Even with rebates, a pricey new drug to treat Alzheimer’s disease is expected to cost Medicaid more than $2 billion a year if a large majority of beneficiaries with the disease switch over to it, a new analysis found.
The analysis, released Tuesday from the Kaiser Family Foundation, underscores that the $56,000 a year price tag for aducanumab will not just be a major strain on Medicare’s budget. Dual-eligible beneficiaries on both Medicare and Medicaid could also face higher premiums due to the high cost, the analysis said.
Medicaid covers nearly all drugs approved by the Food and Drug Administration, but it requires drugmakers to provide rebates for the products. For brand-name drugs such as aducanumab, which is made by Biogen, drugmakers must rebate 23.1% of the average sales price.
Biogen is offering aducanumab, under the brand name Aduhelm, for a price tag of $56,000 a year, but the rebate will reduce that cost to $43,000 a year. States would be responsible for $13,800 of that amount, and the federal government making up the rest.
The estimated cost for Medicaid could vary based on how many people with Alzheimer’s switch over to the drug. There are 6 million people estimated to have Alzheimer’s disease, and Kaiser projects that approximately 67,000 Medicaid beneficiaries get treated for it.
“If 25 percent of these beneficiaries switched to Aduhelm, the total net cost (post-rebate) would be approximately $720 million per year,” Kaiser said. “If 75 percent of these beneficiaries switched to Aduhelm, the total net cost would be more than $2 billion per year, which is 7 percent of current Medicaid net drug spending.”
It remains unclear how many Medicaid beneficiaries will switch to the drug. Biogen and the FDA recently narrowed the label for prescribing the drug to patients with only a milder form of Alzheimer’s.
There are also some policies that could lower the cost of the drug. The Medicaid and CHIP Payment and Access Commission recommended that Congress increase the minimum rebate amount on drugs granted accelerated approval and offer an inflationary rebate if confirmatory drug trials are not completed in a certain amount of time, Kaiser said.
“Drug pricing remains on the policy agenda, and while the discussion remains focused on Medicare, expensive drugs, and proposed policies to address them, will also impact Medicaid,” the analysis said.