The United States Food and Drug Administration (FDA) recently announced accelerated approval of a new Alzheimer’s disease treatment developed by Biogen called ADUHELM. This approval is significant in many ways. Aduhelm is the first novel therapy approved for Alzheimer’s disease since 2003. Aduhelm will be given to via intravenous infused medication administered by physicians and as a result will be covered under Medicare Part B.
Medicare sets reimbursement rates for hospitals and providers, but they do not set rates for drugs covered under Part B.
- Medicare reimburses providers 106% of the Average Sales Price (ASP).
- The ASP is defined as the average price to all non-federal purchasers in the U.S., including rebates.
- For new drugs, like with Aduhelm, where no ASP is available Medicare will pay providers 103% of the wholesale acquisition cost (WAC) until ASP data becomes available.
- The WAC is equivalent to a list price
- Biogen has set the list price for Aduhelm at $56,000 for a one year of treatment.
Medicare pays 80% for most Part B drugs and services. This leaves about $11,500 in potential out-of-pocket exposure for a year of treatment. This will bring significant cost implications to Medicare, insurers and beneficiaries.
- If on Original Medicare only with no other supplemental coverage, beneficiary would bear the 20% coinsurance with no maximum out-of-pocket protection.
- Most Medicare Advantage plans charge 20% coinsurance for Part B drugs provided in-network. This would put out-of-pocket exposure on the beneficiary until they reach their MA plan’s maximum out-of-pocket.
- If the beneficiary has a Medicare Supplement policy, most Med Supp plans will pick up and cover the 20% Part B coinsurance
“If 1 million Medicare beneficiaries receive Aduhelm, which may even be on the low end of Biogen’s expectations, spending on Aduhelm alone would exceed $57 billion dollars in a single year – far surpassing spending on all other Part B-covered drugs combined. In fact, this amount is roughly the same that Medicare paid for all hospital outpatient services in 2019.” — Kaiser Family Foundation
Facts and Figures from the Alzheimer’s Disease Association
- More than 6 million Americans ages 65 or older are living with Alzheimer’s disease:
- In 2021, the total national cost of caring for people with Alzheimer’s and other dementias is projected to reach over $355 billion which does not include $256.7 billion of unpaid caregiving by family and friends.
As further information becomes available, look for future editions of Market Intelligence from CSG Actuarial.
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