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There’s a fair amount of chatter in families who have a family member with Alzheimer’s now that a about a new (monoclonal antibody) drug developed by Eisai Co., Ltd. & Biogen Inc. An Advisory Committee to the Food and Drug Administration (FDA) unanimously endorsed the efficacy and clinical benefit of their drug, called lecanemab (Leqembi™, Eisai). The committee decision makes it very likely FDA will give full approval for the drug (a monoclonal antibody treatment) later this summer.

At that point, a huge debate will ignite about whether Medicare will cover the treatment and for whom.

For families and patients, the drug may slow progression of the disease in early-stage patients. However, this drug is not a cure, and it doesn’t make people get better, but it may slow down progression in very mild disease patients. Leqembi can cause swelling or bleeding in the brain, which means patients must receive periodic brain scans after starting treatment. The monoclonal antibodies are given intravenously every other week to remove amyloid from the brain. Amyloid plaques are a hallmark of Alzheimer’s, though many earlier drugs that targeted amyloid failed to slow down patients’ loss of mental abilities.

The stakes are high for everyone who pays Medicare payroll taxes and especially persons who already participate in Medicare, as the drug is so expensive. The potential number of patients so also large, meaning covering the drug could result in large premium increases for all Medicare patients and potentially even require a Medicare payroll tax increase.

The exact number of Medicare beneficiaries who meet the prescribing requirements for Leqembi is unknown and the take-up rate among eligible individuals is difficult to estimate. But, if 5% of the 6.7 adults in the US with Alzheimer’s disease take Leqembi at the annual list price of $26,500 it would cost Medicare Part B $8.9 billion to Medicare Part B every year. A 10% take-up rate would amount to $17.8 billion in higher spending.

From KFF: “Spending on Leqembi would be roughly equal to spending on the top 3 Part B drugs combined in 2021 based on the 5% take-up rate. At the 10% take-up rate, projected spending on this one drug 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 600+ Part B covered drugs in 2021.”

New Alzheimer’s Drugs Spark Hope for Patients and Cost Concerns for Medicare | KFF

Higher Medicare Part B spending would likely lead to higher Medicare Part B premiums, which are set to cover roughly 25 percent of program costs. In the case of 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, an increase substantially above the norm. Medicare’s subsequent decision to limit coverage of Aduhelm contributed to a modest (3%) decline in the Part B premium for 2023.

At Leqembi’s current $26,500 list price, Medicare patients administered the drug would be responsible for more than $5,000 out of pocket each year, based on a 20% coinsurance requirement in traditional Medicare.

To address concerns about the effect of high-priced drugs on Medicare program spending, 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.

Assuming Leqembi receives full approval in July 2023 and Medicare coverage expands shortly thereafter, the drug’s manufacturers will have between now and 2036 to recoup investments in research and development and earn revenue from Medicare before possibly having negotiated pricing take effect.

While broader access to Leqembi could provide modest clinical benefits to older adults with mild cognitive impairment and mild dementia stage of Alzheimer’s disease, a significant increase in Medicare spending and premiums is a distinct possibility, and one that Medicare, patients, and taxpayers are likely to confront in the not-too-distant future.

Editorial Note: The issue with the price to Medicare for this drug highlights what will be an increasing problem for Medicare. The cost of new drugs times the number of people that will want them is becoming increasingly untenable under the current fiscal framework.

If you listen to the media and some politicians, you may have been led to believe the Medicare negotiation component of the Inflation Reduction Act took care of this problem IT DID NOT.

While earlier proposals (H.R. 3 and even the initial proposal in the IRA) did give good negotiating authority to Medicare the final version only gives very modest and delayed negotiating authority to Medicare. Senator Sinema was instrumental in stripping out the more meaningful parts of the bill, just sayin’.

See: More Meaningful Prescription Drug Price Reform That Could Have Been