Alzheimer’s Drug Could Increase Part B Premiums for Everyone

A newly approved drug to slow the progression of Alzheimer’s disease is drawing criticism for it’s $56,000 price tag, especially given its lack of proven effectiveness.  Aduhelm stirred controversy when the Food and Drug Administration’s own expert advisory panel was nearly unanimous in opposing the drug’s approval due to mixed results in studies of effectiveness.

Now Medicare has launched a formal process to determine whether Aduhelm will be covered, after a widespread uproar spurred a Congressional investigation.  The final decision isn’t expected until next spring, although an initial ruling could come around January.  Medicare’s coverage process came on the same day that two House committees asked drug maker Biogen to turn over documents on how the drug was developed and priced, and on its dealings with government officials at the US Food and Drug Administration.

Patients and their families want to know if the medication will help slow the progression of cognitive decline, especially in view of the serious side effects it can cause, but doctors have no definitive answer yet.  The rate and progression of cognitive decline varies widely among people who have started experiencing memory and thinking problems.  Thus, it is difficult to quantify how much of a difference the drug would make for a given patient.

Senior advocates are concerned that all of Medicare’s 60 million beneficiaries will likely see their premiums for Medicare Part B, and Medigap supplements, rise significantly to cover this one new medication.  Because the drug is administered in a physician’s office, it would be covered under Medicare Part B, not part D plans which pay for drugs purchased from pharmacies.  Medicare typically reimburses doctors 103% of the list price of drugs administered in their office.

The non - partisan Kaiser Family Foundation estimated that, if 500,000 of the roughly 6 million Americans with Alzheimer’s are prescribed Aduhelm, total Medicare spending on this one drug, for one year, would be nearly $29 billion.  This would far exceed the spending on any other drug covered by Medicare Part B, or Part D, in 2019.  Medicare spending for all Part B drugs was $37 billion in 2019.  What’s more the estimated $29 billion does not include the cost of any associated care.  The drug can cause some people temporary brain swelling or small bleeding spots on the brain and requires pricey magnetic resonance imaging (MRI) scans to monitor treatment.

Many enrollees in traditional Medicare have purchased a supplemental Medigap policy that covers the out - of - pocket expenses of Part B.  Premiums for those policies could also rise as insurers anticipate higher outlays for costs associated with Aduhelm.  On the other hand, out - of - pocket costs would be the big cost issue for enrollees in Medicare Advantage plans.  According to experts at Kaiser Family Foundation, 500 thousand patients taking Aduhelm could add about $8 per month to the Medicare Part B premium, which in 2021 is $148.50 for most beneficiaries, to as much as $505 a month for higher income beneficiaries who pay a surtax on their premium.

When the Centers for Medicare and Medicaid Services establish the Part B premium for 2022, they could potentially factor in the expected costs for Aduhelm.  Part B premiums were already on track to be higher.  The Medicare Trustees recently estimated that Part B premiums would increase to $158.50 in 2022.


Source:  “New Alzheimer’s Drug Clouds Outlook For Medicare Premiums Next Year,” Mark Miller, Reuters, July 12, 2021.  “How Everyone On Medicare Could End Up Paying For The Pricey New Alzheimer’s Drug,” July 10, 2021.  “Medicare Evaluating Coverage for $56,000 Alzheimer’s Drug,” Ricardo Alonso Zaldivar, Matthew Perrone, The Associated Press, July 13, 2021.