The Value of OTC Medicines to the U.S. Healthcare System: A Case Study on Smoking Cessation

Executive Summary

NRT use increases the rate of quitting by as much as 50-70 percent.¹ And OTC availability of NRT led to over 400,000 more quit attempts and a 152 percent increase in NRT-assisted quit attempts the first year following the prescription-to-OTC switch of these medicines.² More quitting leads to longer, healthier, more productive lives, saving billions in healthcare costs, and less lost productivity.

Using a short-term approach, we estimate direct medical care savings via cessation with OTC NRT at $1.3 billion per year in direct medical care. Literature further suggests a former smoker compared to a current smoker provides a productivity gain of approximately $1,300 to $1,800 per employee per year.³ About 12 months of non-smoking is linked to risk reduction in heart disease, cancer, and respiratory diseases.

IRI and CHPA Value Study in Context

On behalf of the Consumer Healthcare Products Association (CHPA), earlier this year Information Resources, Inc. (IRI) completed a study on the value of OTC medicines to the U.S. healthcare system.⁴ The study and accompanying white paper calculated the value of nine major categories of OTC medicines based on the difference in cost between today’s scenario in which OTC medicines are widely available, and a hypothetical scenario in which they are not. In the latter scenario, many Americans would visit healthcare professionals and seek prescription or alternative treatments, or not seek treatment at all. The study concluded this shift would cost the healthcare system $146 billion each year. Alternatively stated, each dollar spent on OTC medicines saves over $7 for the U.S. healthcare system. OTC smoking cessation medicines account for $1.6 billion of these direct system savings based on survey methodology to calculate what would happen without OTCs. An alternative way to look at value is to more look at the savings in expenditure due to smoking cessation with nicotine replacement therapies as they’re used in market today.

Costs of Smoking

The costs of smoking are clear: Researchers estimate the proportion of healthcare expenditure attributable to smoking in the U.S. ranges between 6 percent and 18 percent across individual states.⁵ For most countries around the world, smoking-attributable costs represent the largest single expenditure in total healthcare costs.⁶

Beyond direct healthcare costs, tobacco-related illness and premature mortality impose an economic productivity costs because of sick workers and premature deaths during working years.⁷ For instance, U.S. smokers are absent from work approximately 6.5 more day than non-smokers.⁸

Gains Through Smoking Reduction

On the other side of the equation are lower costs associated with smoking cessation through reduced costs in direct medical care – savings in expenditure due to smoking cessation with OTC nicotine replacement therapies – and in indirect cost savings related to productivity. For the annual direct medical care savings from smoking cessation with OTC NRT, IRI estimated $1.3 billion in 2018 using the following method⁹:

Number of NRT consumers: 5.2 million ⇒ Number of consumers able to quit smoking using NRT (at 5.5% — lowest end of range): 286,000 ⇒ Annual smoking attributable expenditures on direct medical care:
$4,656 per person per year ⇒ Annual direct medical care savings via OTC NRT: $1.3 billion

We emphasize this $1.3 billion estimate uses the lowest end of the quit range from the 2016 CDC report. At a higher end of the range, such as 8 percent, the estimate would be just under $2 billion.

Beyond direct medical care savings are productivity gains. For productivity, researchers have concluded current smokers had significantly greater absenteeism and indirect costs compared with former smokers, independent of the time since they quit.¹⁰ In dollar terms, the annual total productivity costs for current smokers were $1,328, $1,560, and $1,840 higher than for those who quit 0 to 4 years, 5 to 10 years, and more than or equal to 11 years prior, respectively.¹¹ Extrapolating the Baker, et al., findings to IRI’s estimation of quitters using OTC NRT, a mid-point annual productivity gain means OTC NRT provides an annual productivity value of approximately $450 million.¹²

Unquantified are the health gains of quitting smoking to the smokers themselves: About 12 months of non-smoking is linked to risk reduction in heart disease, cancer, and respiratory diseases.¹³

The Path to Quitting is Complex, But NRT Access Helps

With the enormous burden of smoking on productivity and healthcare costs, it is clear society has an interest in helping smokers quit. Yet while quitting smoking provides the greatest personal and public health benefit, it is evident that smokers or, more broadly, tobacco users, aren’t all the same. The path to quit may be shorter or longer. It may be one of abstinence or relapse with multiple attempts. It may be one of limiting exposure, including steps. The fact that an average smoker takes five to seven quit attempts before success only underscores how complex this path can be.¹³

OTC NRT medicines are certainly not the only tool to help smokers on the path to quitting, but they do have a role. For instance, only 3-7 percent of smokers who attempt to stop smoking on will power alone are still abstinent after 1 year.¹⁵ In contrast, a multi-country study found those who reported using an approved smoking cessation medicine (prescription or OTC) were more likely to maintain 6-month continuous abstinence from smoking.¹⁶ Another example comes from a meta-analysis which concluded that NRT use increases the rate of quitting by as much as 50-70 percent.¹⁷ And OTC access to safe and effective medicines including NRT means that aids to stop smoking are at least as accessible as those that create nicotine addiction. That leads to a demonstrated a public health gain: The OTC availability of NRT led to over 400,000 more quit attempts over per year, and a 152 percent increase in NRT-assisted quit attempts the first year following the prescription-to-OTC switch.¹⁸ That’s longer, healthier, more productive lives.

Sources

1. LF Stead, et al., Nicotine replacement therapy for smoking cessation, Cochrane Database of Systemic Reviews, issue 11 (2012).
2. Theodore Keeler, et al., The benefits of switching smoking cessation drugs to over-the-counter status, 11 Health Economics 389 (2002); Saul Shiffman, et al., Public health benefit of over-the-counter nicotine medications, 6 Tobacco Control 306 (1997).
3. Christine Baker, et al., Smoking cessation is associated with lower indirect costs, 60 Journal of Occupational and Environmental Medicine 490 (June 2018).
4. IRI, “Value of OTC Medicines to the U.S. Healthcare System,” March 2019, available at overthecountervalue.org
5. Victor Ekpu, Abraham Brown, The economic impact of smoking and reducing smoking prevalence: a review of evidence, 8 Tobacco Use Insights (2015).
6. Id.
7. Id.
8. Id.
9. IRI, supra., in turn citing IRI/NCP consumer survey, December 2018, for number of consumers; the lower end of quit rate range from Centers for Disease Control and Prevention (CDC), Smoking & Tobacco Use, 2016; and using CDC, 2016, for annual direct medical care per person per year cost estimation.
10. Christine Baker, et al., Smoking cessation is associated with lower indirect costs, 60 Journal of Occupational and Environmental Medicine 490 (June 2018).
11. Id.
12. IRI, supra, for the estimation of 286,000 consumers able to quit per year multiplied by the average of the three Baker, et al., annual productivity estimations.
13. Id.
14. J. Jones J, Smoking habits stable; most would like to quit. Gallup News Services, 2006, at http://www.gallup.com/poll/23791/smoking-habits-stable-most-would-like-quit.aspx .
15. TL Feenstrat, et al., Cost-effectiveness of face-to-face smoking cessation interventions: a dynamic modeling study, 8 Value Health 178 (2005).
16. Karin Kasza, et al., Effectiveness of stop-smoking medications: findings from the International Tobacco four country survey, Addiction (2012).
17. Stead, supra.
18. Keeler; supra; Shiffman, supra.