As President Biden suggested, Medicare needs the ability to negotiate drug prices
In his State of the Union address, President Biden proposed giving Medicare the ability to negotiate low prices for prescription drugs.
I think that the president means not only the over-the-counter drug of Part D but also the drug administered at the clinic of Part B. Medicare is an urgent need for that ability. Medicare’s decision to limit the scope of aducanumab to clinical trials will keep costs down for some time, but the bigger problem is: effective A drug for early Alzheimer’s disease in an environment where Medicare does not have the ability to negotiate prices.
The initial price was $ 56,000 for Aduhelm, It lowered the priceTo $ 28,200 in response to sluggish sales. Even with a million beneficiaries priced at $ 28,200, Medicare will be billed at $ 23 billion (Medicare pays 80% and beneficiaries pay 20% out-of-pocket). Aducanumab spends about two-thirds of what Medicare Apartment B currently spends on all medicines, eight times the amount currently spent on the most expensive medicine, Eylea (Table 1). reference).
With total spending of Medicare Apartment B of $ 419 billion in 2020, an increase of $ 23 billion would require a 5.4% increase in Part B premiums. These costs increase over time as individuals with Alzheimer’s disease become eligible. It could also double if a competitor offers a clearly effective product at Biogen’s original price of $ 56,000. Due to the increased number of eligible patients and the initial price of Biogen, it may eventually be necessary to raise Part B premiums by 32% (see Figure 1).
Patients with Alzheimer’s disease will have to pay a high out-of-pocket cost for both the drug and related medical services (such as regular MRI scans) because the beneficiaries usually pay 20% co-insurance. Therefore, even with a “discounted price” of $ 28,200, the beneficiary will pay $ 5,640 for a year’s supply of Aduhelm. At the original $ 56,000 price, joint insurance was $ 11,200. Traditional beneficiaries without Medigap policies face direct costs. If you have adopted the Medigap policy, your insurance premiums will increase. Members of the Medicare Advantage Plan will also be responsible for sharing costs until the annual out-of-pocket limit is reached. All of these increased spending will have a devastating impact on the typical Medicare beneficiaries with an average income of about $ 30,000. And, as mentioned earlier, aducanumab is not a cure, and patients may bear these costs for years.
The increase in Part B premiums and co-insurance from aducanumab would have significantly increased the average out-of-pocket costs as part of the average social security benefits. These costs now reach about 25% of the average social security benefit and will rise to 35% by 2050 under the 2021 trustee assumption and 38% under the alternative assumption (Figure 2). reference).
If Medicare approves Aduhelm for the original price of $ 56,000 and ultimately 3 million beneficiaries qualify for the drug, the expected out-of-pocket cost will be the average social security benefit by 2050. It is equivalent to 43%. Of course, at some point the patent will expire. With the advent of generic drugs, you will have some control over the prices of drug creators.
Obviously, the goal of society is to mitigate the damage of horrific illnesses, but the story of aducanumab is the financial risk of the system if valuable medicines become available and Medicare remains unable to negotiate prices. Is emphasized. Hopefully, the story of aducanumab will rekindle Congress’s interest in empowering Medicare to negotiate drug prices.
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