The FDA approved the first new drug to treat Alzheimer’s in nearly 20 years in recent weeks, and it is a prime example of why our spending on healthcare is so unnecessarily high and not slowing down anytime soon. The new drug is Aduhelm, an infusion therapy developed by Biogen.
A panel of 11 scientists reviewed the research and science for the FDA, and 10 voted against approval of the new treatment, while one was undecided. In fact, three of the scientists have resigned over the approval. The FDA moved to approve Aduhelm despite the lack of evidence that it either cures or slows the progression of the Alzheimer’s and has given the company nine years to conduct a confirmatory trial.
What is the actual cost of this treatment? The drug price is set at a whopping $56,000/year, and the overall costs will be much higher. According to the Kaiser Family Foundation, when related costs are included (the testing to monitor for brain bleeds and other possible side effects, outpatient facilities and staff, etc.) the real price tag will be more like $100,000/year.
What is the cost to the individual? Copays will be as much as $11,500 – nearly 40% of the average income for a Medicare, enrollee according to the Kaiser Family Foundation.
How will this affect Medicare Part B premiums? As an infusion given in a provider’s office, administering Aduhelm will be covered by Medicare Part B. The current average premium for this coverage is just under $150/month. This will almost certainly have to be increased, so the impact will be widespread across Medicare enrollees.
What are the potential impacts to our overall healthcare spending? Biogen estimates that 1 million to 2 million Alzheimer’s patients match the patients studied in the clinical trials. Overall, we have approximately 6 million people who have Alzheimer’s in the U.S., and most are enrolled in Medicare. Interestingly, the FDA has approved the medication widely not just for those who are in the early stages of the disease with mild symptoms like those in the trial. If 1 million people are given this treatment, it could cost Medicare $56 billion annually. Medicare Part B spent $37 billion in total on drugs in 2019. Total outpatient Medicare drug spending with pharmacy prescriptions was $136 billion for 2019.
Biogen’s estimates of future sales are seemingly conservative. The company and other analysts are expecting $103 million in sales this year, about $1 billion in 2022 and $5 billion-plus in 2023.
When you factor in the incentives paid to prescribing physicians by Medicare ($3,360 for each prescription in this case), it seems we have a real problem on our hands.
The Centers for Medicare and Medicaid Services could decide not to cover Aduhelm, but if the past is any indicator this is not likely. Private insurers that provide Part B benefits could also place some limitations on the drug’s use. But, all things considered, It is clearly time for us to take a serious look at how we have allowed a fifth of our economy to get to this point.