Aduhelm's price to squeeze Medicare and patients
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."