Alzheimer's Drug Has Big Costs and Many Questions

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This week on Facing the Future, we turned to health care and the brewing controversy over Aduhelm, a new drug for treating Alzheimer’s Disease that was recently approved by the Food and Drug Administration (FDA). Is it effective, will it be covered by Medicare and how much will it cost? We asked Josh Gordon, Director of Health Policy at the Committee for a Responsible Federal Budget. Next, we looked at where things stand in Washington as the two parties move from a bipartisan infrastructure bill to a one-party budget resolution. Concord Coalition Policy Director Tori Gorman and Chief Economist Steve Robinson joined the conversation.

When the FDA approved Aduhelm as a treatment for Alzthimer’s Disease in June, the drug quickly became a source of hope for the estimated 6 million Americans and their families who are coping with the disease. It also became a source of controversy in the medical community because of the drug’s high cost, pegged at $56 thousand per year per patient by its developer (Biogen), and limited proof of its effectiveness.

“The advisory panel that the FDA had, made up of medical experts, voted unanimously to not approve the drug because they weren’t persuaded that the drug showed some positive impact, certainly not one that exceeded the risk of side-effects, yet the drug was still approved. That’s part of the controversy,” Gordon said.

Adding to the controversy is the enormous cost. As a drug administered in a physician’s office, Aduhelm falls under Medicare Part B. According to Gordon, “If you look at that $56 thousand [annual] price, estimates are that it would cost Medicare between $6 billion and $30 billion a year just for this one drug. For perspective, all drugs in Medicare Part B right now cost about $37 billion.”

“It’s a staggering amount of money,” Gordon said, especially since “we’re not even sure it works.” Moreover, there are ancillary costs such as testing for suitability and monitoring for side effects that are not included in the estimated $56 thousand annual cost.

Medicare is in the process of determining whether to set conditions for access to the drug, although Gordon observed that “this is a very politically fraught decision.”

In the budget discussion, Gorman explained that the Senate passed two pieces of legislation, the bipartisan infrastructure bill and the FY 2022 budget resolution, before adjourning for the rest of the month. Those items now move over to the House where consideration of both will begin the week of August 23rd.

The budget resolution, which passed with only Democratic votes in the Senate, is crucial because it sets the conditions for a “reconciliation” bill to be written and debated later this year. That bill is expected to include many of President Biden’s human infrastructure proposals that were not included in the Senate’s bipartisan physical infrastructure bill.

“Right now, there’s a little interparty squabble between the progressive and the moderates in the House Democratic party,” Gorman noted. “Two questions for House leaders are “do they have enough votes to pass a budget resolution,” and “will they pass what the Senate gave them or will the House amend the budget resolution and send it back to the Senate?”

Robinson discussed the upcoming 2021 Social Security and Medicare Trustees Reports, which are typically released much earlier in the year. “We’re more than a little bit late,” Robinson said.

When the reports finally come out, Robinson said that the media will likely focus on the date by which the trustees project that the trust funds “will be exhausted and benefits will not be paid in full and on time.”

Robinson, however, will be looking closely at certain underlying metrics contained in the report, such as assumptions about wages, workforce growth, life expectancy, fertility and medical cost growth. Such metrics, he said, “tell you what the programs are going to look like in the future and those, in my view, are a little more important than the trust fund exhaustion dates.

Hear more on Facing the Future. I host the program each week on WKXL, (N.H.), and it is also available via podcast. Join me and my guests as we discuss issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on SpotifyPandoraiTunesGoogle PodcastsStitcher or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.

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