New Alzheimer’s drugs expected to strain Medicare’s budget, potentially raising premiums

Purse strings are pretty tight all around lately, and thanks in part to new Alzheimer’s drugs, so are Medicare’s.

While Alzheimer’s drugs developed in recent years represent historic strides in treating the debilitating disease, they also come with hefty price tags. And experts worry this could strain Medicare’s wallet, potentially raising premiums and pulling financial resources away from other more effective treatments.

In early July, the FDA approved Kisunla, pharmaceutical giant Eli Lilly’s Alzheimer’s treatment. Kisunla is the second FDA-approved drug—after Biogen and Eisai’s Leqembi received approval in July 2023—shown to slow cognitive decline in mild dementia by targeting a protein called amyloid, according to the FDA.

Leqembi costs $26,500 per year, and in April, the Centers for Medicare and Medicaid Services (CMS) published a document estimating that Medicare would spend up to $3.5 billion on the drug in 2025.

Eli Lilly’s Kisunla has an even bigger price tag at $32,000 per year, but patients can stop taking the drug once brain scans show that most amyloid protein has been cleared from the brain, which took 18 months in clinical trials. Leqembi patients, on the other hand, must continue treatment indefinitely.

“I think that there will be a significant cost impact,” John Mafi, an associate professor of medicine at the University of California, Los Angeles’s Geffen School of Medicine, told Healthcare Brew. “Nobody really knows exactly what the cost impact is going to be, but I think it’s pretty easy to surmise that, given that the drugs are very expensive and we have millions of Americans with Alzheimer’s disease, it’s going to be a significant number.”

A look at the numbers. Roughly 5.8 million people in the US have Alzheimer’s disease or dementia, according to the CDC. However, both Kisunla and Leqembi are only approved for patients with mild cognitive impairment or dementia, so not everyone would be eligible for these treatments, according to Mariana Socal, an associate professor in the department of health policy and management at Johns Hopkins Bloomberg School of Public Health.

In 2021, around the time when the FDA gave tentative approval to a similar Alzheimer’s drug from Biogen called Aduhelm, CMS announced a 14.5% increase in premiums for Medicare Part B in large part to cover the high costs of this one drug. Aduhelm was originally priced at $56,000 per year before Biogen changed it to $28,200 annually in response to slow sales and concerns over affordability. Medicare ultimately decided not to cover the drug in January 2022, and Biogen discontinued it in January 2024.

While CMS has not yet announced any significant premium increases related to Leqembi or Kisunla, Mafi said, it’s possible premiums could increase to help cover costs.

Some policymakers are also worried that there’s an “opportunity cost,” he said. “We could be spending, in the next few years, billions of dollars on these drugs, and a lot of those monies could be spent elsewhere for treatments that have much higher value.”

For example, Medicare rolled out a program in early July to support dementia caregivers and give patients a more standardized and coordinated care plan.

“This program is one step in the right direction, and in my opinion as a primary care physician and a researcher in this area, these are the kinds of programs that really have the potential to dramatically improve quality of life far more than these drugs,” Mafi said. “There’s just going to be less money to pay for these kinds of programs if you’re spending the money on the drugs that have a very minimal benefit.”

Both Leqembi and Kisunla have shown minimal clinical effectiveness in studies, Mafi noted. For example, Leqembi’s clinical trial shows it can slow cognitive decline by about 3% over 18 months, but also comes with about a 3% risk for serious adverse effects, such as a severe brain bleed or swelling in the brain, according to Mafi.

On July 26, the European Medicines Agency (Europe’s version of the FDA) rejected Leqembi, arguing that the benefits don’t outweigh “the risk of serious side effects.”

But introducing some competition among Alzheimer’s treatments is a good way to start bringing costs down, according to Socal.

Competition is “an important factor that typically contributes to lower prices, because now clinicians have more options to choose from,” she said. “It’s not a guarantee that more drugs will lead to lower prices, but without more drugs, then we don’t have lower prices.

Correction 08/05/2024: This article has been corrected to reflect that the Leqembi trial showed a 3% slowing of cognitive decline, not the Kisunla trial.