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With Cost of Controversial Alzheimer’s Drug Slashed, Could Medicare Beneficiaries Get a Break on Part B Premiums?

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The news last fall took a lot of people by surprise: the Center for Medicare and Medicaid Services, or CMS, announced that the premium for Medicare Part B would jump in 2022 from $148.50 to $170.10 – a hike of over 14 percent. This boost, according to this late-November CMS press release, was being attributed to several factors, but one particularly controversial one stood out. The hefty hike in fees, said CMS, “reflects the need to maintain a contingency reserve for unanticipated increases in health care spending, particularly certain drug costs.” The specific drug mentioned: Biogen’s doctor-administered Alzheimer’s drug Aduhelm.

We won’t go into the details of the Aduhelm controversy here, but suffice it to say that the drug’s hefty price tag – roughly $56,000 per patient per year – was at least one reason for the Part B premium bump. CMS had projected that as many as 1 million patients might be prescribed Aduhelm, putting CMS on the hook for a cost exceeding $50 billion annually! But since then, several high-profile changes have occurred, most notably Biogen’s 50 percent drop in Aduhelm’s cost. Now many Medicare beneficiaries are wondering, could that big rate hike which took effect this month be rolled back? The answer appears to be a solid “maybe.”

Biogen Price Cut Could Lead to Reduced Part B Premium

In this recent Kiplinger article on the topic, reporter Jackie Stewart explains the background on this story. The bottom line: “Seniors could see a cut in their monthly Medicare Part B premiums for 2022 after a controversial new drug’s price was slashed.” Stewart writes that the Part B premium hike to $170.10 for 2022 was “due in part to Medicare beneficiaries potentially being prescribed Aduhelm, an Alzheimer’s treatment manufactured by Biogen that was approved by the Food and Drug Administration last year.”

Aduhelm falls under Part B, not Part D (prescription drugs), because it must be administered by a physician.  Based on initial pricing set by Biogen, the drug would cost $56,000 each year per patient, but the company later announced the price would be reduced to $28,000. According to the Kiplinger report, U.S. Health and Human Services Secretary Xavier Becerra recently told reporters that he had asked Medicare to “reassess the recommendation for the 2022 Medicare Part B premium, given the dramatic price change of the Alzheimer’s Drug, Aduhelm.”

Becerra’s recommendation was unequivocal. “With the 50 percent price drop of Aduhelm on January 1,” the HHS Secretary said, “there is a compelling basis for CMS to reexamine the previous recommendation” to raise Part B premiums so aggressively.

Biogen’s Price Cut Followed a Dismal Market Rollout

We wanted to know a bit more background on Biogen’s decision, so we started searching for an explanation. As this article from the Advisory Board website explains, Biogen released data last October that showed Aduhelm’s market penetration performing dramatically below initial estimates. Partly as a result of dismal sales, and partly to influence the decision of CMS concerning coverage of the controversial drug, Biogen – despite earlier denials – announced a dramatic 50 percent cut in Aduhelm’s cost, from $56,000 per year to $28,000. This announcement came just before Christmas.

“According to [Biogen CEO Michel] Vounatsos,” the Advisory Board article says, “Biogen reduced the price of Aduhelm in an attempt to ‘facilitate patient access to these innovative Alzheimer’s treatments’ as CMS evaluates whether the drug should be covered. He added that the challenge of improving patient access to Aduhelm ‘must be addressed in a way that is perceived to be sustainable for the U.S. health care system.’” Our translation: Biogen realized that the only way Aduhelm would make a dent in the Medicare-covered marketplace would be if the cost were drastically cut.

Biogen Drug Triggered Controversy Over Cost, Effectiveness

In his Kiplinger article, Stewart reported on data from the Kaiser Family Foundation that raised alarm bells about Aduhelm’s hefty price tag clear back in June. Kaiser estimated, based on the original $56,000 cost, “that if just a quarter of the 2 million Medicare beneficiaries who were prescribed an Alzheimer’s treatment under Part D in 2017 took Aduhelm, it would cost Medicare $29 billion in one year.”  That amounts to an astonishing 80 percent spike in total expenditure by Medicare Part B for drugs – from $37 billion in 2019 to a potential $66 billion, according to Kaiser.

But cost isn’t the only objection to Aduhelm. “Besides the hefty price tag,” says Kiplinger, “experts have also raised concerns about the effectiveness and potential side effects of Aduhelm, leading Medicare to complete a national coverage determination to decide whether to pay for the treatment. On Tuesday [January 11], the agency issued a proposal that it would only cover the treatment for certain patients in clinical trials.”

As Stewart reports, Medicare placed even more restrictions on Aduhelm: the agency “would limit coverage to patients who have the protein in their brain that Aduhelm is designed to target and have mild cognitive impairment or mild dementia.”  These restrictions, which would significantly limit the number of Medicare beneficiaries who can access the drug, are still under review and could be finalized later this year.

A Premium Rollback Would Be Sensible but Unprecedented

So will premiums be rolled back once the dust settles? As we said, the answer is “maybe.”  Last week CNBC reported that the rate hike may be scaled back. There’s a chance that your Medicare Part B premiums for 2022 could be reduced. CNBC reported, as did Kiplinger, that HHS Secretary Becerra had ordered CMS “to reassess this year’s standard premium” since roughly half the increase was blamed on the original high cost of Aduhelm. “With the 50 percent price drop of Aduhelm on January 1, there is a compelling basis for CMS to reexamine the previous recommendation,” Becerra said. According to CNBC, CMS is “reviewing the secretary’s statement to determine next steps.”

The CNBC report said that a rate rollback would be sensible, but highly unusual. “Making a retroactive change to Part B premiums would make sense,” said the article. “It would be unprecedented, but in this situation, it may not be unwarranted,” said Juliette Cubanski of the Kaiser Family Foundation. “If it turns out that spending on this drug is going to be significantly less than what Medicare’s actuaries expected … it would be reasonable to make an adjustment to the Part B premium.”

Needless to say, we’ll be keeping a close watch on this developing story here at AgingOptions. Stay tuned!

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