Column-New Alzheimer’s drug overshadows the outlook for next year’s health insurance premiums Reuters

Mark Miller

Chicago (Reuters)-The U.S. drug regulatory agency decided last month to approve a controversial treatment for Alzheimer’s disease, which may drive an unusually large increase in health insurance premiums next year, but it will happen later this year Many factors cast a shadow over the foreground.

Biogen’s (NASDAQ:) drug Aduhelm can bring hope to millions of elderly people with Alzheimer’s disease if it can effectively fight the disease. However, the U.S. Food and Drug Administration (FDA) approved the drug despite the opposition of its scientific advisory panel, which almost unanimously voted that clinical trials did not prove its effectiveness.

Medicare usually covers FDA-approved drugs—but the price set by the manufacturer of this drug is staggering—US$56,000 per patient per year. This figure does not include other related care that may add tens of thousands of dollars in additional costs.

Aduhelm will be administered by a healthcare provider and will therefore be covered by the Part B rather than Part D prescription drug plan. The impact on Part B’s finances can be huge. The premium paid by the registrant-which accounts for 25% of the cost of the project-may rise sharply. The same applies to the remaining costs of Part B, which are borne by all taxpayers.

Because Medicare decides the number of patients who should use Aduhelm is uncertain, the actual cost forecast at this time is speculative. But even the conservative estimate of the Caesars Family Foundation https:// of US$29 billion per year will almost double the drug expenditures of Part B, with total expenditures of US$37 billion in 2019.

Medical insurance trustees will need to consider the plan’s possible expenditure on Aduhelm in 2022, because it sets a Part B premium, which is usually announced in November. New drugs may have other effects on the costs of medical insurance beneficiaries.

Many traditional Medicare participants also have supplementary Medigap policies to cover their co-insurance costs. As insurance companies expect that Aduhelm-related expenses will increase, the premiums of these policies may increase. 10% of traditional medical insurance participants do not have supplementary insurance, so they will comply with the plan’s 20% cost-sharing requirement for Aduhelm—approximately $11,500 per year.

For Medicare Advantage registrants, out-of-pocket expenses are also a problem, which is a privately-provided managed care alternative to traditional plans. According to Kaiser, most Advantage enrollees participate in a plan that charges a 20% co-insurance for Part B drugs provided in the network, which reflects the traditional plan—out-of-network co-insurance rates may be much higher.

Medicare usually covers FDA-approved drugs, but it can conduct its own review to determine which types of patients should be covered. As far as Aduhelm is concerned, Medicare can apply it to patients in the early stages of Alzheimer’s disease. Just last week, the FDA narrowed its recommendations on the prescription of the drug, saying that the drug should only be used for patients with mild cognitive impairment or early dementia.

Congress can also pass legislation to mitigate any impact on health insurance registrants. More broadly, the unusual FDA approval process and high cost of this drug may exacerbate the debate among lawmakers about broader drug pricing reforms.

Rachel Sachs, professor of law at Washington University in St. Louis, said: “This proves the argument that the pharmaceutical industry cannot be relied on to create value for patients. He recently wrote an article for the Aduhelm controversy https://journal of health affairs. (https: //

Other pressure

Two other factors may also put upward pressure on the premium of Part B next year.

This year, Medicare increased Part B premiums by only $3.90 to $148.50 per month. But in fact the increase will be even greater-as part of the COVID-19 relief bill, Congress stepped in to limit its ceiling to 25% of the case where medical insurance follows the usual formula. This may lay the foundation for greater “catch-up” growth this year.

Healthcare utilization is another wildcard. Although the utilization rate of health care related to COVID-19 rose sharply last year, the overall consumption of health care services fell sharply during the lockdown period last year. A key question is how this will affect the use of services by Medicare participants next year. As the pandemic subsides, the utilization rate may be higher than normal, which will put further pressure on the Part B premium.

Coke factor

The Aduhelm drama will be staged in the context of another wallet problem for the elderly next year-Social Security Cost of Living Adjustment (COLA).

The recent surge in inflation has led some forecasters to predict that next year’s COLA will be very high. The Consumer Price Index (CPI-U) of all cities that have received much attention rose 5% from the same period last year in May, the largest increase since the 5.3% rise in August 2008. The final COLA figure will be determined by the monthly data of the Consumer Price Index (CPI-W) for urban wage earners and civilian workers in the third quarter.

But for the elderly who participate in both social security and medical insurance, the key figure is the net COLA after deducting the medical insurance Part B premium. Normally, part of COLA will be swallowed by higher Part B premium costs. (The dollar amount added in Part B is deducted from COLA’s dollar amount.)

Putting all of this together, this fall may be like a roller coaster ride for seniors who monitor these wallet problems.