July 12, 2021
By Mark Miller
CHICAGO (Reuters) – U.S. drug regulators’ decision last month to approve a controversial treatment for Alzheimer’s disease could result in an unusually sharp spike in Medicare premiums over the next year, but a number of factors are clouding the outlook, which will have an impact later this year.
Biogen Inc’s drug Aduhelm could give hope to millions of elderly Americans with Alzheimer’s disease – if it is effective at fighting the disease. But the U.S. Food and Drug Administration (FDA) approved the drug despite objections from its own scientific advisory panel, which almost unanimously agreed that clinical trials had failed to prove its effectiveness.
Medicare typically covers FDA approved drugs – but this one comes with a staggering price tag from its manufacturer – $ 56,000 per patient annually. This number doesn’t include other related care that could add tens of thousands of dollars in additional costs.
Aduhelm is administered by healthcare providers and is therefore covered under Part B rather than Part D of the Prescription Drug Program. And the financial implications of Part B could be huge. The premium paid by the participants – which covers 25% of the program costs – could rise sharply. So the rest of Part B could be costs borne by all taxpayers.
The real cost prediction at this point is speculative due to the uncertainty about the number of patients Medicare will decide they should have access to Aduhelm. But even a conservative estimate of $ 29 billion a year from the Kaiser Family Foundation https://bit.ly/3jUrSpM would nearly double Part B’s drug spending, which stood at $ 37 billion in 2019. (https://bit.ly/ 3jUrSpM)
Medicare trustees must consider the program’s likely expenses for Aduhelm in 2022 when it determines the Part-B premium, usually announced in November. And the new drug is likely to have a different impact on the costs Medicare beneficiaries have.
Many traditional Medicare participants also have additional Medigap policies that cover their co-insurance costs. The premiums for these policies could rise as insurers expect higher spending related to Aduhelm. And 10% of traditional Medicare members have no additional coverage, so they would be subject to the program’s 20 percent co-payment for Aduhelm – roughly $ 11,500 per year.
Cost of ownership would also be an issue for participants in Medicare Advantage, the privately offered managed care alternative to the traditional program. Most Advantage participants have plans that require 20% coverage for Part B drugs deployed on the network, which Kaiser says reflects the traditional program – coverage rates can be much higher outside of the network.
Medicare typically covers FDA-approved drugs, but it can also do its own reviews to decide which types of patients should be covered. In Aduhelm’s case, Medicare could limit its use to patients with early Alzheimer’s disease. Just last week, the FDA narrowed its own prescribing recommendation for the drug, saying it should only be used in patients with mild cognitive impairment or early dementia.
Congress could also step in with laws that mitigate the impact on Medicare members. In general, the unusual FDA approval process and high cost of this drug could fuel debate among lawmakers over broader drug price reform.
“This underscores the argument that the pharmaceutical industry cannot be relied upon to deliver value to patients,” said Rachel Sachs, law professor at Washington University in St. Louis who wrote about the Aduhelm controversy https: // bit .ly / 3hrAzX7 recently for Health Affairs magazine. (https://bit.ly/3hrAzX7)
Two other factors could also put upward pressure on the Part B premium over the next year.
Medicare increased the Part B premium this year by just $ 3.90 to $ 148.50 per month. But the surge should actually be bigger – Congress stepped in to limit it to 25% of what it would have been if Medicare had followed the usual formula under a COVID-19 relief bill. This could create the conditions for a larger “catch-up process” this year.
The use of health care is another wild card. Despite the surge in health care over the past year related to COVID-19, overall consumption of health services decreased dramatically during the lockdown last year. A key question is how this will affect Medicare member use of the services over the next year. Utilization could be higher than normal if the pandemic subsides, which will put further pressure on the Part B premium.
THE COLA FACTOR
The Aduhelm drama will take place next year against the background of another paperback edition for seniors – the adjustment of the cost of living for social security (COLA).
The recent surge in inflation has some forecasters predicting a very high COLA for the next year. The highly respected Consumer Price Index for All Urban Consumers (CPI-U) rose 5% year over year in May – the largest increase since August 2008 when it rose 5.3%. The final COLA number is determined by monthly data in the third quarter for the Consumer Price Index for Urban Wage earners and Office Workers (CPI-W).
But for seniors enrolled in both Social Security and Medicare, the metric is the net COLA after subtracting the Medicare Part B premium. Typically, some of the COLA is gobbled up by higher Part B premium costs. (The dollar amount of the Part-B increase is subtracted from the dollar amount of the COLA.)
If you put it all together, it could be a roller coaster ride this fall for seniors watching these paperback problems.
(Writing by Mark Miller; Editing by Matthew Lewis)
This article originally appeared on www.oann.com