Largest Medicare Price Increase Ever; Fingers Pointing at FDA Approved yet Unproven $56,000 Alzheimer Drug

It was just a few months ago when the FDA approved a new Alzheimer’s drug that

May not be effective
Could cost Americans and Medicare big bucks

Lo and behold, earlier this week, Medicare announced a substantial increase to their health care premiums.

Dubious $56,000 Alzheimer’s drug spurs largest Medicare price hike ever

The drug that could cost Medicare tens to hundreds of billions of dollars.

Seniors throughout the US will see a hefty increase to their health care premiums next year thanks in large part to Biogen’s Alzheimer’s drug, Aduhelm, which is priced at $56,000 per year and is not proven to be clearly effective at treating Alzheimer’s.

The Centers for Medicare & Medicaid Services (CMS) announced Friday that the standard monthly premium for Medicare Part B will rise from $148.50 in 2021 to $170.10 in 2022, an increase of $21.60 or roughly 14.5 percent. It is the largest increase ever in terms of dollars and among the largest percentage increases in recent years.

CMS officials said Friday that Aduhelm was responsible for about half of the rise in Part B premiums, according to the Associated Press. Though the CMS is still determining how it will cover Aduhelm under Part B, the agency said the prospect of paying for Aduhelm at all required “additional contingency reserves.”

“We must plan for the possibility of coverage for this high cost Alzheimer’s drug which could, if covered, result in significantly higher expenditures for the Medicare program,” the CMS said.

Generally, Medicare Part B covers medically necessary services, including doctors’ services and tests, such as lab tests, cancer screenings, diabetes screenings, and supplies. It also covers outpatient care, home health services, durable medical equipment—such as walkers—and some preventative services—such as flu shots—among other medical services.

Biogen did not immediately respond to a comment request from Ars.

Controversy

In November 2020, a committee of independent advisers for the Food and Drug Administration voted nearly unanimously against FDA approval for Aduhelm. The data did not indicate the drug is effective, the committee concluded. Ten of 11 committee members voted against approval while one voted “uncertain.”

But in June of this year, the FDA approved the drug anyway. Outside experts quickly called the approval “disgraceful,” and three experts on the FDA’s advisory committee resigned in protest. A watchdog organization called for the ouster of FDA officials involved in the decision, and an investigative media report suggested overly chummy relations between Biogen and FDA review staff. About a month after the approval, the FDA’s acting commissioner narrowed use of the drug and requested the Office of the Inspector General investigate the agency’s decision.

Meanwhile, Biogen had set the list price at $56,000 per year. Media analyses suggested that at that price, the drug could cost Medicare up to $334.5 billion per year, which is nearly half of the budget for the Department of Defense. A cost-effectiveness analysis by the nonprofit Institute for Clinical and Economic Review pegged a reasonable price for Aduhelm between $3,000 to $8,400 per year.

Money problems

The Medicare premium hike for 2022 is likely to fuel more frustration over Aduhelm and rekindle debate about Medicare price negotiation. In a statement Friday, Representative Frank Pallone Jr. (D-N.J.) said:

“Today’s announcement from CMS confirms the need for Congress to finally give Medicare the ability to negotiate lower prescription drug costs… Skyrocketing drug prices not only make it harder for seniors to afford the lifesaving drugs they need, but also drive up their health care premiums for doctors’ visits and outpatient care…. We simply cannot wait any longer to provide real relief to seniors.”

For now, the 2022 cost-of-living adjustments in seniors’ Social Security benefits will handily offset the Medicare Part B premium increase. It’s also still unclear just how many seniors will end up taking the drug. Amid all the controversy around Aduhelm’s effectiveness, serious side effects, and pricing, several high-profile medical providers, such as the Cleveland Clinic and large health insurance providers, have said they will not administer or cover the drug.

Uptake of Aduhelm has been slow. Stat news reported that just over 100 patients had received the drug in its first few months of availability. About 5.8 million Medicare-eligible adults have Alzheimer’s disease, and in 2017, about 2 million Medicare beneficiaries used an Alzheimer’s treatment covered by Medicare. But, last month, Biogen reported that Aduhelm brought in just $300,000 in revenue between July and September, far below expectations. The New York Times reported that Wall Street analysts had forecast that Aduhelm would bring in at least $12 million in the third quarter.

According to the Ars Technica article, it’s “still unclear just how many seniors will end up taking the drug”. However, earlier this summer, Aduhelm drug maker, Biogen was accused of offering a “cognitive test no one can pass”. So it sounds like at least Biogen is expecting a lot of takers. D’oh!