- Monthly premiums covering physician and outpatient care for Medicare beneficiaries will increase by 15% next year, the Biden administration said on Friday — one of the largest increases ever.
- CMS said the hike is mostly due to potential use of Biogen's Aduhelm, a drug for Alzheimer's disease that's drawn criticism for carrying a high price tag despite unclear effectiveness, along with ongoing uncertainty from the coronavirus pandemic.
- Standard monthly Medicare Part B premiums will be $170.10 next year, compared to $148.50 this year. The Part B deductible is also increasing 15%, from $203 to $233.
About half of the increase in 2022 premiums is due to contingency planning if Medicare decides to cover Aduhelm, federal officials said. It's a case study in how just one expensive medication can affect the spending of millions in the U.S. — even people without Alzheimer's won't be protected from the cost of Aduhelm, as it's expensive enough to affect premiums for everyone in the taxpayer-funded program.
The Food and Drug Administration approved Aduhelm in June to immediate uproar from physicians and other regulators over conflicting study results that raised questions of whether the drug actually improves patients' memory and function.
Medicare is still determining whether it will pay for Aduhelm, but federal actuaries are planning for a high-cost scenario of coverage in 2022, CMS said. The drug is priced at $56,000 a year on average, and will add to the cost of outpatient coverage because it's administered intravenously in a doctor's office and paid for under Part B.
Covering Aduhelm could result in "significantly higher expenditures" in Medicare, the Friday notice reads.
The $21.60 monthly jump in Part B premiums equals an extra $259.20 in costs over 2022. That's one of the biggest hikes ever in dollar terms, though not percentage-wise.
In August, the Medicare trustees projected a much smaller monthly increase of $10 from 2021 to 2022. The report did not include potential coverage of Aduhelm.
"The increase in the Part B premium for 2022 is continued evidence that rising drug costs threaten the affordability and sustainability of the Medicare program," CMS Administrator Chiquita Brooks-LaSure said in a statement.
CMS said the other half of the premium increase was due to natural growth in the program, and adjustments made by Congress last year as COVID-19 hit.
The premium hike comes as Congress considers Democrat-backed legislation to curb what Medicare pays for drugs, which has faced fierce lobbying from the deep-pocketed pharmaceutical industry. Under the latest compromise on the Hill, Medicare wouldn't be able to directly negotiate prices for newly launched drugs.
One top Democrat, House Energy and Commerce Chairman Frank Pallone Jr, D-N.J., is citing the increases as further evidence Congress needs to take a harder stance on drug pricing.
The announcement "confirms the need for Congress to finally give Medicare the ability to negotiate lower prescription drug costs and establish a rebate for drugs that increase faster than inflation," Pallone said, noting rising drug prices make it harder for seniors to afford drugs but also increase premiums for outpatient care.
"This double financial whammy simply cannot continue," the longtime congressman continued.
About 6 million Americans have been diagnosed with Alzheimer's, a progressive neurological disease with no known cure. The vast majority of Alzheimer's patients are old enough to qualify for Medicare.
Aduhelm, the first drug ever approved in the U.S. to slow the disease, is a source of hope for many Alzheimer's patients and their loved ones. However, many experts say its purported ability to slow dementia by reducing clumps of plaque in the brain hasn't been clearly demonstrated.
Last November, an FDA advisory panel voted almost unanimously against recommending the drug's approval. When the FDA approved it anyway, several members of the panel resigned.
Medicare traditionally doesn't take cost into account when deciding whether or not to cover a drug. But the question marks around Aduhelm's effectiveness have stymied the medication's uptake so far and coverage determinations by both public and private payers alike have likely been colored by its eye-popping price tag.
The Institute for Clinical and Economic Review, a nonprofit think tank focused on drug pricing, determined Aduhelm's actual value should be between $3,000 and $8,400 per year based on its unproven benefits, a reduction of 85% to 95% compared to Biogen's current price.
The pharmaceutical giant has defended its pricing, but indicated it will work with insurers to address cost concerns if the company's assumptions about how many patients will receive its drug prove incorrect.
So far, Aduhelm has not yet generated meaningful sales for Biogen or been adopted by many of the country's most prominent treatment centers, the Massachusetts-based biotech said on an October call with investors. One of the drug's biggest obstacles is that many centers are holding off administering Aduhelm until payers determine coverage plans.
Meanwhile, major payers say they're waiting to see where Medicare falls.
CMS is currently creating a National Coverage Determination that will establish a single, countrywide policy for Alzheimer's drugs that work like Aduhelm, but that won't be finalized until April. A draft version should be available in January. But for now, Medicare is deciding whether to pay for the drug on a case-by-case basis.
If Aduhelm is covered in Medicare, which insures some 63 million senior and disabled Americans, it will likely prove a further stressor on the finances of the cash-strapped program. Spending in Medicare is already expected to balloon from 4% of the country's gross domestic product to 6.2% by 2045 — not accounting for Aduhelm.