The pricey new Alzheimer’s drug adds to the pressure for drug price controls

3 min
June 16, 2021

By Paige Winfield Cunningham

June 16, 2021

The newly-approved, big-ticket Alzheimer’s treatment may heighten pressure on Congress to tackle high drug prices this year.

Yet Aduhelm, the brand name for the medication aducanumab, also illustrates what some have described as a hole in Democrats’ flagship prescription drug legislation.

Even if Congress manages to pass the Elijah E. Cummings Lower Costs Now Act — more commonly known as H.R. 3 — the bill still wouldn’t let the government immediately slash prices on Aduhelm, which is expected to cost $56,000 annually for a single patient and could quickly become Medicare’s biggest prescription drug expense.

The health policy world is all abuzz over the treatment’s approval and what it could mean for spending in Medicare’s prescription drug program.

The Food and Drug Administration decision last week “was the most contentious in years and followed prolonged debate among researchers, doctors, patients and advocates about whether the medication works — a consequence of the drug’s complicated history,” my colleague Laurie McGinley reported.

“One of the biggest points of disagreement is whether a reduction in amyloid beta, a sticky compound that many scientists believe damages communication between brain cells and eventually kills them, results in a slowdown in cognitive decline,” she noted. “Critics assailed the decision, arguing that data on the drug’s effectiveness is weak and that the FDA approval represents a dangerous lowering of standards in response to pressure from patients and advocacy groups.”

Medicare has a policy of generally paying for most FDA-approved treatments regardless of their cost. That’s great for seniors, who can access a range of medications — but can leave the government with hefty receipts.

For example, if just half a million Medicare recipients were prescribed Aduhelm, it would cost the health insurance program nearly $29 billion a year, the Kaiser Family Foundation estimates. That’s far more than any other medication Medicare pays for.

Given those costs, Aduhelm seems like just the type of drug H.R. 3 would be aimed at, in trying to lower prices. Yet the bill’s chief cost-lowering mechanism wouldn’t immediately be available to apply to the drug, because it’s new.

H.R. 3 uses an index of prices paid in other nations to reduce Medicare’s spending on the most expensive brand-name drugs. If passed (and that’s hardly certain), the measure would work like this. The Department of Health and Human Services would negotiate for lower prices up to 250 brand-name drugs that generate the highest spending. For these drugs, the manufacturers couldn’t charge more than 120 percent of the average prices paid in Australia, Canada, France, Germany, Japan and the United Kingdom.

The pricey treatment would certainly be a top candidate for price negotiation. Yet so far the drug has only been approved in the United States. It could be three or four years before enough pricing data is collected from international markets, assuming the drug gets approval from the European Union and other regulators.

“There could be a several-year period until we have this international price index,” said Sean Dickson, health policy director for the nonprofit group West Health.

So even if Congress were to give the government permission to negotiate lower prices for a new drug like Aduhelm, HHS might not be able to use its chief lever for some time.

“It’s only after enough countries have set a price that you get a price you can peg it on,” a health-care lobbyist told me. “That is one of the weaknesses.”

The H.R. 3 legislation says that if there aren’t comparable prices from the six other countries, the negotiated price can’t exceed 85 percent of the U.S. average manufacturer price. In the case of Aduhelm, 85 percent of its expected list price is $47,600 for a year-long course of treatment.

Furthermore, there’s a provision in H.R. 3 that could require drugmakers to retroactively pay rebates back to the government if an index was eventually established and the earlier negotiated prices far exceeded that.

So H.R. 3 could still have an immediate dampening effect on the price of a drug like Aduhelm.

And the aim of the Democrats’ bill is to bend the cost curve on U.S. drug spending over the long term, Dickson stressed.

“So even if a drug like Aduhelm doesn’t get negotiated in the first year, that doesn’t mean H.R. 3 isn’t working,” he said.

House Democrats have made absolutely clear that H.R. 3 is a top priority this year. But whether they’ll succeed is about as clear as mud at the moment, given ongoing negotiations on Capitol Hill over President Biden’s infrastructure plans and questions over whether Republicans will help pass some of them.


Sean Dickson
Director, Health Policy