Why one drug is responsible for half of the Medicare Part B premium increase

Dana Neely | Taxi | Getty Images

Medicare beneficiaries may already know that the sharp increase in their Part B premiums in 2022 is in part due to the cost of a single drug.

Yet why all registrants are footing the bill for Aduhelm – a controversial new drug designed to slow the cognitive decline associated with Alzheimer’s disease – may not be clear. Adding to the confusion is the fact that Medicare itself has yet to officially approve coverage for the biologic, which is estimated to cost $ 56,000 per patient annually.

“Customers are quite unhappy with the increase and many have asked why,” said Danielle Roberts, co-founder of insurance company Boomer Benefits.

More from Personal Finance:
Who can claim the home office tax deduction
How to Avoid the Tax Bomb when Selling Your Home
Unmissable changes for the 2021 tax season

The standard monthly premium for Part B, which covers ambulatory care and durable equipment, will be $ 170.10 next year, up $ 21.60 from $ 148.50 this year. Medicare administrators had estimated this summer that the 2022 premium would be $ 158.50.

About half of the increase is attributed to the potential cost of Aduhelm’s coverage, which was approved by the Food and Drug Administration in June. It is the first new drug for the disease in nearly two decades, and the first approved by US regulators to slow cognitive decline in people living with Alzheimer’s disease.

The deal for the drug, made by Biogen, came despite some objections from the scientific community about its effectiveness and side effects, including brain swelling and bleeding. Medicare is expected to release its determination of coverage, whether it will be limited to certain patients under certain conditions, in the spring.

“Medicare coverage decisions aren’t really about a drug’s price but its recommendation for treatment of a particular disease,” said Juliette Cubanski, deputy director of the Medicare policy program at the Kaiser Family. Foundation. “FDA approval is seen as a proxy for ‘this is a recommended product’.”

While Medicare Part D provides coverage for prescription drugs, some drugs are administered in a doctor’s office – such as with Aduhelm, which is administered intravenously – and therefore covered by Part B.

And by law, the Centers for Medicare & Medicaid Services are required to set the Part B premium annually at 25% of the estimated costs that will be incurred by that part of the program. Thus, in its calculation for 2022, the agency had to take into account the possibility of covering Aduhelm.

About 6 million Americans have Alzheimer’s disease, a degenerative neurological disease that slowly destroys memory and thinking skills, and has no known cure. It can also wreak havoc in the lives of families and friends of people with dementia.

That’s such a staggering number for a drug that hasn’t proven to be the miracle cure everyone is hoping drug companies will come up with for Alzheimer’s disease.

Juliet Cubanski

Deputy Director of the Medicare Policy Program at the Kaiser Family Foundation

Most of these patients are 65 years of age or older and are typically enrolled in Medicare, which covers more than 63 million people. In 2017, around 2 million beneficiaries used one or more of the treatments for Alzheimer’s disease then available and covered by Part D, according to the Kaiser Family Foundation.

If just a quarter of those beneficiaries – 500,000 – were to be prescribed Aduhelm, the total spending on this drug alone in one year would be almost $ 29 billion, according to the foundation’s research. By comparison, total Medicare spending on all Part B drugs was $ 37 billion in 2019.

“This is such an impressive number for a drug that has not proven to be the miracle cure everyone is hoping drug companies will come up with for Alzheimer’s disease,” Cubanski said.

She also said this type of situation – an expensive drug that must be covered by Medicare and ends up driving up premiums – could happen again.

“There is no mechanism in place to prevent this from happening,” Cubanski said. “Pharmaceutical companies invest billions in research and development and are always looking for successful treatments for a number of diseases, and we want effective drugs to be brought to market.”

Additionally, while there is a proposal in Congress that would allow Medicare to negotiate the price of certain drugs from 2025, new biologics like Aduhelm would have 13 years before they could potentially be subject to price negotiations. . Biogen, meanwhile, said it would not increase the price of the drug for four years.

The changes proposed by Congress – which are included in the Build Back Better Act – would also limit direct spending by recipients for Part D drugs to $ 2,000 per year. However, as Aduhelm would be delivered under Part B, this cap would not apply.

Beneficiaries typically pay 20% of Part B services, unless they have additional insurance that supports that coinsurance (a Medigap policy) or offers a different co-pay and maximum amount (a Medicare Advantage plan).

Aduhelm’s situation highlights the ripple effect expensive drugs can have, said David Lipschutz, associate director and senior counsel for the Center for Medicare Advocacy.

“Even the possibility that Medicare could provide coverage for Aduhelm has increased the premiums for Part B,” he said.

It is possible that if Medicare approves drug coverage, the program will not end up spending as much as expected.

“Doctors may not be very excited about prescribing it, given the side effects seen in the two clinical trials before approval and since then in patients,” Cubanski said. “This could lead to lower adoption than the manufacturer is hoping for.”

Previous Australia’s runaway farmland prices are terrifying, at least to this farmer | Pete Mailler
Next Jones Lang LaSalle Incorporated: San Diego area mall sells for $ 23.5 million