A new $56,000-a-year Alzheimer’s medication that’s leading to one of the biggest increases ever in Medicare premiums is highlighting the limitations of President Joe Biden’s strategy for curbing prescription drug costs.
The medication known as Aduhelm would be protected from Medicare price negotiations for more than a decade under the Democratic drug pricing compromise before Congress, part of Biden’s social agenda legislation. That’s because the bill doesn’t allow Medicare to negotiate over newly launched drugs, providing a window for drugmakers to recoup investments in research and development. Biologics such as Aduhelm get 13 years of protection.
Seniors soon will be paying higher premiums so Medicare can set aside a contingency fund to cover Aduhelm, which is made by the pharmaceutical company Biogen. It’s the first Alzheimer’s medication in nearly 20 years. But its benefits have been widely questioned.
Leading Democrats say their party cannot afford such optics when it’s scrambling to deliver prescription drug savings. The Democrats’ social agenda bill would cap the cost of insulin at $35 a month, limit annual price increases for medications and shield Medicare recipients from high out-of-pocket costs.
If the legislation passes, those changes would take several years to fully phase in. The Medicare premium increase, however, is coming soon — at the start of an election year.
Medicare’s Part B premium for outpatient care will jump by $21.60 a month in 2022, to $170.10, the largest dollar increase ever although not percentage-wise. About $11 of that would be due to Aduhelm.
“Seniors should not have to pay a surcharge on their premiums whenever a drug company decides to set an astronomical price on their products,” Sen. Ron Wyden, D-Ore., said in a statement to The Associated Press. “I’m prepared to act to protect seniors’ pocketbooks, and I am encouraging Medicare to explore all available options to course-correct.” Wyden heads the Senate Finance Committee, which oversees Medicare, and he’s a key player in drug pricing legislation.
Sen. Bernie Sanders, a Vermont independent, has summed it up succinctly: “With Democrats in control of the White House, the House and the Senate we cannot let that happen,” he wrote Biden last week, urging the president to stop the part of the Medicare premium increase attributable to Aduhelm.
White House officials say they are well aware of the concerns and are dealing directly with Sanders. But Biden made no mention this week of Aduhelm when he promoted the drug pricing provisions in his $2 trillion legislation.
Usually the financial impact of high-cost drugs falls most directly on patients with serious diseases such as cancer, rheumatoid arthritis or multiple sclerosis. But with Aduhelm, the financial pain is being spread among Medicare recipients generally, not just Alzheimer’s patients needing the drug.
“This is the poster child drug for showing how one medication can have a high impact on premiums and costs incurred by people on Medicare, not just those who are taking that drug,” said Tricia Neuman, a Medicare expert with the nonpartisan Kaiser Family Foundation. “This is not a hypothetical question: ‘Do drug prices impact premiums?’ This is a case closed.”
Biogen says it priced Aduhelm fairly after taking into account payments for other innovative drugs aimed at hard-to-treat diseases. Alzheimer’s is a degenerative neurological disease with no known cure. It affects some 6 million Americans, most of them older people eligible for Medicare.
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In approving Aduhelm, the Food and Drug Administration determined that the drug’s ability to reduce clumps of plaque in the brain is likely to slow dementia. But experts including the FDA’s own outside advisers objected, saying that benefit has not been clearly demonstrated. A nonprofit think tank focused on drug pricing estimated Adulhelm’s value at between $3,000 and $8,400 per year, not $56,000, based on its unproven benefits.
Medicare is considering requests to pay for Aduhelm on a case-by-case basis, pending a broader coverage determination that’s not expected for months. The reason Aduhelm would add to the cost of Medicare’s Part B outpatient coverage is that it’s administered intravenously in a doctor’s office.
Sanders is asking that Medicare delay its coverage approval until there is scientific consensus that the drug is safe and effective. He is also urging Biden, through executive action, to reinstate a government policy that drugmakers charge “reasonable prices” for treatments that receive federal funding.
Two House committees are investigating the FDA’s approval of Aduhelm. The HHS inspector general is conducting its own review.
Supporters of the Democratic drug pricing legislation are mostly staying quiet about the controversy. But some say they would have preferred an earlier version of the legislation that applied Medicare negotiations to new drugs as well. Echoing pharmaceutical industry arguments, a few Democratic lawmakers feared that would go too far. Their opposition almost killed the Democrats’ drug pricing plan, and in the end led to a compromise limiting Medicare negotiations.
“This is a long fight and you’ve got to take the long view, especially when you are trying to overcome one of the most powerful lobbies in the world,” said David Mitchell, founder of the advocacy group Patients for Affordable Drugs. “I believe that the issue of launch prices will force itself upon us in the years ahead because we don’t have unlimited resources.”