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Biogen's new Alzheimer's drug comes with "serious cost concerns" for millions on Medicare

FDA approves first Alzheimer's drug in 18 years
FDA approves first new Alzheimer's drug in nearly two decades, raising hopes despite skepticism 04:09

Biogen's new Alzheimer's drug may substantially raise premium costs for millions of Medicare patients and inflate costs for the government program itself, experts say. 

The drug, called Aduhelm and administered by infusion, will cost $56,000 for a year of treatment per patient, Biogen announced last week. The Food and Drug Administration approved the drug amid controversy over its expense and efficacy. That raises "serious cost concerns for both patients and payers, particularly Medicare," according to a recent analysis from the nonpartisan Kaiser Family Foundation. 

Roughly 6 million people in the U.S. have Alzheimer's, according to the Alzheimer's Association. About 2 million with the disease are covered by Medicare, the government health insurance program. Putting a quarter of Medicare recipients on Aduhelm would raises costs by $29 billion a year, more than any other medication, Kaiser found.

"It is not hyperbole to say that this new Alzheimer's drug could be a real budget-buster for Medicare," Juliette Cubanski, deputy director for the Kaiser Family Foundation's program on Medicare policy and co-author of the report, said in a tweet

FDA approves controversial Alzheimer's drug 02:18

But, Cubanski added, because the drug is covered under Medicare Part B, the portion that covers prescription drugs, it won't impact the solvency of Medicare's trust fund. Total spending in 2019 for all Part B drugs was $37 billion for the program, according to the report.

What does that mean for patients?

Medicare beneficiaries could be forced to pay about $11,500 per year, according to Kaiser. That's about 40% of the median annual income for people who use the program's coverage. Most have supplemental insurance that would cover some or all of that cost, the report added. 

A preliminary analysis by one group found that the drug would need to be priced between $2,500 and $8,300 a year to be of real value to most patients. 

Biogen CEO Michel Vounatsos has defended Biogen's pricing of Adhelm. "This will allow sustainability of continuing to invest in our rich pipeline that goes beyond Alzheimer's, Parkinson's, ALS, stroke, neuropathic pain and many more. So, we believe this is a fair price," he told CNBC earlier this month.

The Centers for Medicare & Medicaid Services is reviewing the FDA's decision and will have more information soon, a CMS spokesman said in an emailed statement to CBS MoneyWatch. Private insurers are also considering how to cover the treatment, Politico reported, citing industry lobbyists.

No matter what the coverage, $56,000 may amount to about half of the total per patient cost of using Aduhelm because it doesn't include physician, infusion center and imaging expenses, wrote Sam Gandy, associate director of the Mount Sinai Alzheimer's Disease Research Center in New York, in an opinion for health publication STAT.

"While some seeking help at our center can afford the cost, most cannot," Gandy wrote.

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The high price tag of Aduhelm is drawing congressional attention amid a renewed push to allow Medicare to negotiate the price of prescription drugs directly with pharmaceutical companies — a step many experts say would lower costs for patients.

"It's unconscionable to ask seniors and taxpayers to pay $56,000 a year for a drug that has yet to be proven effective," Oregon Senator Ron Wyden, chairman of the Senate's Committee on Finance, said in a tweet last week. "Medicare must be able to negotiate a fair price for prescription drugs."

The government is studying ways to lower prescription drug prices more broadly, including a proposal for Medicare Part B submitted by the CMS in 2019. The Office of Management and budget is reviewing that proposal. 

The Associated Press contributed to this story.

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