New Alzheimer’s Drug Will Cost Medicare Billions

By Yuval Rosenberg

Bipartisan Senate Group Reaches Infrastructure Deal

Republican senators involved in bipartisan infrastructure
talks said Thursday that they had reached agreement on a plan that
would spend a fraction of the roughly $4 trillion proposed by
President Joe Biden and pay for it without the tax increases Biden
has proposed.

The deal comes just days after the president ended stalled
talks with a separate group of GOP senators. The bipartisan group
of 10 senators did not detail its proposal, but it had reportedly
been considering a package totaling about $900 billion. Senators
familiar with the deal say that it calls for a total investment of
$1.2 trillion, including nearly $600 billion in new spending,
according to
The Hill. Both the total spending and new money
appear to be higher than under plans proposed by Republicans
negotiating with the White House — but lower than the funding Biden
had sought.

The details of the plan — and proposals for how to pay for it —
could also still face resistance from the White House or other
lawmakers.

"Among the ten of us there is a tentative agreement on a
framework but obviously there’s a long ways to go. I would not say
that we have the leaders on board or we have started negotiating
with the White House but I think having 10 senators come together
and reach an agreement on a framework is significant," Sen. Susan
Collins (R-ME), a member of the group, said, according to The
Hill.

Another member, Sen. Mitt Romney (R-UT), said the group was
still in the middle of the process: "We have a tentative agreement
on the pay-fors, yes, but that’s among the five Democrats and the
five Republicans. It has not been taken to our respective caucuses
or the White House so we’re in the middle of the process. We’re not
at the end of the process, not at the beginning but we’re in the
middle."

A gas tax increase: Among the pay-fors reportedly
included in the deal is the indexing of the gas tax to inflation.
The tax, 18.4 cents a gallon, has not been raised since 1993, but
the White House has objected to an increase, saying that it would
hit lower-income Americans. A gas-tax hike could violate Biden’s
pledge not to raise taxes on Americans making under $400,000 a
year. Some Democratic lawmakers also oppose the idea.

Sen. Bill Cassidy (R-LA), another member of the bipartisan
group, reportedly said that the emerging deal diverged from
Republican proposals presented to Biden in a way that could help
win the White House’s support — namely, that it includes energy
provisions the president wants. "We have an energy section in ours
that in my conversation with the president said he really wanted,"
he said.

The bottom line: It’s progress, but there’s still a long
way to go.

New Alzheimer’s Drug Set to Cost Medicare Billions — Despite a
Lack of Evidence It Works

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 noted.

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."

Biden Plan Would Extend Medicare Solvency by 14 Years:
Analysis

President Biden’s 2022 budget request includes a number of
proposed changes to the Medicare system, and a new analysis by the
Committee for a Responsible Federal Budget finds that one set of
policies contained in the request could extend the solvency of a
key Medicare trust fund by 14 years.

Under current law, the Medicare hospital insurance trust fund
— which finances Medicare Part A and is funded mainly
through payroll taxes and income taxes on Social Security benefits
— will be exhausted in five years. According to CRFB,
Biden’s proposal to increase revenues going into the fund would
push the date that the trust fund balance hits zero from 2026 to
2040.

However, CRFB cautions that much of the proposed improvement in
the trust fund’s balances comes from redirecting general revenues.
Under Biden’s proposal, about $430 billion from an expanded net
investment income tax (NIIT) would be routed into the Medicare
hospital trust fund. CRFB says that there may be a problem with
double-counting those funds, though, since the Biden administration
has indicated that at least some of those same tax revenues would
be used to offset the cost of the president’s proposed American
Families Plan.

If those revenues were to be applied to other spending programs,
the extension of the Medicare trust fund under Biden’s plan would
be much more modest, with the Medicare-specific revenues and
savings extending the life of the trust fund to just 2029.


Read the full analysis here.

Tax Gap Will Total $7 Trillion Over Next Decade: Treasury

The gap between what Americans owe and what the IRS
collects is only getting bigger, with lost revenues totaling
trillions of dollars over the next 10 years, Deputy Assistant
Secretary Mark Mazur told lawmakers Thursday.

"Over the coming decade, the gross tax gap is projected to
total approximately $7 trillion, roughly 15 percent of all owed
taxes," Mazur said in prepared
remarks to the House Subcommittee on Oversight and
Subcommittee on Select Revenue Measures. "Tax non-compliance has
serious consequences for the majority of Americans who pay their
taxes in full each year. A larger tax gap generates the following
results: higher tax rates elsewhere in the system, lower revenues
to fund the nation’s fiscal priorities, or higher budget deficits
and larger amounts of federal debt. Extensive and persistent
non-compliance also undermines confidence in the fairness of our
tax system."

Mazur said years of underinvestment in the IRS has been a
major contributing factor to the growing tax gap, as audits
declined steeply in the wake of a 20% cut in funding over the last
decade. The $80 billion in increased funding requested by the Biden
administration for the agency over the next 10 years would reverse
that decline, Mazur said, and help generate hundreds of billions of
dollars in additional revenues. Over a longer time horizon
stretching to 2040, the full package of compliance measures
outlined by the White House could generate additional revenues of
more than $2 trillion, he noted.

Former Treasury chiefs provide support: Mazur’s
testimony comes on the heels of an
op-ed in The New York Times by five former
Treasury secretaries — Lawrence Summers, Robert Rubin, Henry
Paulson, Jacob Lew and Timothy Geithner — urging Congress to back
Biden’s plan to beef up the IRS.

"Reasonable people can disagree on the magnitude of
particular tax rate increases," the former secretaries wrote. "But
on this issue, all should agree, including members of Congress of
both parties: Giving the I.R.S. the tools it needs to improve
compliance will raise significant revenue and create a fairer, more
efficient system of tax administration."

US Budget Deficit Hits Record $2.1 Trillion in First Eight
Months of FY 2021

The federal budget deficit climbed to a record $2.1
trillion in the first eight months of fiscal year 2021, the
Treasury Department reported Thursday in its
monthly statement.

Federal revenues rose to a record high of $2.6 trillion
from October 2020 to May 2021, an increase of 29% from the same
period a year earlier, driven largely by a rise in individual and
corporate income tax receipts as the economy recovered, Treasury
said. Outlays also rose to a record of $4.7 trillion, up 20%,
driven by big increases in spending related to the Covid-19
pandemic, including direct relief payments, unemployment benefits
and support for small businesses.

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