July 13, 2021

All Eyes are on Medicare


            When the FDA approved Biogen’s new Alzheimer’s drug, aducanumab (brand name Aduhelm) on June 7, the reaction was surprise, dismay and, in some quarters, enthusiasm. But everyone was shocked by the drug company’s audacity in setting the price for the medication at $56,000 per year. As one STAT article put it, the only question about the consequences for Medicare, the insurer for close to 97 percent of Alzheimer’s sufferers, was whether the impact would be big, huge, or catastrophic. 

Pharmaceutical manufacturers figured out some time ago that they could bring out “specialty drugs,” typically targeted against a single relatively rare disease, if they charged ten or even a hundred times more than for an average medication. The list price of crizotinib (brand name Xalkori), for example, used against a relatively uncommon type of lung cancer found in non-smokers, is just under $20,000 for a one-month supply—and patients usually take the drug until they die or develop resistance to it. But aducanumab is intended for all people with Alzheimer’s disease, and according to recent Alzheimer Association estimates, that means 6.2 million people over age 65.

            The high price is especially disturbing because it’s not even clear that the drug works. A number of studies have been carried out with similar drugs, other monoclonal antibodies that, like aducanumab, were designed to mop up abnormal brain amyloid deposits, which are the hallmark of Alzheimer’s disease—but none of those drugs proved helpful in practice. The trials of aducanumab were likewise discontinued because interim analysis showed the drug was ineffective. Then, in a surprise move, the manufacturer nonetheless applied to the FDA for approval after a reanalysis of the data showed some evidence of benefit when the drug is given in high doses. The independent scientific review panel convened by the FDA to evaluate the data was not convinced, however, with 10 out of 11 members rejecting approval and one abstaining—but the FDA nonetheless approved the drug.

            Even if aducanumab does work, “work” means slowing the rate of decline slightly, not stopping or reversing the disease process. And the potential side effects of the drug are considerable: 40 percent of patients experienced brain swelling, in some cases of sufficient magnitude to cause nausea, vomiting, confusion, or visual changes. 

            Patients and their families, who are desperate for an effective drug against this progressive, ultimately fatal disease, are eager to try something with promise, anything. But they are worried about the side effects of aducanamab, about the need for regular MRI scans to monitor for those effects, and about its high cost.

            Most critiques of the new drug—and there are many, the NY Times alone has published eight articles on the subject between June 7, when the FDA announced approval of the drug, and July 9 , and STAT has published at least 16—assume that since it has been approved by the FDA it will necessarily be paid for by health insurers. In the case of aducanumab, that will principally be Medicare. In fact, CMS is not obligated to provide coverage for the drug just because the FDA approved it.

            Medicare, like all other health insurance companies, can decide what tests, procedures, and treatments it will cover. The relevant part of Medicare that will be responsible for paying for aducanamab, if Medicare covers the drug, will be Part B: oral medications fall within the jurisdiction of Medicare Part D plans (prescription drug plans), but medications administered intravenously in a physician’s office, such as aducanumab, fall under Medicare Part B. Most determinations of whether to provide coverage for this kind of treatment are made locally, by the private carriers that process Medicare claims. But the decision about coverage can be made nationally if requested by CMS, by the manufacturer, or by members of the medical profession, in which case the decision becomes binding on all the private carriers. Such “National Coverage Decisions” are reviewed by an internal arm of CMS, the Special Coverage and Analysis Group. For particularly controversial decisions, especially if they have social or ethical implications, CMS may request the guidance of the quasi-independent committee, MEDCAC, the Medical Evidence Development and Coverage Advisory Committee. This is a group of 100 experts including economists, ethicists, physicians, scientists and others, from whom a subgroup of 15 is selected to provide in-depth analysis on the particular test or treatment under consideration. 

            Since its inception, MEDCAC (or its predecessor, the Medicare Coverage Advisory Committee), has issued 348 National Coverage Decisions. These comprehensive analyses have addressed topics as diverse as cardiac pacemakers, Pap smears, and lipid testing. On rare occasions, they have dealt with drugs, for example, an intravenous medicine used in the treatment of heart failure, Nesitiride. When MEDCAC deliberates Medicare coverage for a particular intervention, it can recommend covering the intervention, not covering it, or restricting its use in specific ways. For instance, it advocated coverage of the Left Ventricular Assist Device, an invasive treatment that is almost but not quite an artificial heart, but it required a detailed informed consent process that included a social worker and palliative care expert along with the patient, family, and cardiac surgeon. Ultimately, Medicare approved coverage for the device but set reimbursement at $70,000 (the manufacturer’s price was closer to $200,000) and limited insertion of the device to a handful of medical centers across the country. 

            Medicare is required by federal law to provide coverage for anything that is “reasonable and necessary” for “the diagnosis or treatment of an illness or injury.” Despite years of often contentious debate, there is no precise definition of what this means. The FDA, by contrast, approves drugs and devices if they are “safe and effective.” In the case of aducanumab, it is arguable whether the drug is truly safe and effective, but surely it would be reasonable and necessary for Medicare to restrict the use of aducanumab to early disease (the only group in whom it was tested) and to require an elaborate informed consent process. While Medicare, by established custom, does not reject coverage based on cost-benefit analysis, it could set the price at a level comparable to those of the existing, only marginally beneficial drug treatments for Alzheimer’s disease, drugs such as rivastigmine (brand name Exelon, which has a yearly retail cost, when given as the brand name drug, of $823) and donepezil (brand name Aricept, which has a yearly retail cost, when given as the brand name drug, of $5380).

            Given the controversy swelling around Biogen’s new Alzheimer’s drug, the case for Medicare initiating the National Coverage Decision process is strong. The only reason for failing to do so is external pressure, whether by the manufacturer, by members of Congress under the influence of the pharmaceutical industry, or by the public. If CMS opts against this path or convenes MEDCAC only to reject its advice,* as the FDA did with its advisory committee, that would be a compelling reason to make CMS an independent agency, along the lines of the National Science Foundation, that is under control of a bipartisan board and whose director is independent of the President.


            *Between when this essay was drafted on July 9 and edited for publication today, CMS has in fact decided to proceed with a National Coverage Decision.