daily Lutein with Zeaxanthin for Adults over Age-65 (in millions) $111 $139 $174 $217 $270 $911 Total cost of daily lutein with zeaxanthin for new users (adults over age-65 not currently taking supplement) Cost offset due to avoided transitions to dependency in home or SNF Cost Offsets from Reduced AMD $559 $678 $823 $998 $1,210 $4,267 Net costs (savings) $447 $539 $649 $781 $941 $3,357 Premium offset to (in millions) $28 $35 $43 $54 $68 $228 Potential Savings Total cost offsets (savings) $475 $573 $692 $836 $1,008 $3,584 *Source: Dobson DaVanzo Table 4: Costs and Potential Savings from a Reduction in NTDs Gross Cost of Providing Daily Folic Acid for Women of Childbearing Age (in millions) Total cost of daily folic acid for new users (women of childbearing age not currently taking supplement) $88 $92 $96 $101 $105 $482 Cost Offsets from Reduced NTDs Cost offset due to avoided lifetime cost of NTDs $353 $362 $371 $381 $391 $1,857 Net costs (savings) $265 $270 $275 $280 $286 $1,375 *Source: Dobson DaVanzo Dobson DaVanzo iii

6 Introduction The purpose of this study is to provide the Dietary Supplement Education Alliance (DSEA) and its members with updates to earlier analyses of the health benefits and associated cost effects of daily use of four selected supplements. A number of age-related diseases contribute significantly to whether an older person can maintain his or her independence, including coronary heart disease (CHD), osteoporosis, and age-related macular degeneration (AMD). Over one third of adults over age-65 experience falls each year, many of which result in a hip fracture. Hip fractures can be devastating, as they cause the greatest number of deaths and lead to the most severe health problems of any age-related diseases. In addition, they are extremely costly, as they require a hospital stay to repair the hip, with 50% of patients going to a skilled nursing home (or inpatient rehabilitation facility) for a stay that lasts anywhere from a few weeks to over three months. Up to 25% of community dwelling older adults who sustain hip fractures remain institutionalized for a whole year. 5 AMD affects activities central to independent living, which include reading, driving, and writing, which are considerably impaired through the loss of central vision, for example. AMD is the leading cause of irreversible blindness in persons over age 65. Research studies have shown that preventive measures, such as smoking avoidance and good nutrition, practiced throughout one s life can help reduce the risk of these conditions, thereby avoiding or delaying a loss of independence or the onset of functional disability. Visual impairment is one of the top four reasons for loss of independence. Furthermore, eighteen percent of all hip fractures among seniors have been attributed to age-related vision loss. The transition to greater dependency, whether by getting more help at home or through moving to a nursing facility, places considerable financial burden on the older person, his or her family, and the health care system. 2 Studies have shown that there are additional medical and other costs that occur in the year when an older person makes the transition to dependency at home or moves to a nursing facility. The prevention (or even delay) in the loss of independence has implications both economically and also for the individual s quality of life. We used Congressional Budget Office cost accounting methodology to determine the economic impact on Medicare and others that could result from daily supplement use. Four supplement/disease combinations were examined and earlier estimates of cost effects were 5 Magaziner J, Hawkes W, Hebel JR, et al. (2000). Recovery from hip fracture by eight areas of function. Journal of Gerontology: Medical Sciences. 55A(9): M Dobson DaVanzo 1

