WASHINGTON (AP) — Medicare’s “Part B” outpatient premium is set to rise $21.60 a month in 2022, one of its largest increases ever. Officials said Friday that a new drug for Alzheimer’s disease is responsible for about half of that.
The increase guarantees that the health care system will gobble up a large chunk of the recently announced Social Security reimbursement, an increase that came to $92 a month for the average retired worker, intended to help with rising gas and food prices that are squeezing seniors.
Medicare officials told reporters Friday that about half of the increase is due to emergency planning if the program is eventually to cover Aduhelm, the new $56,000-a-year drug for Alzheimer’s disease from drug company Biogen. The drug would increase the cost of outpatient coverage because it is administered intravenously in a doctor’s office and is paid under Part B.
The problem turns into a case study of how one expensive medication for a condition that affects millions of people can cut government spending and affect household budgets. People who do not have Alzheimer’s would not be protected from the cost of Aduhelm, as it is large enough to affect their premiums.
The new Part B premium will be $170.10 per month by 2022, officials said. The jump from $21.60 is the largest dollar gain ever, though not in percentage terms. Just in August, the Medicare Trustees’ report had forecast a smaller increase of $10 from the current $148.50.
“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,” Medicare chief Chiquita Brooks-LaSure said in a statement. Officials said the other half of the premium increase is due to the program’s natural growth and adjustments Congress made last year when the coronavirus pandemic hit.
The late Friday afternoon announcement — in a time frame that government agencies use to deliver bad news — comes as Congress considers Democratic legislation, backed by President Joe Biden, that would limit what Medicare pays for drugs. Under the latest compromise, however, Medicare would not be able to negotiate prices for newly launched drugs. News of Medicare premiums could reopen that debate internally among Democrats.
“Today’s announcement … confirms the need for Congress to finally give Medicare the ability to negotiate lower costs for prescription drugs,” said Rep. Frank Pallone, DN.J., in a statement. “We just can’t wait any longer to really help seniors.” Pallone was a supporter of the original House version of the legislation, which took a stricter approach to the pharmaceutical industry.
Alzheimer’s is a progressive neurological disease with no known cure, affecting approximately 6 million Americans, the vast majority old enough to qualify for Medicare.
Aduhelm is the first Alzheimer’s drug in nearly 20 years. It won’t cure the life-threatening condition, but the Food and Drug Administration has determined that its ability to reduce clumps of plaque in the brain is likely to delay dementia. However, many experts say the benefit has not been clearly demonstrated.
Medicare has begun a formal review to determine whether it should cover the drug, and a final decision isn’t likely until spring. For the time being, Medicare decides on a case-by-case basis whether Aduhelm must be paid.
Costs are traditionally not included in Medicare coverage provisions. But in this case too, there is plenty of discussion about the effectiveness of Aduhelm. Last November, an FDA advisory panel voted almost unanimously against recommending approval, citing shortcomings in company studies. Several panel members resigned after the FDA approved the drug over their objections.
A not-for-profit think tank focused on drug pricing estimated Adulhelm’s true value at between $3,000 and $8,400 per year — not $56,000 — based on its unproven benefits.
But Biogen has defended its pricing, saying it has looked carefully at the cost of advanced drugs to treat cancer and other conditions. The company also says it expects a gradual uptake of the Alzheimer’s drug, rather than a ‘hockey stick’ scenario of rising costs. Nevertheless, Medicare officials told reporters to plan for contingencies.
Two House committees are examining Aduhelm’s development, including contacts between business leaders and FDA regulators.
Medicare covers more than 60 million people, including those over 65, as well as those with disabilities or severe kidney disease. Program spending is approaching $1 trillion per year.