Wednesday, May 18, 2022

New drug could cost the government as much on NASA as it can

A newly approved drug to treat Alzheimer’s disease is expected to cost Medicare several billions of dollars. By one estimate, drug spending for Medicare patients could exceed the budget of the Environmental Protection Agency or NASA.

There is little evidence that the drug, EduHelm, slows the progression of dementia, but the Food and Drug Administration approved it this month. Analysts expect Medicare and its enrollees, who pay a portion of their prescription drug costs, to spend $5.8 billion to $29 billion on the drug a year.

“It’s immeasurable,” said Tricia Newman, executive director of the Kaiser Family Foundation’s program on Medicare policy. “These are crazy numbers.”

Several other drugs cost more than Aduhelm, which is made by Biogen and will cost $56,000 annually. What makes it different is that there are millions of potential customers, and this drug is expected to last for years.

The drug’s approval has drawn criticism from health policy experts and drug researchers for its lack of proven effectiveness. Effective or not, if widely determined, it could have a huge impact on the Medicare budget because the public program covers the vast majority of the nearly six million Americans diagnosed with Alzheimer’s.

There is no precedent for a sudden spending shock of this size. Even at the low end of projections, Aduhelm will become one of Medicare’s most expensive drugs.

On the high end, analysts say the new drug could lead to a 50 percent increase in Medicare’s annual spending on drugs given in hospitals and doctor’s offices (as EduHelm, which is given intravenously, would require ).

The comparisons here are approximate: One-third of Medicare enrollees are covered through private Medicare Advantage plans that do not release detailed information on the drugs that are provided at doctor’s offices. To estimate that expense, we used drug spending data for Medicare Enrollment in the Traditional Public Program and scaled it up by the missing portion.

A sudden spending of this scale could have far-reaching implications for Medicare, its users, and taxpayers. an additional $29 billion One year in the Medicare budget will be offset by an increase in both taxpayer spending and premiums paid by all Medicare users. Premiums may also increase for supplemental plans many Medicare beneficiaries purchase to offset costs that the program doesn’t pay for directly. And the cost is likely to spill over into the state budget, where Medicaid pays premiums for low-income Medicare enrollees.

Congress, budget experts and many of the White House have spent years suggesting ways to reduce spending in Medicare, which makes up a large and growing portion of the federal budget. But many of these proposals are politically difficult to achieve – and most will save less than Eduhelm’s projected cost.

“It’s a lot of work to get to savings that are really small compared to this one drug,” said Joshua Gordon, director of health policy at a responsible federal budget committee, who says he himself spoke about the challenges. Thinking nonstop has been picked up by Aduhelm since its approval.

Cost predictions vary because analysts aren’t sure how many patients will eventually use the new drug. The FDA approval could apply to all people with Alzheimer’s disease — about six million people. But the drug was developed for a small group of about 1.5 million patients who are in the early stages of the disease. Analysts aren’t yet sure what doctors will recommend the treatment for and which families might want to try it. The FDA has asked Biogen to continue studying the drug until 2030, but the prescribing may be extensive before there are any further public results on how well it works.

Biogen spokeswoman Alison Parks said in an email that the company would focus on reaching the types of patients that were studied in the company’s clinical trials, “in the early symptomatic stage of the disease.”

The range reflects a variety of reasonable expert estimates. high estimate, running a kaiser paper, It assumes that nearly a quarter of the two million Medicare enrollees who are currently receiving treatment for Alzheimer’s will take it. The low one is based on analyst estimates from Cowen & Company for $7 billion in total sales by 2023.

Estimating how many patients will use the drug is challenging. Aduhelm is not only expensive but also somewhat difficult to obtain, requiring monthly in-person visits to an infusion center for treatment. Patients taking it will need to have multiple brain scans during their treatment to look for side effects.