7 updated. 6,7 These supplements had been selected because the rigor and validity of the available scientific literature met critical evidentiary thresholds. The supplements are: Calcium with Vitamin D Folic Acid Omega-3 Fatty Acids Lutein with Zeaxanthin We had found significant scientific agreement concerning the improvement in health status and reduction in health care and other expenditures for calcium with Vitamin D and folic acid in the first study. We found a well-developed literature concerning the role of omega-3 fatty acids in reducing the risk of coronary events (myocardial infarction and ischemia) and atherosclerosis, including a comprehensive review of the literature by the Agency for Healthcare Research and Quality 8 in the second study. 9 The literature is less well-developed for lutein, although studies date back fifteen years. Currently clinical trials are being conducted at the National Institutes of Health to isolate the effects of lutein on macular pigment density and determine the optimal dosage. Additionally, the Agence Francaise de Securite Sanitaire des Aliments, which is a French organization comparable to the U.S. Food and Drug Agency (FDA), evaluated the scientific merit of the health claims that have been made concerning lutein s protective effect on the lens and retina. Their evaluation found that the assertion that lutein contributes to the protection of the retina and lens from oxidation is substantiated by the scientific evidence. 10 Study Methodology This study was conducted for the purpose of updating previous estimates developed by the author of the potential savings that could be achieved if people with Medicare and women of childbearing age used specified dietary supplements. We used a Congressional Budget Office (CBO) scoring-like methodology for the studies. The CBO annual projections of federal budget revenues and spending which remain constant during the study period serve as a baseline. We employed methodology that is consistent with that used in earlier studies to obtain the net costs. 11 The estimates that were developed for calcium and omega-3 represent the likely impact on the federal budget (Medicare program) from some proportion of seniors taking the 6 DaVanzo JE, Dobson A, et al. (2004) A Study of the Health and Cost Effects of Five Dietary Supplements. Falls Church, VA: The Lewin Group. 7 DaVanzo JE, Dobson A, et al. (2006) An Evidence-Based Study of the Role of Dietary Supplements in Helping Seniors Maintain their Independence. Falls Church, VA: The Lewin Group. 8 Agency for Healthcare Research and Quality (2004). Health Effects of Omega-3 Fatty Acids on Cardiovascular Disease. (Publication No. 04-E009-2). 9 For this study, we updated the earlier literature reviews. 10 Agence Francaise de Securite Sanitaire des Aliments. Maisons-Alfort, le 23 janvier Dr. DaVanzo was the lead author of these reports while at The Lewin Group. Dobson DaVanzo 2

8 supplements at the recommended dosage on a daily basis. 12 The estimates for folic acid and lutein represent the likely impact to the U.S. economy more broadly, as they include not only health care but other societal costs, such as the costs of social support services. In the case of folic acid, the estimate is based upon 11.3 million women taking 400 mcg. on a daily basis. Approximately 44 million women in the U.S. are currently of childbearing age, and although folic acid supplements have been proven to be the best and most reliable method of reducing the probability of NTDs, two thirds of women of childbearing age fail to do this. Thus one of every thousand babies is born in the U.S. with NTD. 13 The estimates are conservative, as they only take into account the behavior of a small proportion of the at-risk individuals. In the case of lutein with zeaxanthin, the estimates presented this study are based on the behavior of only 191,000 seniors, out of nearly 20 million who report having symptoms of AMD. Identifying the Study Population It should be noted that about 55% of the 37 million aged Medicare beneficiaries are currently under treatment for at least one chronic disease. We started with projections of aged Medicare beneficiaries between 2008 through We then extracted the individuals who are currently taking the supplement based upon our analyses of 2000 National Health and Nutrition Survey (NHANES) data to leave the individuals who are potential new users. A ratio that is key to the determination of the number of potential new users who begin taking the supplement and could potentially benefit is the take up rate. The base take up rate for each of the supplements was determined using NHANES, information from the Nutrition Business Journal, and rates found in the literature for newly introduced Medicare benefits (such as mammograms, flu shots, and pneumonia shots). The rate was then projected through the period of This rate is applied to the potential new users to determine the individuals in the study population. For this study update, these rates were adjusted to reflect any new research and rolled forward based upon the annual projected growth in aged Medicare beneficiaries obtained from the Trustees report. Cost Estimation The conceptual framework for our study has the following three segments. 1. First, we determine if the supplement produces a physiological effect as shown by a change in biological markers; 12 The recommended dose of calcium with Vitamin D is 1200 mg. per day, omega-3 is 1800 mg. per day, lutein with zeaxanthin is 6-10 mcg. per day, and folic acid is 400 mcg. per day. 13 Testimony of Dr. Jeffrey Blumberg before the Subcommittee on Human Rights and Wellness Committee on Government Reform for the U.S. House of Representatives. September 22, Medicare Combined Board of Trustees Annual Report. Dobson DaVanzo 3

