Seniors will pay for Big Pharma price gouging

Half of Medicare premium increase next year will be set aside for questionable Alzheimer's drug

Medicare announced on Friday it will increase senior citizens’ physician premiums by 14.5% next year. Half the new money will be set aside to pay for Biogen’s unproven Alzheimer’s drug, Aduhelm, government officials said.

Most of the 61.5 million senior citizens in the federal program will see premiums for Part B, which covers physician visits and drugs administered in physician offices and clinics, rise to $170.10 a month, a $21.60 per month increase. For the average beneficiary, the Medicare rate hike will grab fully one-fourth of the 5.9% inflation adjustment in their Social Security checks.

Biogen has reported very slow take-up of the new drug because many insurers are refusing to pay for it. But that could change next year when the Centers for Medicare and Medicaid Servicees makes its national coverage decision. I am not aware of a single instance where CMS has refused to cover a drug that has been approved by the Food and Drug Administration, which gave its thumbs-up to Aduhelm last June under its accelerated approval program.

Under accelerated approval, drugs are assumed to show clinical benefit (in this case, slowing the progression of dementia) if the clinical trials showed improvement in a surrogate marker (in this case, clearing plaque from the nerve endings in the brain). Once a drug is given accelerated approval, its manufacturer must conduct follow-up clinical trials proving patients’ condition actually improved through use of the drug.

Those follow-up trials usually take years, and many companies fail to complete the required studies. A recent white paper from the Institute for Clinical and Economic Review found that nearly a quarter of the 145 drugs given accelerated approval between 1992 and 2016 were either withdrawn or failed to complete proof of efficacy trials.

No help from Build Back Better

The drug price negotiations compromise contained in the latest version of the Build Back Better bill will not affect Aduhelm’s price, which the company set at $56,000 a year — about ten times its estimated value, according to ICER. The compromise legislation, if passed, will only give Medicare the authority to negotiate prices for the ten most expensive drugs, and then only once they’ve been on the market for at least nine years for small molecule drugs and 12 years for biologics. For Aduhelm, a biologic, that would be 2033.

The proposed annual cap of $2,000 on seniors’ out-of-pocket drug costs also will not help seniors taking Aduhelm. The cap will only apply to drugs covered by Part D drug plans sold by private insurers, not to Part B infusion drugs like Aduhelm, which are administered in physician offices and have a 20% co-pay.

Takeaway: More than 60 million seniors will be charged on average $120 next year to pay for a drug whose benefit remains unproven.