Improved Diabetes Management Could Save $72 Billion in Next Decade According to New Data Presented at the American Diabetes Association Annual Meeting.

MINNEAPOLIS -- U.S. economic analysis projects financial impact of improved diabetes management; related Swiss study demonstrates cost effectiveness of insulin pump therapy

Medtronic, Inc. (NYSE:MDT) today reported results of a health economic analysis that predicts the U.S. economy could save up to $72 billion in medical expenses and other costs if Americans with diabetes kept their blood sugar (glucose) levels in line with current treatment guidelines. Data from the Medtronic-supported study were presented at the 65th annual Scientific Sessions of the American Diabetes Association.

The predictive health economic analysis showed that lowering A1C to levels recommended by the American Diabetes Association (ADA) and the American Association of Clinical Endocrinology (AACE) in Americans with type 1 and type 2 diabetes would save between $35 and $50 billion in direct medical costs, such as hospitalizations, over a 10-year period. When indirect cost savings were included, the total savings would increase to between $50 and $72 billion. Indirect costs of diabetes include lost work time, premature mortality and disability.

An A1C test measures patients' blood sugar control over a three-month period and is a widely accepted indicator of how well diabetes is controlled. The ADA and AACE recommend that diabetes patients maintain A1C levels below 7 percent and 6.5 percent, respectively. Elevated A1C levels are associated with an increased risk of diabetes complications. Proper control of A1C levels is important because for every 1 percent reduction in A1C, diabetes complication rates drop by more than 25 percent, according to a study published in Diabetes 2001: Vital Stats. Serious complications of diabetes include coma, blindness, impotence, kidney failure, amputation and heart disease.

The U.S. healthcare savings data came from a predictive analysis that is part of the CORE (Center for Outcomes Research) Diabetes Model - a multi-national health economic model that projects costs and outcomes for diabetes patients based upon data from major clinical and epidemiological studies from published sources. The peer-reviewed CORE Diabetes Model, validated with 66 comparisons from published studies, estimated clinical outcomes and costs over 10 years by projecting the impact of reducing A1C levels to 7 percent and 6.5 percent in Americans with diabetes.

"Tighter control of A1C will make an enormous difference in the life of diabetes patients, reducing the risk of the severe, life-altering and sometimes fatal complications of the disease," said Michael E. Minshall, MPH, director of CORE-USA, LLC. "And, as dramatically demonstrated by this study, improving the blood sugar control of diabetes patients in the United States has the potential to save billions of dollars." CORE is a contract research company based in Switzerland and the United States that specializes in disease modeling, health economic analysis and medical writing.

The estimated annual direct and indirect healthcare cost of diabetes and its complications is currently more than $132 billion in the United States, according to a study published in 2003 by the American Diabetes Association (Diabetes Care, 2003; 26(3):917-932). More than 18 million Americans are estimated to have diabetes, with an approximately 5.2 million undiagnosed according to the Centers for Disease Control and Prevention. Diabetes is the sixth-leading cause of death in the United States. Type 1 diabetes accounts for about 10 percent of total diabetes cases, and type 2 diabetes for the remaining 90 percent. In type 1 diabetes, the pancreas does not produce insulin, which is needed to control blood glucose. In type 2 diabetes, the body is unable to make enough, or properly use, insulin.

Swiss Economic Study Also Presented at ADA

Another CORE Diabetes Model analysis based on Swiss data, also presented at the ADA meeting, demonstrated that insulin pump therapy extends life and is cost effective for treating type 1 diabetes compared to multiple daily injections (MDI) of insulin. The study projected that pump therapy would increase life expectancy by approximately 10 months (0.87 years on a discounted basis) compared to MDI (based on mean life expectancy). Moreover, the lifetime treatment costs of complications, such as vision loss, renal disease and vascular disease, were CHF 10,327 lower for pump therapy as compared to MDI (calculated in Swiss francs; approximately $8,400). The incremental cost effectiveness ratio (ICER) for pump therapy compared to MDI was CHF 22,444 (approximately $18,300) per life year saved, which falls within range of accepted values in many countries around the world. The ICER is a common methodology used to determine whether a new medical intervention provides economic value and is based on the incremental difference in costs and life expectancy between two treatment regimens.

How Pump Therapy Helps Improve A1C Control

Insulin pump therapy is the most advanced method for precise and adjustable insulin delivery, and has been proven to help patients lower their A1C levels. An insulin pump is a small pager-size device that delivers insulin around the clock, much like a healthy pancreas. Patients can also deliver insulin on demand at the touch of a few buttons. Unlike injection therapy, pump users can program their pump to deliver insulin at varying rates to meet their changing insulin needs throughout the day and overnight. Many patients experience improved quality of life with pump therapy, ridding themselves of multiple injections, strict meal schedules and rigid sleep patterns associated with injection therapy.

CORE Diabetes Model

The CORE Diabetes Model provides an insight into implementing diabetes treatment guidelines that would otherwise require 20 to 30 years in a clinical trial setting before results would be available. Computer-simulation models allow the projection of short-term data from clinical trials to evaluate clinical outcomes and costs over the long term, providing information that is often unavailable or otherwise difficult to collect. Patients with chronic diseases often need to be followed for a long period of time (more than 5 years) before the effectiveness of disease management strategies can be adequately evaluated. Modeling provides an early estimate of financial impact without having the added expense and burden of conducting an epidemiological or clinical study. Data from the Diabetes Control and Complications Trial were used to set the baseline typical A1C level for the theoretical type 1 diabetes cohort, and data from the National Center for Health Statistics were used to set the baseline typical A1C level for the type 2 diabetes cohort.

About Medtronic Diabetes

Medtronic Diabetes (www.minimed.com) is the world leader in pump therapy and continuous glucose monitoring. The company's products include external insulin pumps, related disposable products, and a continuous glucose monitoring system.

About Medtronic

Medtronic, Inc. (www.medtronic.com), headquartered in Minneapolis, is the world's leading medical technology company, providing lifelong solutions for people with chronic disease.

Any forward-looking statements are subject to risks and uncertainties such as those described in Medtronic's Annual Report on Form 10-K for the year ended April 30, 2004. Actual results may differ materially from anticipated results.