A New Alzheimer’s Treatment Could Cost Medicare Billions of Dollars by 2025

A new Alzheimer’s treatment could cost Medicare billions of dollars by next year — well over Wall Street or even the drug’s manufacturer projections — according to a document obtained by STAT.

5.5 million people in the U.S. suffer from Alzheimer’s disease

Declining general health is natural as one grows older. However, struggling with Alzheimer’s disease, dementia, and other types of memory loss can make someone’s retirement days more difficult. Everyone becomes confused and startled once a loved one or family member starts forgetting their names or cannot recall important memories. Around 44 million people in the world are living with either Alzheimer’s disease (AD) or a related form of dementia. In the U.S., AD is the sixth leading cause of death; an estimated 5.5 million people have the disease. The majority, around 5.3 million, are 65 and older; about 200,000 younger patients suffer from an early-onset type. According to the Alzheimer’s Association, this number is projected to rise to 14 million by 2050. By then, AD and other dementias will cost the nation as high as $1.1 trillion.
Making diagnosis easier to establish is increasingly important, since more and more people are suffering from the disease, and many of the traditional memory assessment tools doctors have at their disposal are not sufficiently precise and reliable. Various pharmaceutical companies and innovators are trying to find the best treatment to counteract not only Alzheimer’s, but also other forms of dementia. Mission Therapeutics, a drug creator company focused on selectively targeting deubiquitylating enzymes (DUBs) and Chicago-based AbbVie, a research-based global biopharmaceutical company, announced on November 15th 2018 a new partnership to develop DUB inhibitors to fight Alzheimer’s and Parkinson’s diseases. Both Alzheimer’s and Parkinson’s patients have an abnormal accumulation of misfolded, toxic proteins, which cause impaired functions and the death of nerve cells in the brain. DUBs basically regulate the degradation of these particular proteins, thus ensuring the cells remain healthy.

Approved by the FDA last year, the new drug is the first broadly covered by Medicare

Leqembi® (generic name lecanemab) was granted traditional approval by the U.S. Food and Drug Administration in 2023. Following Aduhelm™, Leqembi is the second anti-amyloid Alzheimer’s disease treatment on the market. Now, it’s the first to qualify for broader coverage under original Medicare.

For patients on Medicare, the Centers for Medicare and Medicaid Services will decide on possible limitations, such as who is eligible to receive the medication. The medication would be covered under Medicare Part B since it is given by infusion in a doctor’s office or health care clinic. The co-insurance for beneficiaries enrolled in Original Medicare Part B services is 20%; therefore, the out-of-pocket cost for Medicare beneficiaries will be $11,200 per year. For those with Medicare supplemental or other secondary insurance, the costs may be less. For individuals enrolled in Medicare Advantage plans, the out-of-pocket cost will vary but could be as much as 20%.

Alzheimer’s might bankrupt medicare, according to popular media

Headlines in popular media suggest that Alzheimer disease will bankrupt the Medicare program.

The Centers for Medicare & Medicaid Services (CMS) is expecting outlays on Alzheimer’s disease drug Leqembi that far outpace the drugmaker’s estimates next year.

Medicare’s actuaries expect the drug Leqembi, made by the Japanese drugmaker Eisai and sold in partnership with Biogen, to cost the traditional Medicare program around $550 million in 2024, and the entire Medicare program $3.5 billion in 2025, a spokesperson for the Centers for Medicare and Medicaid Services confirmed to STAT.

In a document (PDF) recapping a February stakeholder call that was first obtained by Stat, the agency estimates that per member per month spending on Leqembi will rise from $1.67 in 2024 to $4.67 in 2025. Stat reported that this translates to about $550 million in spending for traditional Medicare this year and $3.5 billion across all of Medicare in 2025.

Based on these projections, that would represent a major jump in spending on Leqembi next year, according to the report. The numbers also raise questions on how much the program should be willing to pay on products like this.

40% of deceased Medicare beneficiaries have Alzheimer’s or other forms of dementia

Like many diseases, Alzheimer disease and dementia are associated with aging, but unlike other diseases, families and Medicaid, rather than Medicare, bear most of the substantial cost burden. As research continues into Alzheimer treatments, it is not too early to consider how to better integrate Medicare and Medicaid to fund and improve patient outcomes, which will likely involve better diagnosis, treatment, and care coordination. 

A study funded by the Alliance for Aging Research found that 40% of deceased beneficiaries have Alzheimer disease or unspecified dementia diagnoses in their claims history. In their last 9 years of life, Alzheimer disease added about 11% to the average $17,000 per year Medicare cost for same-risk beneficiaries without dementia. 

Using the Medicare 5 Percent Limited Data Set claim files from 2006-2015, the authors  conducted a cost impact analysis of costs for up to 8 years before the year of death. Risk adjustment was performed at a beneficiary level using Medicare’s 2015 Hierarchical Condition Categories. Beneficiaries were classified into dementia categories based on their diagnoses during the last 3 years of life. Costs were trend adjusted to 2015.
“I think CMS’ estimates demonstrate an incredible demand for Alzheimer’s treatments and possibly suggest broader use than I think was originally conceived,” said Ameet Sarpatwari, Ph.D., an assistant professor of medicine at Harvard Medical School who studies pharmaceutical costs and outcomes, told Stat.