How one drug boosts Medicare premium
Medicare’s “Part B” outpatient premium will jump by $21.60 a month in 2022, one of the largest increases ever. Officials said a new Alzheimer’s drug is responsible for about half of that.
The increase guarantees that healthcare will gobble up a significant chunk of the recently announced Social Security cost-of-living allowance — a boost that had worked out to $92 a month for the average retired worker, intended to help cover rising prices for gas and food that are pinching seniors.
Medicare officials told reporters last month that about half the increase is due to contingency planning if the program ultimately has to cover Aduhelm, the new $56,000-a-year medication for Alzheimer’s disease from pharmaceutical company Biogen. The medication would add to the cost of outpatient coverage because it’s administered intravenously in a doctor’s office and paid for under Part B.
Drugs are significant cost factor
The issue is turning into a case study of how one pricey medication for a condition afflicting millions of people can swing the needle on government spending and impact household budgets.
People who don’t have Alzheimer’s would not be shielded from the cost of Aduhelm, since its expected use and cost are great enough to affect the premiums of everyone on Medicare.
The new Part B premium will be $170.10 a month for 2022, officials said. The jump of $21.60 is the biggest increase ever in dollar terms, although not percentage-wise. As recently as August, the Medicare Trustees’ report had projected a smaller increase of $10 from the current $148.50.
“The increase in the Part B premium for 2022 is continued evidence that rising drug costs threaten the affordability and sustainability of the Medicare program,” said Medicare chief Chiquita Brooks-LaSure in a statement.
Officials said the other half of the premium increase is due to the natural growth of the program, and to recover from adjustments made by Congress last year to temporarily reduce Medicare premiums as the coronavirus pandemic hit.
Controversial drug isn’t a cure
Alzheimer’s is a progressive neurological disease with no known cure, affecting about 6 million Americans, the vast majority old enough to qualify for Medicare.
Aduhelm is the first Alzheimer’s medication in nearly 20 years. It doesn’t cure the life-sapping condition, but the Food and Drug Administration determined that its ability to reduce clumps of plaque in the brain is likely to slow dementia. However, many experts say that benefit has not been clearly demonstrated.
Medicare has begun a formal assessment to determine whether it should cover the drug, and a final decision isn’t likely until at least the spring. For now, Medicare is deciding on a case-by-case basis whether to pay for Aduhelm.
Cost traditionally does not enter into Medicare’s coverage determinations. But in this case, there is also plenty of debate about the effectiveness of Aduhelm. [See “New Alzheimer’s drug breeds skepticism,” in the November Beacon.]
Last November, an FDA advisory panel voted nearly unanimously against recommending its approval, citing flaws in company studies. Several members of the panel resigned after the FDA approved the drug anyway over their objections.
A nonprofit think tank focused on drug pricing pegged Adulhelm’s actual value at between $3,000 and $8,400 per year — not $56,000 — based on its unproven benefits.
But Biogen has defended its pricing, saying it looked carefully at costs of advanced medications to treat cancer and other conditions.
The company also says it expects a gradual uptake of the Alzheimer’s drug, and not a “hockey-stick” scenario in which costs take off. Nonetheless Medicare officials told reporters they have to plan for contingencies.
Two House committees are investigating the development of Aduhelm, including contacts between company executives and FDA regulators.
Medicare covers more than 60 million people, including those 65 and older, as well as people who are disabled or have serious kidney disease. Program spending is approaching $1 trillion a year.