And the side effects themselves — about 40 percent of patients in one clinical trial showed signs of brain swelling — may discourage some patients from trying the drug, and prompt others to stop taking it. Huh. (Many scans — and treatments for more serious side effects — will also be covered by Medicare.)

There are six million Medicare enrollees who do not buy supplemental coverage who may have to pay 20 percent of the cost of the drug, in this case $11,200 per year.

Yet demand may be greater from families who see an opportunity to intervene when faced with a devastating diagnosis. So far, few treatment options are available for patients hoping to prevent cognitive decline from the disease.

“There’s something intrinsically tough about having a loved one, watching the clock ticking and saying, let’s just wait,” said Dr. Steven Pearson, a primary care physician and president of the Institute for Clinical and Economic Review (ICER). ) “It’s too hard to ignore the drive to do something.”

Doctors, who will administer the drug and will be paid a percentage of the drug’s high price by Medicare for that work, may face financial incentives to say yes when patients ask for it.

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“The implications of this one drug and related set of procedures are enormous,” said Rachel Sachs, a professor of law at Washington University in St. Louis and author of a recent one. Essay Claiming in The Atlantic that the drug “could sabotage American health care.”

Private insurers can create barriers to treatment, requiring patients to undergo additional tests or prove that other options have not worked. But under normal circumstances, Medicare covers drugs approved by the FDA Medicare, deciding whether or not they are “appropriate and necessary,” not based on how much they cost.

Medicare initially requires you to pay for this type of drug at its list price, plus a 3 percent fee to the doctor giving it. And then, after about a year in the market, it pays an average selling price plus 6 percent. For competing drugs, that average price can be much less than the sticker price. But for a drug like Aduhelm, which is the first of its kind, the drugmaker cannot give discounts to doctors.

Medicare, which covers 61 million Americans 65 and over, has few tools to control costs. It may decide to cover the drug in a way that is more limited than FDA approval, a break from its common practice.

Or it could be doing something even more unusual: an unlikely coalition of advocates. have suggested That Medicare put the drug in a randomized experiment to evaluate how well it worked — paying to cover the drug in some parts of the country, but not others. Such policy uses were authorized under the Affordable Care Act, but have never been used to limit the coverage of a drug in this way.

Other countries are most likely to control Eduhelm’s costs by negotiating a lower price with Biogen, or refusing to buy it at all. Most people will consider the effectiveness of the drug when deciding what they are willing to pay. So far, the drug has not been approved for use anywhere else in the world.

Medicare cannot do this. The way it pays for drugs under current law, it has no way of reducing the price. Democrats support legislation to rapidly change this. The House passed legislation in 2019 that would give Medicare the right to negotiate certain prices, but it died in the Senate. Legislators re-introduced the same bill in the House in April.

President Biden supports allowing Medicare to negotiate drug prices but did not include the policy in his proposed American Family Plan.

Dr. Pearson of ICER an estimate That if the effectiveness of the new drug is taken into account, the fair value would be $2,500 to $8,300.

“It will be interesting to see if this starts a discussion about fair pricing in the United States,” he said. “In the eyes of most people, this looks like a classic example of a price that doesn’t match the evidence.”


Methodology: Estimated current spending on Medicare Part B drugs was prepared from the Centers for Medicare and Medicaid Services Part B. drug spending dashboard, and adjusted up to 54 percent of Medicare beneficiaries enrolled in Medicare Advantage plans. Because of the demographics of who is in which program, this assumption may underpin current drug spending.)

Medicare Part D drug expenses were derived directly from CMS Part D drug spending dashboard, and may represent an overestimate because those numbers do not include all discounts paid for drug plans.

High Aduhelm Spending Estimates Come From Kaiser Family Foundation paper. The lower estimate is derived from Cowen & Co.’s total sales estimate, and is adjusted to account for 80 percent of Alzheimer’s patients enrolled in Medicare early in their disease — and the initial 3 percent payment to doctors for Medicare’s overhead and administration.

Nation World News Desk
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