How just one new Alzheimer’s drug could blow up the federal budget

WASHINGTON – A new pharmaceutical treatment may or may not be effective in slowing the effects of Alzheimer’s disease, but it is already causing heartburn in Washington.

The surprise FDA approval of the drug, Aduhelm, despite almost unanimous opposition an independent advisory group, has the potential to blow up the federal budget and bring an already latent debate over drug prices to Congress and the White House to the fore.

The stakes around the question are enormous. For patients with Alzheimer’s, Aduhlem, manufactured by Biogen, is the first approved treatment intended to slow the progression of the disease, even modestly. But it faces questions about both its effectiveness and its cost, estimated at $ 56,000 per year.

If approved by Medicare, it alone could cost the government hundreds of billions, if not billions of dollars, and thousands of dollars to seniors and their families per year.

Biogen said its drug, which is intended for patients in the early stages of the disease, could apply to up to 1.5 million people. A Analysis by the non-partisan Kaiser Family Foundation estimated that if even just 1 million people were approved for treatment under Medicare, which covers the vast majority of around 6 million patients with the disease. Alzheimer’s, it would cost the government $ 57 billion a year. That’s $ 20 billion more than Medicare Part B spent on all drugs combined in 2019.

Medicare patients without additional insurance would also be required to pay up to 20% of the cost of their treatment, or about $ 11,500 per year. And premiums could increase for additional plans that cover treatment.

Three members of the independent FDA panel who advised against drug approval have resigned in protest, arguing that there is insufficient and conflicting evidence regarding its benefits and a risk of side effects. They say more trials are needed to address these concerns. The Centers for Medicare & Medicaid Services will ultimately decide whether federal health programs will cover treatment and under what circumstances, but they tend to follow the FDA’s lead.

All of this makes observers fear that the country is heading for the worst of both worlds, a world in which taxpayers and patients are stuck like never before with expensive treatment with questionable benefits.

“It’s in many ways a version of other debates over drug pricing and the FDA that we’ve had over the past few years, but it’s turning the knobs up to 10,” said Rachel Sachs, professor of right at Washington University in St. Louis which does health policy research.

“You have the perfect storm of a drug where one wonders if it is really effective, the patient population is very large and there is potential here to spend a very large amount of not just the money of the patients. taxpayers, but also the money of the elderly. “

However, saying no to drug coverage would also mean saying no to families who are in desperate need of help.

Prominent Alzheimer’s disease advocates celebrated the FDA decision, saying it offered new hope against the disease where there was none and would encourage more companies to develop new ones. treatments. But they also share concerns about the cost.

“We think this will be an insurmountable hurdle for many,” said Robert Egge, director of public policy for the Alzheimer’s Association, which supported the drug’s approval.

The news comes as lawmakers consider a range of potential measures to reduce drug prices. Americans pay more than 2.5 times more for brand-name prescription drugs than other countries, according to a study by the RAND Corporation, and politicians from both parties have been exploring ways to close the gap in recent years. Medicare is currently not allowed to negotiate drug prices, leaving the government with little influence over costs.

Lawmakers leading drug reform efforts have expressed shock at the price of Biogen.

“Ineligible,” said Sen. Ron Wyden, D-Ore., At a hearing last week.

“Who the hell can afford it?” Senator Bernie Sanders, I-Vt., request journalists.

In one letter to President Joe Biden, Senator Joe Manchin, DW.Va., criticized the FDA’s decision to rescind its independent advisory board and asked the president to appoint a new agency head to replace Acting Commissioner Janet Woodock in response.

“Dr. Woodcock is not the right person to lead the FDA,” he wrote.

But while the policy changes proposed on the table could have a significant impact on drug prices overall, possibly even saving hundreds of billions of dollars, it is not clear that they would immediately address the issues. issues raised by the new drug, experts told NBC News. Critics of pricing reform efforts, including the pharmaceutical industry, also argue that an excessive reduction in profits could discourage research into new treatments.

HR 3, a bill backed by the Democratic leadership, would allow the federal government to negotiate the most widely used drugs and set a maximum tariff for public and private purchases tied to international prices. A rule proposed by the Trump administration would also tie some Medicare drugs to overseas prices. A bill co-authored by Wyden and Sen. Chuck Grassley, R-Iowa, would penalize the makers of drugs that raise prices faster than inflation.

But Aduhelm is a new drug and it’s not yet clear whether other countries will approve it or negotiate a different price. Biogen also said it does not plan to increase the price for at least several years. Nor would its price trigger a provision proposed in HR 3 that would allow negotiations on drugs with a starting price above the median household income.

“There is no silver bullet to dealing with drug prices in the United States,” said Juliette Cubanksi, deputy director of the Kaiser Family Foundation’s Medicare Policy Program. “There are different options that could be implemented simultaneously that would address the problem from different angles. “

Biogen, in a statement, said it was “committed to providing access to Aduhelm for patients in a wide range of financial situations” and that its price “reflects the overall value this treatment brings to patients, caregivers and to society – and that will enable Continuous Innovation. “

The Institute for Clinical and Economic Review, a nonprofit organization that independently assesses drug prices, concluded that Aduhelm justified an annual price of $ 2,500 to $ 8,300 based on current evidence. But if the most optimistic claims about the drug are true, the price could reach $ 23,100. And a drug that would actually stop the progression of Alzheimer’s disease, without curing it, would be about the price Aduhelm asks, in part because it would save money by reducing existing treatment costs. .

In the case of Biogen’s new treatment, there is some debate about its value. But the level of upheaval caused by a single drug raises difficult questions about how to assess the relative benefits of new drugs as the population ages, more breakthroughs will hopefully follow, and healthcare occupies. an increasingly large part of the economy.

Like america notoriously expensive medical system indicates, this is a conversation the country has often been reluctant to have. Several of the proposed drug reforms would effectively outsource the work to other countries by mimicking their prices, rather than instituting a formula of their own for determining value.

“Americans tend to want to have it all, and American politicians like to give Americans everything,” said Christopher Holt, director of health policy at the right-wing American Action Forum. “But you have to make a choice and be honest about what those tradeoffs are.”

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