How everyone on Medicare could end up paying for the expensive new Alzheimer’s drug

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Originally Posted: JUL 10, 21 10:07 ET

By Tami Luhby, CNN

(CNN) – Controversial new Alzheimer’s drug Aduhelm is priced at $ 56,000 a year for treatment – but Alzheimer’s patients won’t be the only ones to bear it the cost.

All of the roughly 60 million Medicare registrants will likely see their premiums increase to cover the new drug, experts say – and the burden will also fall on federal and state governments and, therefore, taxpayers.

Here’s how it should work: Since Aduhelm will be administered in doctors’ offices, it should be covered by Medicare Part B, not Part D, which pays for drugs bought at pharmacies. For new Part B drugs, Medicare typically reimburses 103% of the list price.

So if 500,000 of the estimated 6 million Americans with Alzheimer’s disease were prescribed Aduhelm, the total expenditure for one year would be almost $ 29 billion, which would far exceed the expenditure for any other drug. covered by Medicare Part B or Part D in 2019, according to the Kaiser Family Foundation. Total Medicare spending on all Part B drugs was $ 37 billion in 2019.

If one million patients were to receive the drug, the total spending would reach $ 57 billion, Kaiser said.

“We are concerned that if there are a significant number of Medicare beneficiaries who end up taking this drug, the premiums for all Medicare beneficiaries will increase, not just for the elderly taking the drug,” said Rachel Sachs, professor. law at the University of Washington. . “Especially for seniors on fixed incomes, a significant increase in premiums could be of concern.”

Medicare is expected to bear a large part of the cost since the vast majority of the estimated 6 million people affected by Alzheimer’s disease are seniors. The program typically covers drugs approved by the FDA, although it may impose certain limits.

The approval by the United States Food and Drug Administration last month of Aduhelm, manufactured by Biogen, raised many questions and concerns about the approval process, the drug’s effectiveness and its price. On Thursday, the FDA narrowed down the group of patients who can receive Aduhelm to those with mild cognitive impairment or milder stages of the disease. The next day, the agency’s acting commissioner requested an independent review of the approval.

The Centers for Medicare and Medicaid Services, which administer Medicare, are still reviewing the FDA approval of Aduhelm and all the evidence, Administrator Chiquita Brooks-LaSure said at an Axios event last week.

Those enrolled in traditional health insurance must bear 20% of the cost of most Part B drugs, which would translate into approximately $ 11,500 in out-of-pocket expenses for people prescribed Aduhelm. Most have additional policies, such as Medigap plans, but they might see their premiums increase to account for the liability of the insurers associated with the treatment. Those on Medicare Advantage could also have to shell out thousands of dollars in coinsurance.

Why Medicare Enrollers Will Be Affected

But all Medicare beneficiaries would likely see their annual premiums increase to cover some of the cost of the drug. While many factors remain unknown, a rough calculation shows that half a million patients prescribed Aduhelm could add about $ 97 per year to premiums, or about $ 8 per month, according to experts at Kaiser. If 1 million patients take the drug, premiums could increase by about $ 190 per year, or nearly $ 16 per month.

The standard Part B premium in 2021 is $ 148.50 per year, or just over $ 12 per month, although it increases to $ 505, or about $ 42 per month, for seniors. high income.

“It’s just for a drug,” said Juliette Cubanski, deputy director of the Medicare policy program at Kaiser, noting that the hike would come on top of the regular annual increase in premiums.

Health insurance premiums usually don’t increase as much every year, she continued.

As for the bulk of the annual cost of the Aduhelm, it would be borne by taxpayers, who fund Medicare Part B through general revenue.

Medicaid costs would also increase

Medicare is not the only government health program that would be affected. State and federal Medicaid spending would also increase.

Medicaid pays the Part B premium for about 12 million low-income Medicare beneficiaries and covers coinsurance for 9 million beneficiaries who participate in both programs, according to Kaiser.

Also, some people with early-stage Alzheimer’s disease may be enrolled in Medicaid, although there isn’t much data on this, said Rachel Dolan, senior policy analyst at the Kaiser’s Program. on Medicaid and the Uninsured. Much of the state’s spending goes to Medicaid, but the impact would depend on the number of Alzheimer’s patients living in the state.

Medicaid programs, which typically have to cover drugs approved by the FDA, have expressed concern about drugs the agency has approved in the past as part of its fast-track program.

“They fear paying for drugs that are approved without verified clinical benefit,” Dolan said.

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