New Alzheimer’s Drug Could Cost the Government as Much as It Spends on NASA

Private insurers may erect roadblocks to treatment, requiring patients to get additional tests or prove that other options haven’t worked. But in normal circumstances, Medicare covers drugs that are approved by the F.D.A. Medicare decides what drugs to cover based on whether they are “reasonable and necessary,” not on how much they cost.

Medicare is initially required to pay for this type of drug at its list price in addition to a 3 percent fee to the doctor who gives it. And then, after about a year on the market, it pays the average sales price plus 6 percent. For drugs with competition, that average price can be substantially lower than the sticker price. But for a drug like Aduhelm, which is the first of its kind, the drugmaker may not offer doctors discounts.

Medicare, which covers 61 million Americans 65 and over, does have some tools to contain costs. It could decide to cover the drug in a way that is more limited than the F.D.A. approval, a break from its normal practice.

Or it could do something even more unusual: An unexpected alliance of advocates has suggested that Medicare put the drug into a randomized experiment to evaluate how well it works — paying to cover the drug in some parts of the country, but not others. Such policy experiments were authorized under the Affordable Care Act, but one has never been used to limit coverage of a drug in this way.

Other countries will most likely control the cost of Aduhelm by negotiating with Biogen for a lower price, or simply decline to buy it at all. Most will consider the drug’s effectiveness when deciding what they are willing to pay. So far, the drug has not been approved for use anywhere else in the world.

Medicare can’t do that. Because of the way it pays for drugs under current law, it has no way to bargain down the price. Democrats increasingly support legislation to change that. The House passed legislation in 2019 that would give Medicare the authority to negotiate some prices, but it died in the Senate. Legislators reintroduced the same bill in the House in April.

President Biden supports allowing Medicare to negotiate drug prices but did not include the policy in his proposed American Families Plan.

Article source: https://www.nytimes.com/2021/06/22/upshot/alzheimers-aduhelm-medicare-cost.html