The potential for an Alzheimer’s drug to be covered by Medicare could bring hope to millions of patients and their families, but it also brings a hefty price tag that would lead to higher Medicare premiums.
The Food and Drug Administration is set to announce soon whether it will grant full approval to lecanemab after granting accelerated approval in January. A decision is expected by July 6.
The Veterans Health Administration has said it will cover the drug, which goes by the brand name Leqembi. The drug was developed by Eisai Co. Ltd.
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and Biogen Inc.
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According to data published in the New England Journal of Medicine at the end of November, lecanemab was shown to moderately slow the progression of Alzheimer’s in patients in the earliest stages of the disease. But the study also found that lecanemab may pose risks to people who take blood thinners.
Read: New Alzheimer’s drug appears to slow cognitive decline but is ‘not a breakthrough’
If the FDA grants full approval to Leqembi, the Centers for Medicare and Medicaid Services is expected to cover the drug, according to KFF, a health policy research group.
“We remain committed to helping people obtain timely access to treatments proven to meaningfully improve care and outcomes for people living with Alzheimer’s disease. We intend to share more information soon about how people will have access to treatments for this devastating disease,” CMS said in a statement.
The exact number of Medicare beneficiaries who meet the prescribing requirements for Leqembi is unknown, but about 6.7 million older adults in the U.S. have Alzheimer’s. Access to the drug could be complicated by a requirement that patients participate in a registry that collects data, analysts said.
“‘These high costs do cause a burden. Retirees are frequently surprised by the percentage of income they must spend on healthcare. They are often just one diagnosis away from financial trouble.’”
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A $26,500 price tag
An analysis by KFF estimated that if 5% of those with Alzheimer’s took Leqembi at the annual list price of $26,500, this would add $8.9 billion to Medicare Part B spending annually. A 10% take-up rate would amount to $17.8 billion in higher spending.
KFF projected Medicare spending on Leqembi would be roughly equal to spending on the top three Part B drugs combined in 2021 based on the 5% take-up rate. At the 10% take-up rate, projected spending on Leqembi alone would exceed spending on the top 10 Part B drugs in 2021 and would represent close to half of the $40 billion spent in total on the more than 600 Part B covered drugs in 2021, KFF said.
These estimates do not include additional costs to Medicare associated with PET scans or multiple MRIs that may be needed in conjunction with use of Leqembi, or the potential savings if treatment helps reduce spending on other services, such as hospitalizations due to falls or skilled nursing facility stays, KFF said.
Higher Medicare Part B spending would likely lead to higher Medicare Part B premiums, analysts said. It would affect both traditional Medicare and Medicare Advantage plans.
In the case of a different Alzehimer’s drug, Aduhelm, the anticipation of substantially higher Medicare Part B spending due to coverage of that drug contributed to a 15% jump in the Part B premium between 2021 and 2022. Medicare’s later decision to limit coverage of Aduhelm contributed to a 3% decline in the Part B premium for 2023.
At Leqembi’s current $26,500 list price, Medicare patients given the drug would be responsible for more than $5,000 out of pocket each year, based on a 20% coinsurance requirement in traditional Medicare, KFF said. Medicare Advantage subscribers are also typically responsible for the 20% coinsurance for Part B drugs up to their plan’s out-of-pocket maximum.
“Leqembi could be beyond the reach of many people with Medicare, whose median income is around $30,000 per person,” said Tricia Neuman, KFF’s senior vice president and executive director of KFF’s program on Medicare policy.
It becomes even more concerning for older Hispanic and Black adults, who have higher rates of dementia and lower incomes than older white adults in the U.S., Neuman said.
“The high cost of treatment could raise equity concerns if it means Black and Hispanic beneficiaries are less likely to gain access to this treatment because they can’t afford it,” KFF said.
How much more in premiums?
Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League, estimated Medicare Part B premiums could rise by about 3%, based on KFF’s estimate of $17.8 billion in spending on Lecanemab, and the Medicare Trustees estimate of Part B spending in 2024.
The Medicare Trustee’s estimate of Part B premiums in 2024 is expected to be $174.80. Lecanemab could potentially add about $5.30 to the base Part B premium, putting it at $180.10, Johnson said.
“The overall growth in Medicare Part B premiums is roughly two to three times faster than COLAs (cost of living allowance). This expense is automatically taken directly out of Social Security benefits, and it routinely gobbles up the amount that most beneficiaries receive in their annual cost of living adjustments,” Johnson said.
“Part B premiums are one of the top 10 fastest-growing costs in retirement,” Johnson said. “These high costs do cause a burden. Retirees are frequently surprised by the percentage of income they must spend on healthcare. They are often just one diagnosis away from financial trouble. That’s why it’s so important for Congress to do more to finish the job and cut prescription drug costs,” Johnson said.
The potential price hike in Medicare premiums “will not be insignificant for some low-income beneficiaries and may, in particular, disproportionately impact racial and ethnic minorities. It should also be noted that out-of-pocket costs for the one in six Medicare beneficiaries who do not have supplemental insurance, will range in the thousands of dollars for the drug,” said Anand Parekh, chief medical adviser of the Bipartisan Policy Center.
The Inflation Reduction Act requires Medicare to negotiate the price of top spending drugs, but manufacturers of biologic drug products like Leqembi would be exempt from having CMS-negotiated prices take effect for 13 years from the drug’s licensure date, KFF said.
“Medicare is prohibited from negotiating prices for 13 years. Price can make this out of reach for many people, even if they have coverage,” Neuman said. “People worry about both issues—costs and health. It’s impossible to overstate the frustration families of Alzheimer’s patients feel. It’s all very real. It’s separate from concerns about the cost of premiums.”
