The challenge of Aduhelm (and similar drugs) for the future of Medicare

By Regina Lohr and Natalie Trebes

CMS’s rate announcement should be viewed as a bellwether for the finances of many plans and purchasers. The two abnormal factors they cite—pandemic-related spending and Aduhelm—are massive uncertainties that CMS must proactively price into their coverage. In general, plans and purchasers have remained uncertain about the continued impacts of the pandemic on care utilization. Whether it is pent-up demand, deferred care, or handling Covid-19 care itself, quarterly earnings disclosures from large plans continue to oscillate. It's not a deep surprise that Medicare premiums have been forecasted to increase by such a large percentage. There is more to this forecast, so let's not stop there.

The Aduhelm predicament

The emphasis on drug costs and Aduhelm is part political calculus and part a familiar refrain for any purchaser. That is, what you're seeing from Medicare is the same challenge we're hearing from all purchasers (e.g., employers): a pre-existing struggle to contain drug costs and pharmacy spend is being exacerbated by increasingly expensive drugs coming online. 

Aduhelm is particularly challenging to plan for, as so many patients (at least 1.5 million) are potentially eligible to receive the drug. It would also require additional high-cost procedures such as a PET scan or lumbar puncture to determine an individual patient's eligibility. And added to that is the cost of caring for potential side effects such as brain swelling and falls that patients taking the drug may experience.

And while most other purchasers won’t be affected to the same degree by Aduhelm specifically given the concentration of Alzheimer’s disease in the 65+ population, the lack of sustainable cost management solutions more broadly is a concern for the pipeline of future drugs. High-cost specialty drugs are upending typical purchaser approaches and necessitating changes to offset those costs; in this case, passing on higher premium costs; in other cases—such as with employers—"carving out” certain specialty drugs altogether.

Looking forward—what should we expect?

There are plenty of open questions we are still asking when it comes to drugs like Aduhelm. It’s worth noting that CMS is still determining whether it will even cover Aduhelm, given the current lack of conclusive evidence of the drug’s impact on treating the disease. The medication is currently in the midst of a National Coverage Determination analysis process that’s expected to conclude in Spring 2022. So, while we can't count on it, there is a possibility that these rates come back down if CMS declines or limits coverage.

But in the meantime, these high-profile premium increases could have spillover impact on any current legislative activities around the Medicare program—especially any attempts to expand Medicare coverage. It's not unreasonable to ask: is the future of Medicare at risk of falling apart if it runs short of money? Will premium increases save Medicare? Are massive premium hikes the new normal for Medicare? We don't have all the answers, but we do think it is worth asking the hard questions. 

Jared Landis helped contribute to this piece.