New Alzheimer’s drug could balloon state Medicaid budgets

MM Curator summary


Medicaid may be left with all the cost of the new drug if Medicare does not cover it.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.



New Alzheimer’s drug could balloon state Medicaid budgets – STAT


A decision by Medicare not to cover Aduhelm would cost the Medicaid program an estimated $1.9 billion more in fiscal year 2022.



A new drug that was supposed to be a lifeline for thousands of individuals and families struggling with the tragic impacts of Alzheimer’s disease is evolving into a millstone around the neck of Medicaid, America’s largest safety net health insurer.

The Medicaid program, which today connects one in every four Americans to the health care they need, is an essential part of the U.S.’s health care fabric. But a recent decision by the Food and Drug Administration to approve Aduhelm, an unproven and exceptionally costly new drug to treat the symptoms of early Alzheimer’s disease, could threaten Medicaid’s ability to continue to serve the millions of people who rely on the program.

Medicaid operates independently in each of the nation’s 56 states and territories. It is a “first responder” during economic downturns and for natural disasters and pandemics. It is the largest provider of mental health and behavioral health services. Forty percent of all children rely on Medicaid for comprehensive health care benefits, and the program finances 50% of all births in the U.S.

Medicaid now overshadows its sister program, Medicare, in terms of total number of people covered. Medicaid also supports the Medicare program for low-income seniors and individuals with disabilities by paying for its sizable premiums, co-pays and deductibles. It also pays for comprehensive nursing home care and home and community-based options for seniors with low incomes.

There’s no question that curing or treating Alzheimer’s, or at the very least delaying its onset, is a priority for all sectors of the health care landscape, as 5 million Americans and their families are currently living with the disease. But the most recent development in this sphere could burden state Medicaid programs with an expensive product with questionable evidence of effectiveness.

The FDA’s approval of Aduhelm, a drug meant to slow the progression of the disease, has been touted as a potential cost saver for the Medicaid program by reducing the number of seniors with dementia who will need long term care. It’s likely to do just the opposite.

The Medicare program has just embarked on a comprehensive review of Aduhelm, which may lead to the federal program deciding to cover it for a narrow set of individuals, or not cover it at all. This may well be the smart decision for a product with a $56,000 price tag and questionable evidence of success. The Institute for Clinical and Economic Review believes a price between $3,000 and $8,400 is more appropriate.

A decision by Medicare not to cover Aduhelm will shift all of the costs entirely to the Medicaid program, which is required by federal law to cover all FDA-approved drugs, no matter how poorly they work. Based on a survey conducted on behalf of the National Association of Medicaid Directors, which I direct, Medicare’s decision not to cover Aduhelm would cost the Medicaid program an estimated additional $1.9 billion in fiscal year 2022.

State Medicaid programs can ill afford to waste valuable resources — particularly in the midst of a pandemic — on high-cost, low-value treatments. Compounding this budget reality is the fact that Aduhelm is not intended to cure Alzheimer’s, so in all likelihood individuals who are prescribed it will take it for the rest of their lives, compounding the long-term costs of covering it.

The federal government must take immediate action to ensure that these costs are not irresponsibly shifted onto the Medicaid program. One straightforward reform might be to allow state Medicaid programs the authority to cover — or not cover — Aduhelm in alignment with Medicare’s decision.

Aduhelm is just the most recent example of the challenges Medicaid faces in sustaining its ability to provide high-value and cost-effective care for the tens of millions of Americans who rely on it. There are further reforms that will still need to be made as future products like Aduhelm that carry both astronomical price tags and little evidence of their clinical effectiveness receive FDA approval. Medicaid must have a more sensible, longer-term solution to how it covers and pays for those products.

Matt Salo is the executive director of the National Association of Medicaid Directors.