9 2. Then, we ask if the physiological effect creates a change in health status; 3. And finally, we determine if the change in health status is associated with a decrease in health care expenditures. In order to consider costing the supplement, there has to be evidence in the form of clinical trials and other well-designed research studies that can support each of the above questions. Gross Cost. To determine gross cost, we started with the size of the at-risk population using data from the Medicare Trustees Report (rates, hospitalization, new beneficiaries, costs, etc). To find the cost of the supplement, we created a simple average across products, both generic and branded. We then applied the take up rate to obtain a gross cost. Benefit. The benefits accrue from avoided health care by the segment of the at-risk population that would have achieved the therapeutic effect (e.g., hospitalizations for hip fractures for users of calcium with Vitamin D). We considered the number of new users who take the supplement as directed and achieve the full therapeutic effect, such as those involved in the Veterans Administration s Lutein studies. The benefit is either the reduction in Medicare spending (such as hospitalizations, skilled nursing facility admissions, physician visits) or the health care and societal savings associated with avoiding either NTDs in the case of folic acid, or the single year expenses associated with the transition to dependency because of a loss of central vision. 15 Net Costs. The net costs over the five year period ( ) were derived by subtracting the benefits from the costs. For studies of potential benefits to the Medicare program, the cost estimation takes into account a 20% premium effect. To estimate the impact on a federal program (e.g., Medicare), we then compare the net costs to baseline spending by Medicare on the services. In cases where the net costs are negative, the negative costs represent savings. Study Findings A clear need for focusing time and money in the area of dietary supplements is supported by two key findings in the field. Surveys of dietary intake and physical and laboratory data reveal that the typical American diet does not always provide a sufficient level of vitamins and/or minerals (Dept. of Health and Human Services, HHS). In addition, the Nutrition and Your Health: Dietary Guidelines for Americans acknowledges that some Americans may need a vitamin and/or mineral supplement to meet specific nutrient needs. (Department of Agriculture, USDA). 15 Guralnik JM, Alecxih LM, Branch LB, Wiener JM. (2002). Medical and long-term care costs when older persons become more dependent. Amer Journal of Public Health, 92(8): Dobson DaVanzo 4

10 Previous studies sponsored by DSEA found that existing evidence-based research indicated positive health effects: Calcium and vitamin D reduce bone loss and/or osteoporosis, especially among postmenopausal women Folic acid reduces the occurrence of neural tube defects (NTDs) if women consume the supplement before they become pregnant, and continue to do so in the early stages of pregnancy Omega-3 fatty acids reduce the relative risk of coronary heart disease (CHD) Lutein with zeaxanthin reduces the risk of age-related macular degeneration (AMD) Calcium with Vitamin D: In 2003, there were 309,500 hospitalizations for hip fracture among older Americans. 16 We found considerable evidence supporting the association between taking 1200 mg of calcium with vitamin D, reduced bone loss, and fewer hip fractures in elderly people. This results not only in a reduction in the cost of hospitalization to repair the hip, but also a reduction in the post-acute care in a skilled nursing facility and associated physician costs. We estimated that cost offsets could result from the potential avoidance of approximately 776,000 hospitalizations for hip fractures over five years, and avoidance of admissions to skilled nursing facilities for some proportion of these (approximately 25%). The five year ( ) estimated cost effect to Medicare associated with avoided hip fractures is approximately $16.1 billion. See Table 1. Table 1: Costs and Potential Savings from a Reduction in Hip Fractures Gross Cost of Providing Daily Calcium with Vitamin D for Adults over Age-65 (in millions) Total cost of daily calcium with vitamin D for new users (adults over age-65 not currently taking supplement) Cost offset due to avoided hospitalizations, SNF stays, and physician charges $759 $842 $931 $1,027 $1,130 $4,688 Cost Offsets from Reduced Hip Fractures $3,562 $3,737 $3,919 $4,109 $$4,307 $19,634 Net costs (savings) $2,802 $2,895 $2,989 $3,083 $3,178 $14,946 Premium offset (in millions) $190 $210 $233 $257 $283 $1,172 Potential Savings to Medicare Total cost offsets (savings) $2,992 $3,105 $3,221 $3,339 $3,460 $16,118 *Source: Dobson DaVanzo Omega-3 fatty acids: There are approximately 1.5 million hospital discharges of aged Medicare beneficiaries each year for coronary heart disease (CHD), approximately 7.6 million over five 16 National Center for Health Statistics, Dobson DaVanzo 5

