By Bob Herman
June 8, 2021
More than 90% of people with Alzheimer’s disease are 65 and older, which means Medicare (i.e., taxpayers) will shoulder the load for Aduhelm’s $56,000 annual list price.
Why it matters: Aduhelm could create massive strains on Medicare spending and could create financially ruinous prospects for patients and their families.
Background: Medicare Part B covers IV medications like Aduhelm that are administered in doctors’ offices, and pays 106% of its average sales price, which usually hovers around the retail list price set by the drug company.
If Medicare decides to cover the drug with no restrictions, it would pay almost $59,000 annually for a course of treatment. Biogen could easily fetch tens of billions of dollars every year if fewer than 10% of the 6 million Alzheimer’s patients get it.
Medicare patients have a 20% coinsurance rate on drugs after they meet their deductible, so some patients could have to pay more than $10,000 in extra out-of-pocket costs, according to Juliette Cubanski, a Medicare policy expert at the Kaiser Family Foundation.
What to watch for: Medicare could initiate a “coverage determination process,” which uses a drug’s clinical data to determine if the program should limit coverage.
Private health insurers, which sell Medicare Advantage plans, are also trying to grapple with how to pay for the drug.
A spokesperson for Humana, one of the largest Medicare Advantage plans, told Axios it “will look to the Centers for Medicare & Medicaid Services for guidance.”
Biogen and Cigna announced a “value-based contract.” Cigna declined to explain any details of that contract.
Worth noting: Aduhelm could trigger Medicare’s “significant cost” policy, which means Medicare Advantage plans wouldn’t be at risk for paying Aduhelm claims — at least in 2022. The traditional Medicare program instead would pay those claims.
The big picture: “It’s incumbent upon Medicare to establish criteria for when Aduhelm is ‘reasonable and necessary’ for a patient,” said Sean Dickson, a drug pricing expert at West Health who co-authored a Health Affairs article about how Medicare should pay for the drug. “Without these criteria, taxpayers will be on the hook for a costly drug that barely works.”
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