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Perspective: New Alzheimer’s Drug is Projected to Increase National Health Expenditures by More Than One Percent

06/17/2021

Background

On June 7, the U.S. Food and Drug Administration (FDA) approved Aduhelm for treatment of Alzheimer’s disease. While Biogen, the drug’s manufacturer, tested it on patients with mild cognitive impairment (of whom there are an estimated one to two million in the U.S.), the FDA approved its use more broadly for the more than 6 million Americans currently diagnosed with Alzheimer’s. The drug is administered through intravenous infusion at an annual cost of $56,000 per patient – a non-retail expenditure that will be borne primarily by Medicare Part B.

 

FDA’s decision is controversial both because of the drug’s cost and the limited efficacy demonstrated in the manufacturer’s clinical trials. In this paper, we address the impact of Aduhelm use on non-retail prescription drug expenditures, total prescription drug expenditures, and national health expenditures (NHE) as projected by the Centers for Medicare and Medicaid Services (CMS).

 

Methods

In a previous report, we developed projections of non-retail prescription drug expenditures through 2028 and estimated their share of national health expenditures. In this paper, we extend those projections to include estimated expenditures on Aduhelm. We consider only spending on the drug itself, excluding additional expenditures associated with facility costs at infusion sites, Medicare payments to prescribing physicians, and testing of patients both for eligibility for receiving the drug and for side effects during its administration.

 

Although the FDA has approved Aduhelm for broader use, we assume a target population for receiving the drug to be the one million patients who currently represent the low end of the estimated population with mild disease (approximately 16% of the total Alzheimer’s population). This target population is assumed to grow over time, based on the Alzheimer’s Association’s projection of disease prevalence in the U.S. Utilization is assumed to ramp up in 2021 and 2022, with treatment of the full target population beginning in 2023. Biogen has announced that the price of Aduhelm will not increase in the next four years; we assume no price increase through 2028. While we believe these assumptions to be conservative, they are subject to significant uncertainty.

 

Results

Exhibit 1 presents our ten-year projection of the share of NHE attributable to retail and non-retail prescription drug spending, including our projected spending on Aduhelm. We include 2018 shares, representing the most recent CMS official historical data, for comparison. These projections suggest that, by the mid-2020s, Aduhelm will constitute more than 1% of all national health spending, increasing non-retail drug spending by more than 25% and increasing total prescription drug spending by more than 8%. (Doubling the uptake of Aduhelm to 2 million people – at the higher end of Biogen estimates of the target population – would double this impact, with Aduhelm’s contribution to NHE increasing to nearly 2.5% and non-retail drug spending increasing by more than 50%.)

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