New Drug Could Cost the Government as Much as It Spends on NASA
7 min read
A newly approved drug to treat Alzheimer's disease is expected to become a multibillion dollar expense for Medicare. By one projection, spending on the drug ...
for Medicare's patients could end up being higher than the budgets for the Environmental Protection Agency or NASA.

There's little evidence that the drug, Aduhelm, slows the progression of dementia, but the Food and Drug Administration approved it this month. Analysts expect that Medicare and its enrollees, who pay a share of their prescription drug costs, will spend $5.8 billion to $29 billion on the drug in a single year.

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"It's unfathomable," said Tricia Neuman, executive director of the Kaiser Family Foundation's program on Medicare policy. "These are crazy numbers."

Plenty of other drugs cost more than Aduhelm, which is made by Biogen and will be priced at $56,000 annually. What makes it different is that there are millions of potential customers, and the drug is expected to be taken for years.

The drug's approval has aroused criticism from health policy experts and pharmaceutical researchers for its lack of proven effectiveness. Effective or not, if widely prescribed, it could have an overwhelming effect on Medicare's budget because the public program covers the vast majority of the nearly 6 million Americans with an Alzheimer's diagnosis.

There is little precedent for a sudden spending jolt of this size. Even at the low end of projections, Aduhelm would become one of Medicare's most expensive drugs.

At the high end, analysts say the new drug could cause a 50% increase in Medicare's annual spending on drugs delivered in hospitals and doctor's offices (as Aduhelm, which is given intravenously, would need to be).

The comparisons here are approximate: A third of Medicare enrollees are covered through private Medicare Advantage plans that do not release detailed information on the drugs provided in doctor's offices. To estimate that spending, we used the drug spending data for Medicare enrollees in the traditional public program and increased it to account for the missing share.

Josh Katz, Sarah Kliff and Margot Sanger-Katz
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