11 years ( ). Based on the literature, we assumed a 15% reduction in CHD among the subset of individuals who began taking omega-3 fatty acids over the period (approximately 54,000 in 2008). Based upon the recent publicity of the health benefits of omega-3, we assumed a 25% take up rate in 2008 ramping up to 41% of potential new users in We estimate that over five years approximately 374,301 hospitalizations for coronary heart disease (CHD) could be avoided through daily use of 1800 mg. 17 The cost effect to Medicare resulting from reduced hospital and physician expenditures could be approximately $3.2 billion. See Table 2. Table 2: Costs and Potential Savings from a Reduction in CHD Gross Cost of Providing Daily Omega-3 for Adults over Age-65 (in millions) Total cost of daily omega-3 for new users (adults over age-65 not currently taking supplement) Cost offset due to avoided hospitalizations and physician charges $350 $411 $477 $555 $636 $2,429 Cost Offsets from Reduced CHD $679 $825 $982 $1,152 $1,337 $4,976 Net costs (savings) $329 $415 $505 $598 $702 $2,547 Premium offset (in millions) $88 $103 $119 $139 $159 $607 Potential Savings to Medicare Total cost offsets (savings) $417 $517 $624 $736 $860 $3,154 *Source: Dobson DaVanzo Lutein with Zeaxanthin: Because the loss of central vision is widely considered to be a determinant of dependency in over-65 adults, the cost estimate is comprised of potential avoidance of the transition to dependence associated with the relative risk of AMD. We assumed a 10% take up rate in 2008, ramping up to a 23% rate in We further assumed (based on the literature) that 39% of individuals would experience increased macular pigment density and 43% of those individuals would experience a reduced risk of AMD, or about 500,000 per year. About 1.1% of new individuals require dependent care in a nursing facility and 3.3% in the community each year or about 25,000 individuals in Avoidance over five years ( ) of a transition to dependence by 190,927 individuals taking 6-10 mg. of lutein with zeaxanthin daily could result in $3.6 billion in savings. See Table 3 below. 17 The Food and Drug Administration (FDA) recommends that consumers not exceed 3,000 mg. per day of EPA and DHA omega-3 fatty acids, with no more than 2000 mg. per day from a supplement. Dobson DaVanzo 6

12 Table 3: Costs and Potential Savings from a Reduction in AMD Gross Cost of Providing Daily Lutein with Zeaxanthin for Adults over Age-65 (in millions) $111 $139 $174 $217 $270 $911 Total cost of daily lutein with zeaxanthin for new users (adults over age-65 not currently taking supplement) Cost offset due to avoided transitions to dependency in home or SNF Cost Offsets from Reduced AMD $559 $678 $823 $998 $1,210 $4,267 Net costs (savings) $447 $539 $649 $781 $941 $3,357 Premium offset to (in millions) $28 $35 $43 $54 $68 $228 Potential Savings Total cost offsets (savings) $475 $573 $692 $836 $1,008 $3,584 *Source: Dobson DaVanzo Folic Acid: Of the approximately 44 million American women of childbearing age who are currently not taking folic acid, if only 11.3 million began taking 400 mcg. of folic acid on a daily basis periconceptually, as many as 600 babies could be born without neural tube defects (NTDs), saving as much as $344,700,000 in lifetime healthcare costs for these children. Over five years, ( ) approximately $1.4 billion could potentially be saved. See Table 4. Table 4: Costs and Potential Savings from a Reduction in NTDs Gross Cost of Providing Daily Folic Acid for Women of Childbearing Age (in millions) Total cost of daily folic acid for new users (women of childbearing age not currently taking supplement) $88 $92 $96 $101 $105 $482 Cost Offsets from Reduced NTDs Cost offset due to avoided lifetime cost of NTDs $353 $362 $371 $381 $391 $1,857 Net costs (savings) $265 $270 $275 $280 $286 $1,375 Conclusions Our updated study of the four selected supplements indicates an increase in potential savings over the five year period, from our earlier studies. Taking the four estimates together, we found the potential of about $5 billion more savings than we found when we combined the results of the two earlier studies (from over $19 billion combined savings to over $24 billion in combined savings). Dobson DaVanzo 7

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