WASHINGTON, Medicare’s outpatient premium “Part B” will increase by $21.60 per month in 2022. This is the highest ever increase. Friday’s announcement by officials indicated that about half of this increase is due to a new Alzheimer’s drug.
This increase will ensure that health care will absorb a large portion of the newly announced Social Security cost–of-living allowance. The boost, which was $92 per month for an average retiree, is intended to cover rising food and gas prices that are pinching seniors.
On Friday, Medicare officials informed reporters that approximately half of the increase was due to contingency planning in the event that the program has to cover Aduhelm (a new medication for Alzheimer’s disease costing $56,000 per year from Biogen). Because the medication is administered intravenously by a doctor, it would increase the outpatient cost. It’s also covered under Part B.
This issue is becoming a case study in how one expensive medication for a condition that affects millions of people can impact government spending and household budgets. Aduhelm’s cost is large enough to impact premiums, so even people who aren’t affected by Alzheimer’s disease would be unable to avoid it.
Officials stated that the new Part B premium for 2022 will be $170.10 per month. Although the increase in dollars is not proportional, it’s the largest ever. The Medicare Trustees’ report from August had predicted a $10 decrease in the Medicare budget, compared to the $148.50 currently.
Chiquita Brooks LaSure, chief of Medicare, stated that the Part B premium increase for 2022 “continues to be evidence that rising drug prices threaten the affordability sustainability of Medicare program.” Officials claim that the other half of premium increases are due to natural growth and adjustments made last year by Congress in response to the coronavirus pandemic.
This Friday’s announcement, which was made in the same time frame that government agencies drop bad news, comes as Congress considers Democratic legislation supported by President Joe Biden. It would limit Medicare’s ability to pay for drugs. The latest compromise means that Medicare will not be able negotiate the prices of newly launched drugs. This news about Medicare premiums could spark a new debate within the Democratic Party.
“Today’s announcement… confirms that Congress must finally give Medicare the ability negotiate lower prescription drug prices,” Frank Pallone (D-N.J.), said in a statement. Pallone was a supporter of the original House bill, which had a more aggressive approach to the pharmaceutical industry.
Alzheimer’s disease is a progressive neurological disorder that has no cure. It affects approximately 6 million Americans, most of whom are old enough to be eligible for Medicare.
Aduhelm is the first Alzheimer’s drug in almost 20 years. Although it doesn’t cure this life-threatening condition, the Food and Drug Administration found that it can slow down the progression of dementia. Experts disagree with this claim.
Medicare has started a formal assessment in order to decide whether the drug should be covered. A final decision will not likely until the spring at the earliest. Aduhelm is being paid for by Medicare on a case-by–case basis.
Cost is not traditionally included in Medicare’s coverage decisions. There is much debate over the effectiveness of Aduhelm in this instance. A panel of FDA advisors voted almost unanimously to deny approval last November. They cited flaws in company studies. After the FDA approved the drug, several members of the advisory panel resigned.
An independent think tank focusing on drug pricing estimated Adulhelm’s true value at between $3,000 to $8,400 per annum — not $56,000 — based upon its unproven benefits.
Biogen, however, has maintained its pricing position by stating that it carefully considered the costs of advanced drugs to treat cancer and other conditions. Biogen also stated that it anticipates a gradual increase in the use of Alzheimer’s drugs and not a “hockey stick” scenario where costs rise. However, Medicare officials said that they must plan for contingencies.
Two House committees are looking into the development of Aduhelm. They also look at contacts between FDA regulators and company executives.
Medicare covers more 60 million people. This includes people 65 years and older as well as those with serious kidney disease or disabled. The annual program spending exceeds $1 trillion.
