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Why one drug is responsible for half the hike Medicare Part B premiums

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Medicare beneficiaries may be already aware of the fact that 2022 Part B premiums have risen by a large amount due to the price of a single medication.

Yet why all enrollees are picking up the tab for Aduhelm — a controversial new medicine designed to slow cognitive decline with Alzheimer’s disease — may be unclear. Medicare is yet to officially approve the coverage of this biologic. The annual price for it, at $56,000 per person, adds confusion.

Boomer Benefits co-founder Danielle Roberts stated that “clients are very upset about this increase”

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For Part B (outpatient care, durable equipment), the standard monthly premium is $750 will be $170.10 next year, up $21.60 from $148.50 this year. Medicare trustees estimated that the 2022 premium would reach $158.50 this summer.

Half of this increase can be attributed to Aduhelm’s potential costs. was approved by the Food and Drug Administration in June. It’s the U.S.’s first approval of a new medication for Alzheimer’s in more than two decades.

This is the approval for drug manufactured by BiogenAlthough there were some concerns in the scientific community regarding its efficacy and side effects (e.g. brain swelling and bleeding), it was approved. Medicare is expected to issue its coverage determination — i.e., whether it will be limited to certain patients under certain conditions — in the spring.

Juliette Cubanski is the Kaiser Family Foundation’s deputy director for Medicare policy. She stated, “Medicare coverage decisions aren’t tied to the price a drug has but rather whether it’s recommended in the treatment of particular diseases.” “FDA approvals are taken to indicate that ‘this product is recommended.’

While Medicare Part D provides prescription drug coverage, some medicines are administered in a doctor’s office — as with Aduhelm, which is delivered intravenously — and therefore covered under Part B.

And by law, the Centers for Medicare & Medicaid Services is required to set each year’s Part B premium at 25% of the estimated costs that will be incurred by that part of the program. In order to calculate 2022’s premium, the agency needed to consider the possibility that Aduhelm might be covered.

About 6 million Americans are affected by Alzheimer’s. This degenerative neurological condition slowly damages memory and thinking abilities and is not curable. The disease can also cause havoc in the lives and relationships of loved ones.

That’s a huge number that drug companies have yet to come up with for Alzheimer’s.

Juliette Cubanski

Kaiser Family Foundation, Deputy Director for the Medicare program policy

These patients, who are mostly 65 years old or older, usually have Medicare coverage that covers over 63 million people. According to Kaiser Family Foundation, about 2,000,000 beneficiaries utilized one or more of the available Alzheimer’s treatment options covered by Part D in 2017.

If just one-quarter of those beneficiaries — 500,000 — were to be prescribed Aduhelm, total spending on that drug alone in one year would be nearly $29 billion, the foundation’s research shows. In comparison, Medicare spent $37 billion on all Part B drugs in 2019, compared to the $29 billion total Medicare spend.

Cubanski explained that “it’s so eye-popping for one drug that hadn’t proven itself to be the miracle treatment that everyone wants drug companies to come up with for Alzheimer’s disease,” he said.

She also said this type of situation — a pricey drug that must be covered by Medicare and ends up driving up premiums — could happen again.

Cubanski stated that there is no way to stop it happening. “Medical companies are known for investing billions of dollars in research and developing blockbuster drugs for all sorts of diseases. And we want them to be able to bring effective medicines to patients.”

A bill in Congress would allow Medicare to set the prices for some drugs beginning in 2025. But new biologics such as Aduhelm will need to wait 13 years before any price negotiations are possible. Biogen has, however, stated it won’t raise the price of the drug for four more years.

The proposed congressional changes — which are included in the Build Back Better Act — also would limit beneficiaries’ out-of-pocket spending for Part D drugs to $2,000 per year. This cap wouldn’t apply because Aduhelm is delivered under Part B.

If they don’t have any additional insurance, the beneficiary will pay 20% for Part B services.a Medigap policy)Or offers an alternative copay or out-of pocket maximum.a Medicare Advantage Plan).

David Lipschutz is associate director of the Center for Medicare Advocacy and senior policy lawyer. The Aduhelm case highlights the impact that costly drugs can have.

“Even the possibility Medicare could cover Aduhelm caused Part B premiums to go up,” he stated.

The possibility exists that Medicare might not cover the drug as it is approved by Medicare. 

Cubanski stated that it is possible for physicians to be reluctant about prescribing the drug, considering the side effects observed in clinical trials and among patients. This could lead to a lower uptake than what the manufacturer hopes.

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