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New, unproven Alzheimer's drug could blow up health spending

Reproduced from KFF and Bernstein; Chart: Axios Visuals

Biogen's new Alzheimer's treatment could be experts' nightmare drug spending scenario: An extremely expensive product that millions of desperate patients could be eligible for — and it may not even work.

Why it matters: Alzheimer's is a devastatingly common disease with no cure. But the FDA's decision this week paved the way for a free-for-all in which taxpayers foot most of the enormous bill for a drug that hasn't been proven effective.

Driving the news: The FDA approved Aduhelm for all Alzheimer's patients, rather than the narrower subset it was tested against.

  • It's estimated that around 6 millionAmericans currently have the disease, most of whom are covered by Medicare.

By the numbers: Around 500,000 Americans are diagnosed with Alzheimer's each year, and the company announced that the drug costs $56,000 annually.

  • Patients would receive monthly infusions of the drug, which they'd likely need long-term. An Alzheimer's patient lives, on average, an additional three to 11 years after their diagnosis, per the Mayo Clinic.
  • If half of the newly eligible Americans in a year began treatment with Aduhelm, the cost would be $14 billion — roughly equivalent to Medicare Part B spending in 2019 on the next 8 products combined, per a Bernstein analysis. Total Part B spending in 2019 was $37 billion.
  • But that's a conservative estimate of annual spending on Aduhelm, as it only applies to half of one year's worth of newly diagnosed Alzheimer's patients.

Yes, but: It will likely take a while for the health system to build up enough capacity to handle the influx of eligible patients.

  • And some private insurers may limit eligibility. Steve Miller, chief clinical officer at Cigna, said yesterday that he expected Cigna and most other insurers will pay for the drug only for patients meeting certain criteria, per the NYT.

Between the lines: The numbers alone could give new ammunition to advocates who argue that drug prices are too high and should be limited.

  • "It's unconscionable to ask seniors and taxpayers to pay $56,000 a year for a drug that has yet to be proven effective. Medicare must be able to negotiate a fair price for prescription drugs," tweeted Senate Finance Committee Chairman Ron Wyden.
  • But politicians may find it hard to take on the narrative that the treatment is anything but a long-sought beacon of hope for Alzheimer's patients.

What they're saying: “It’s always been the worry that if you get a super expensive drug that is targeted toward a huge population, that that is going to be a turning point in how we deal with health care spending,"said Walid Gellad,a health policy professor at the University of Pittsburgh. "And that’s what this drug is.”

Go deeper: Aduhelm's price to squeeze Medicare and patients

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