The Food and Drug Administration’s decision this week to approve a new Alzheimer’s drug for the first time in nearly 20 years was highly anticipated — and highly questioned. It’s also likely to be highly costly for U.S. taxpayers, with a new analysis suggesting that Medicare could spend more on the new medication, Biogen’s Aduhelm (aducanumab), than on any other drug it covers.
The added costs are likely to result in broad-based increases in Medicare premiums, and patients prescribed the drug could also face copayments of $11,500 a year, the analysis by the Kaiser Family Foundation finds.
“Aduhelm may represent hope for Alzheimer’s patients and their families who have waited years for new treatments to come along, but that hope is likely to come at a high cost to Medicare, beneficiaries, and taxpayers,” the Kaiser analysis concludes.
A controversial approval: The approval for the Aduhelm came despite the objections of the FDA’s outside scientific advisers, who joined other experts in citing uncertain trial data and questioning the drug’s benefits in slowing the pace of the disease.
The cost of the drug — set by Biogen at $56,000 a year — only heightens the concerns surrounding it. “For its manufacturer, Biogen, the new drug is poised to be a blockbuster. For just about everyone else, it is likely to further inflate high U.S. health care costs,” The New York Times’s Rebecca Robbins and Pam Belluck wrote this week. “And that is despite the fact that there is not much evidence the drug actually works.”
The Institute for Clinical and Economic Review, which assesses the value of medicines, estimated that Aduhelm would be cost-effective only below $8,300, Robbins and Belluck note.
Facing ‘a substantial increase in Medicare spending’: The new analysis by the Kaiser Family Foundation details the potential costs to Medicare. “Alzheimer’s disease is estimated to affect about 6 million Americans, the vast majority of whom are age 65 and older and therefore eligible for Medicare,” the report explains. “It is hard to know exactly how many Medicare beneficiaries will take Aduhelm, but even a conservative estimate would lead to a substantial increase in Medicare spending.”
In 2017, nearly 2 million Medicare beneficiaries used Alzheimer’s treatments covered by the program’s prescription drug benefit in 2017, Kaiser says. If just a quarter of that group is prescribed Aduhelm, Medicare and patient spending on the drug could total $29 billion — “an amount that far exceeds spending on any other drug covered under Medicare Part B or Part D, based on 2019 spending,” Kaiser’s Juliette Cubanski and Tricia Neuman write. “To put this $29 billion amount in context, total Medicare spending for all Part B drugs was $37 billion in 2019.”
If 1 million Medicare beneficiaries get the drug, spending would top $57 billion a year — “far surpassing spending on all other Part B-covered drugs combined.”
Renewing the drug-pricing debate: Biogen has defended the drug’s pricing and said it won’t hike the price for four years. Chirfi Guindo, Biogen’s head of global product, said this week that the company priced Aduhelm at about a third the level of immunotherapy treatments for cancer. “So, we consider this to be a really responsible price and we consider this to be a price that is sustainable for the system,” he said, according to the Associated Press.
Some lawmakers and others vehemently disagree, and the drug’s pricing has renewed calls to allow Medicare to negotiate drug prices.
Bloomberg’s editorial board, for example, on Thursday cited the cost issue as one major reason the FDA’s approval was “perplexing and wrong” — and it echoed other critics in suggesting that the drug highlights the need for structural reforms to the U.S. health care system:
“It would be absurd to spend so much on a drug that remains essentially unproven. Yet that is what Medicare is poised to do. It’s forbidden to negotiate prices, and it is expected to pay for medicines the FDA approves unless a special exception is made. Both of those strictures should be changed. … And if, in addition, Medicare was generally under no obligation to buy drugs before full clinical trials were done, drugmakers would have a powerful incentive to conduct those trials as quickly as possible. In effect, the current arrangement allows high prices to be charged and collected until a merely promising drug is proven to be of no use.”