Aduhelm Pay-Formula Change Overshadowed By Other Developments
By John Wilkerson
March 24, 2022
The change to Medicare Part B reimbursement of Aduhelm is minor compared to other developments in the saga of the Alzheimer’s drug, sources say, and the temporary financial losses it might cause some doctors would likely be more than offset by the previous overpayments that Medicare was making for the drug.
CMS plans to change the doctor-payment formula for Aduhelm because the average sales price it normally uses was double the “widely available market price,” or WAMP, after Biogen halved the price of the drug. The formula is typically ASP plus 6%, and CMS plans to change it to WAMP, without an add-on payment.
That means doctors would break even on the drug, but with the phase-in of sequestration, which begins the same day (April 1) as the formula change, they’ll likely lose money, sources say.
However, Aduhelm’s price drop in December was a windfall for providers in the first quarter of this year because Medicare was still reimbursing them the previous price plus the add-on payment, according to Sean Dickson, director of health policy for West Health. The drug’s average annual price was $56,000, which Biogen cut to $28,000 on Jan. 1 following slower-than-expected sales. The WAMP is designed to prevent such overpayments from continuing longer than three months.
“While the combination of WAMP and sequestration means some providers may be slightly under-reimbursed in Q2 2022, these are likely the same providers that saw windfall reimbursement in Q1 2022,” Dickson said.
Dickson said the new pay formula will last one quarter before reverting to the ASP + 6% formula for the same reason that doctors were overpaid for one quarter: The reporting of ASP lags behind. Once first quarter sales at the lower price are reported to CMS in the second quarter, those prices will set reimbursement in the third quarter.
Dickson also said CMS has no choice. The HHS Inspector General is required to tell CMS when ASP is more than 5% higher than WAMP for two out of four consecutive quarters, at which point CMS “shall” use the WAMP. It can only use the wholesale acquisition cost (WAC), which would be accompanied by an add-on payment, if WAC is lower than ASP and WAMP is not lower than ASP, he noted.
Drug industry sources said CMS had the discretion to use WAC, which would’ve preserved the add-on payment for doctors while falling in line with the price cut.
However, most sources believe the new WAMP formula, while interesting, is overshadowed by other developments linked to Aduhelm. As for the drug itself, the $28,000 price cut was voluntary, sales were already lackluster and the lack of add-on payment is not expected to make them worse, they said. CMS is considering restricting coverage of Aduhelm to patients in clinical trials, which would hurt sales.
Also, Aduhelm triggered efforts to reform the commonly used accelerated approval process for all drugs. It also gave states, such as Oregon, an excuse to try to exclude all accelerated approval drugs from Medicaid formularies.
However, not everyone believes the Part B formula change is benign. Susan Peschin, president and CEO of the Alliance for Aging Research, said it’s part of the administration’s attack on Aduhelm. Peschin is scheduled to meet with HHS Secretary Xavier Becerra, and the Alliance for Aging Research led a protest at HHS over CMS’s proposed national coverage policy. The agency has received a lot of support and opposition to the proposed national coverage determination. The deadline for the final coverage policy is April 11.
“CMS clearly doesn’t want to pay for the new AD treatments and is using every tool in their toolbox to block utilization,” Peschin said.