By Joseph Antos

Biogen is cutting the price of Aduhelm (aducanumab), a new treatment for Alzheimer’s disease, from $56,000 to $28,000 starting in January. That could justify reducing Medicare’s premium for next year, but the amount that most seniors could save is trivial. At this late date, any change in the premium amount would complicate Medicare’s billing process without appreciable savings for beneficiaries. Policymakers should work on improving how Medicare responds to the introduction of high-cost medical innovations rather than generating a press release that will be forgotten before the next election.

In recent weeks, Senators Bernie Sanders (I-VT) and Ron Wyden (D-OR) urged the administration to reduce or eliminate the $11.60 increase in Part B’s monthly premium attributed to potential spending on Aduhelm. Biogen’s price cut has renewed demands by patient advocates to reduce Medicare’s Part B premiums for 2022. UsAgainstAlzheimers, which supports broad access to the new drug, called for both a lower premium and a rapid decision to provide broad Medicare coverage for the drug. George Vradenburg, chair of the group, said “If they didn’t reverse that [premium increase] . . . then I would be pretty unhappy as a Medicare beneficiary.”

Medicare beneficiaries would be unhappy, but mainly because
they would not save much if the premium was reduced. Cutting the price of
Aduhelm in half cuts projected Medicare spending for the drug in half. That
means the average senior would save $5.80 a month, but even with that discount
the monthly Part B premium would total $164.30.[1]
Given press reports that emphasize billions of dollars in potential Medicare
spending for Aduhelm, seniors might feel short-changed by such a modest premium
reduction.

Reducing the Part B premium would be neither fast nor easy. In
addition to reducing the premium, any change in the Medicare actuary’s cost assumptions
would require changing the Part B deductible. The deductible is increased
annually to account for increases in projected Part B spending, which includes
spending assumed for Aduhelm. Reducing only the premium is not an option
without new legislation, which is implausible.

Even if those calculations could be completed before January 1, they could not be implemented immediately. Part B premiums are normally deducted from Social Security benefits, which are paid at different times of the month depending on the recipient’s birthday. The first tranche of 2022 premiums will be withheld on the second Wednesday in January, with additional collections on the third and fourth Wednesdays. Bills are sent in advance of coverage to Part B enrollees who are not receiving Social Security benefits, so some people have already paid the full undiscounted premium. Changing the premium would require time to reprogram the billing system, and any excess payments from early in the year would have to be refunded to Part B beneficiaries.

Such an effort would raise administrative costs and be prone
to errors that could result in overpayments or underpayments that might not be
discovered for months. Any political advantage to this gesture is likely to be
overwhelmed by the confusion and annoyance that would be imposed on nearly 60
million Part B beneficiaries.

The controversy over Aduhelm is the latest example of the challenges that rapid advances in medical treatment and technology pose for Medicare. The program is charged with covering products and services that are “reasonable and necessary” for the diagnosis or treatment of a disease or injury. That standard is not easily translated into a useable coverage methodology. Medicare should beef up its ability to evaluate the trade-off between benefit and risk in making coverage decisions. New payment mechanisms should be developed to promote appropriate use of high-value, high-cost treatments.

The opportunity for policymakers to take credit for lowering
Medicare premiums with no apparent downsides is unprecedented. It is also an
unnecessary distraction from the serious policy work needed to prepare Medicare
for the introduction of new, breakthrough treatments. It’s time to quietly drop
any further discussion of this bad idea.

[1] Because beneficiaries are responsible for 20 percent of the cost of a Part B drug, the lower price could lead to an increase in the number of patients receiving treatment. If asked to estimate program spending with the lower price, the Medicare actuary would take this into account along with any new information about take-up rates. As a result, the premium reduction would differ somewhat from $5.80. This refinement is ignored here for simplicity.

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