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Aduhelm – A perfect example of what is wrong with how we pay for healthcare

The FDA approved the first new drug to treat Alzheimer’s in nearly 20 years in recent weeks and it is a prime example of why our spending on healthcare is so unnecessarily high and not slowing down anytime soon. The new drug is called Aduhelm and Biogen is the drug company that developed the infusion therapy.

A panel of 11 scientists reviewed the research and science behind the new treatment for the FDA and 10 voted against approval and 1 was undecided. In fact, 3 of the scientists have also resigned over the approval. The FDA moved to approve Aduhelm despite the lack of evidence that it either cures or slows the progression of the Alzheimer’s and has given the company 9 years to conduct a confirmatory trial.

What is the actual cost of this treatment? The drug price is set at a whopping $56,000/year and the overall costs will be much higher. According to the Kaiser Family Foundation, when other related costs are included (the testing to monitor for brain bleeds and other possible side effects, outpatient facilities and staff etc.) the real price tag will be more like $100,000/year.

What is the cost to the individual? Copays will be as much as $11,500 dollars – nearly 40% of the average income for a Medicare enrollee according to the Kaiser Family Foundation.

How will this affect Medicare Part B premiums in the future? As an infusion given in a provider’s office, the cost of administering Aduhelm will be covered by Medicare Part B.

The current average premium for this coverage is just under $150.00/month. This will almost certainly have to be increased and so the impact will be widespread across Medicare enrollees.
What are the potential impacts to our overall healthcare spending?

Biogen estimates that 1-2,000,000 Alzheimer’s patients match the patients that were studied in the clinical trials. Overall, we have approximately 6,000,000 people who have Alzheimer’s in the US and most of them are enrolled in Medicare.

Interestingly, the FDA has approved it widely not just for those that are in the early stages of the disease with mild symptoms like those in the trial. If 1,000,000 people are given this treatment it could cost Medicare $56 Billion dollars annually. Medicare Part B spent $37 Billion in total on drugs in 2019. Total outpatient Medicare drug spending with pharmacy prescriptions was $136 Billion for 2019.

Biogen’s estimates of future sales are seemingly conservative. They and other analysts are expecting $103,000,000 in sales this year, about $1 Billion in 2022 and $5+ Billion in 2023.

The reality will likely be somewhere in the middle, however, when you factor in the incentives paid to prescribing physicians by Medicare ($3,360 for each prescription in this case) it sems likely that we have a real problem on our hands.

CMS could decide not to cover Aduhelm, but if the past is any indicator this is not highly likely. Private insurers that provide Part B benefits could also place some limitations on the drug’s use. All things considered, It is clearly time for us to take a serious look at how we have allowed a fifth of our economy to get to this point.


This article was originally published in: https://www.insurancethoughtleadership.com/aduhelm-and-whats-wrong-in-healthcare/

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