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Understanding the New Biogen Alzheimer’s Drug and Medicare Impact

The Cost of Alzheimer's text over image of a paper brain cutout with puzzle piece missing

Posted on July 28, 2021 by Kyle Walton

What is Biogen's new Alzheimer's drug?

You may have heard recent reports about the development of an all-new, prescription drug based approach to the treatment of Alzheimer’s disease. This new drug, which has been developed by the biotechnology company Biogen, is the world’s first antibiotic targeting the physiological symptoms of Alzheimer’s. 

Generically, the drug is known as aducanumab, but has been given the brand name Aduhelm. Though aducanumab has only recently received accelerated FDA approval, Biogen claims the drug can effectively treat patients with mild cognitive impairment resulting from Alzheimer’s disease and early-stage dementia.

Though this may sound like a modern medical miracle on paper, the costs associated with the medication have raised several red flags for government officials and older Americans everywhere. Biogen has priced their new Alzheimer’s drug at $56,000 per year, an absurdly high cost even for such an advanced treatment approach.

How might the price of aduhelm affect Medicare costs?

Aduhelm is the first FDA-approved treatment for Alzheimer’s in over two decades. As a result, thousands of Medicare beneficiaries are eager to get involved with the medication. However, some critics argue that the true effectiveness of the medication is still somewhat unclear.

Medicare Part D, an optional part of advanced Medicare coverage, typically pays at least some of the cost of nearly all FDA-approved medications, but the abnormally high price of Aduhelm carries such a big financial hit, the government may have no choice but to eventually restrict access, according to recent reports.

“Medicare can’t afford to treat this as business as usual,” said Andy Slavitt, a former Medicare acting administrator and Biden administration senior adviser.

The Kaiser Family Foundation, a non-profit source for information on national health issues, estimates that Aduhelm alone will put Medicare on the hook for $29 billion in annual coverage costs associated with the drug. This number is nearly five times the FDA’s own budget and over three times the size of the CDC’s.

Naturally, having to take on this much cost has the strong potential to increase premium costs for nearly all 56 million Medicare enrollees.

What is being done to address the Aduhelm issue and its potential associated Medicare costs?

The many financial and ethical issues surrounding the FDA’s approval of the Biogen Alzheimer’s drug have not gone unnoticed by those in power. Some have already been in talks with the Centers for Medicare and Medicaid Services (CMS) to potentially limit the pool of Alzheimer’s patients who would qualify for treatment while additional studies continue.

Certain members of the U.S. government’s legislative branch have also been working toward a way to resolve the issue. In a letter written late last month by Senators Elizabeth Warren and Bill Cassidy, the two lawmakers called upon the Senate Finance Committee to hold a hearing to discuss Aduhelm’s costs and the financial challenges that it may pose to Medicare.

With criticism heavily mounting, Biogen recently issued a lengthy response addressing the concerns, in which the company promised to work with public and private insurers to ensure Aduhelm costs don’t become absurd for Medicare beneficiaries.

That said, prior to FDA approval, David Whitrap, a drug cost watchdog and the vice-president for communications at the Institute for Clinical and Economic Review (ICER), the price tag for a year’s worth of Aduhelm should likely be no more than $8,300 at most. Still, Whitrap was careful to highlight the value that Aduhelm brings to the medical community.

"We don't think there's anything necessarily stingy about what we considered a fair price for this treatment," Whitrap said. "Even at the low end of our fair price, we're talking about a blockbuster treatment."

What can Medicare do about the Aduhelm coverage issue?

As influential as Aduhelm may be in the effective treatment of Alzheimer’s symptoms, Medicare is not required to cover any treatment that is not deemed “reasonable and necessary,” though this mostly applies to physician services and medical testing, not drugs.

Medicare Part D and its optional plan coverage levels can do little to effectively limit coverage of any FDA-approved drug beyond brand labels. However, even following FDA approval, there is still some controversy over whether aducanumab is helpful enough to Alzheimer’s patients for Medicare to justify its enormous costs. 

The drug is a monthly infusion that is not curative. Instead of relying on actual clinical outcomes to achieve approval, aducanumab was approved on the basis that it does in fact remove amyloid plaques, though the degree to which this actually slows cognitive decline is still uncertain.

"I would say this is the most controversial FDA approval in many years, and it takes what was controversial about previous approvals and makes it more extreme," stated Rachel Sachs, a law professor at the Washington University in St. Louis.

Right now, efforts to limit access to the drug to those affected by amyloid plaque only are ongoing, as are efforts to draft prescription drug price reform legislation. 

About the Author

Kyle Walton

Kyle Walton

Kyle is a professional writer with several years of experience helping to inform the public on many diverse topics and industries, including healthcare. He is a Kutztown University graduate, Class of 2017.

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