WASHINGTON, D.C. July 18, 2023 (Reuters) — Federal officials made a splash last week by giving the green light to an expensive new drug that holds promise of slowing the advance of Alzheimer’s disease. If this sounds like deja vu, you are not wrong. You may remember another news story that also concerned soaring Medicare premiums and controversy over an Alzheimer drug’s effectiveness. But the current story of Leqembi will likely be different than the drama surrounding the drug for treating Alzheimer’s that rolled out in 2021. That year, the U.S. Food and Drug Administration approved a drug called Aduhelm despite objections from the agency’s own scientific advisory panel.
Doubts about the drug’s safety and effectiveness ultimately led Medicare officials to sharply limit its use – but not before the program increased the Part B premium for 2022 by a whopping 14.5% to fund expected Aduhelm expenses. Medicare later adjusted course by making an unusual downward adjustment in the 2023 premium. Leqembi was developed by Japanese pharmaceutical company Eisai, and it is marketed in the U.S. through a partnership with Biogen, the maker of Aduhelm. In clinical trials, Leqembi has shown more promising results than Aduhelm – it may slow patient decline by about five months over an 18-month period for people with mild Alzheimer’s symptoms.
Some Alzheimer’s experts are not convinced that the benefits will be meaningful, and there also are concerns about side effects that include brain swelling and bleeding. Medicare announced that it will cover Leqembi for patients with mild cognitive impairment or mild dementia, although it also will require physicians to participate in a data-collection effort to monitor the drug’s effectiveness and risks. But the approval of Leqembi also will put new upward pressure on Medicare premiums, and it casts a fresh spotlight on escalating drug costs borne by the Part B program.
Medicare covers a wide range of expensive drugs for conditions such as cancer. But the program’s spending and premiums are especially sensitive to possible spending on Alzheimer’s drugs because the potential base of users is so large. “There are millions of people who have Alzheimer’s disease, and potentially millions more who will have it in the future,” said Juliette Cubanski, deputy director of the program on Medicare policy at the Kaiser Family Foundation. “So it’s a much larger potential patient population than for other diseases.” Other pharmaceutical companies also have Alzheimer’s drugs in the works.
HIGH OUT-OF-POCKET COSTS
Leqembi is expected to cost $26,500 per year for patients. While Medicare covers many drugs through Part D prescription drug plans, Leqembi will be covered under Part B, which pays for outpatient healthcare services. That is because the drug is administered intravenously by healthcare providers. And the drug will not be the only cost, Cubanski said. “There will be the expense of doctor visits and brain scans that are needed to determine whether you qualify to take the drug.” Much of the cost will be spread across the entire population of Part B enrollees – and that raises the question of whether Leqembi will lead to a repeat of the Aduhelm Medicare premium mess.
The answer depends on how many Alzheimer’s patients take the drug – and the speed of uptake. The drug’s manufacturers have estimated that about 100,000 patients will use it over the first three years of availability. If that estimate holds, KFF estimates that annual Part B spending on Leqembi would be $2.7 billion, making it the third-most costly drug covered by Part B. If take-up rates are higher, impact on Part B premiums could be more severe. “But if we’re on the lower end of take-up, the premium impact may be pretty modest,” said Cubanski.
Some patients and families will face high out-of-pocket costs for Leqembi. Medicare Part B pays for 80% of covered services, with patients paying the remaining 20%. People enrolled in traditional Medicare who have purchased Medigap supplemental policies will have some or all of that copayment covered. Given the list price of $26,500, Medicare patients who lack that protection would shoulder more than $5,000 in out-of-pocket costs annually. That includes people on traditional Medicare who do not have Medigap policies and everyone enrolled in Medicare Advantage plans.
Advantage is a managed-care alternative to the traditional program that now accounts for nearly half of total Medicare enrollment. Enrollees are responsible for the 20% coinsurance amounts up to a cap specified by each plan. In 2022, the weighted average out-of-pocket maximum was nearly $5,000 for in-network services and just over $9,200 for in-network and out-of-network combined, KFF reports.
The Inflation Reduction Act will cap out-of-pocket spending in Part D plans, with the controls coming in two phases. In 2024, Medicare’s current requirement that enrollees pay a 5% coinsurance above the Part D “catastrophic threshold” will be eliminated. This will provide critical help to beneficiaries who now pay 5% of the cost of very expensive drugs. And starting in 2025, no enrollee will be required to pay more than $2,000 out of pocket per year.
But there is no similar cap on drugs administered under Part B. The law also empowers Medicare to negotiate drug prices with pharmaceutical companies, but Leqembi will be exempt from those negotiations until 2036 due to exemptions granted under the law for makers of expensive biologic drugs.
The high cost of Leqembi raises questions about equitable access for seniors with lower incomes, and people of color, Cubanski said. A larger share of Black and Hispanic than white beneficiaries is enrolled in Medicare Advantage plans than in the traditional program, KFF research has found. “Medigap policies are more commonly purchased by people who can afford their costs – and they have more complete out-of- pocket cost protection than people in Medicare Advantage. So that just adds to the burdens that some beneficiaries could face.”
