RACMonitor: New Drug Makes a Splash – A Swan Dive or a Belly Flop?

Dr. Ronald HirschJune 17, 2021

Physician with elderly patient.

The soaring cost of new medications and technologies is not news. Insulin was first patented in 1923, but due to incremental changes in the molecule and delivery system, a vial of insulin can still cost hundreds of dollars. When highly active antiretroviral therapy was approved for treatment of HIV in the mid-1990s, the drug combination was priced at about $1,000 a month. There was initially outrage at the exorbitant cost of drugs that turned a nearly uniformly fatal disease into a chronic illness. But now, it is not uncommon for a new oral medication for diabetes or heart failure to cost nearly that much alone.


When CAR-T therapy was approved for treatment of blood cancers, the $250,000 price tag for a treatment course raised some eyebrows, as did the cost for a new one-time therapy for spinal muscular atrophy, onasemnogene abeparvovec-xioi, which was priced at over $2 million. But the decision by the Food and Drug Administration (FDA) on June 7 to approve a new treatment for Alzheimer’s disease has raised a whole new set of questions. This drug, aducanumab, has not yet been priced, but it is expected to be near $60,000 per year. This medication is given intravenously on a monthly basis, adding to the cost, and patients will need to undergo at least two MRIs per year to monitor for complications.


While the price of the medication is high, the number of patients who are potentially eligible to receive the treatment, those with Alzheimer’s disease, is in the millions. But it is not the cost of the treatment, nor the potential number of patients who may need monthly access to an infusion center to receive treatment, that got attention. It was the fact that this medication did not significantly improve patient outcomes in the clinical trials. A proper analysis of this treatment’s efficacy is beyond the scope of this publication. However, many experts are concerned that the approval was based on the ability of the medication to clear amyloid plaques from the brains of patients – but without any clinically meaningful improvement in the patient’s memory or cognition.


In medical parlance, this is referred to as relying on a surrogate marker, rather than a patient-oriented outcome. For example, the common diabetes blood test, the hemoglobin A1c, is a surrogate marker (or control) of diabetes. Diabetics track their A1c not because a lower A1c is intrinsically better, but because a lower A1c has been correlated with the reduced risk of developing some of the devastating consequences of diabetes. While increased amyloid plaques are associated with a higher incidence of Alzheimer’s disease, it is not clear that removing those plaques reduces the risk of developing Alzheimer’s or slows the progression of the disease.


It is certain that the debate about who should get this medication and when in the course of the disease it should be administered is likely to be extensively debated. But this medication’s cost warrants monitoring by the utilization review staff. As an infused medication, this drug will be covered by Medicare Part B for Medicare beneficiaries, and not Part D. Of course, until this medication received FDA approval, Medicare would not address coverage. But now that FDA approval was finalized, many parties are asking for the Centers for Medicare & Medicaid Services (CMS) to quickly start the National Coverage Determination process. This will provide an objective review of the data to determine if the drug meets medical necessity guidelines for coverage – and if so, how CMS will cover the medication. If covered, protocols will need to be established to ensure that medical necessity is met and clearly documented. Processes must also be developed to review the use of the medication in the inpatient setting. As a single infusion, there is no indication for admission simply to administer this medication, as can occasionally occur with chemotherapy. But there may be instances in which a patient is hospitalized for a condition related or unrelated to their dementia, wherein a physician orders the medication. Unless the manufacturer applies for a new technology add-on payment (NTAP), the cost will be included on the inpatient claim and only result in additional payment if outlier status is reached. Even if NTAP status is approved, the additional payment will be limited to 65 percent of the approved cost, resulting in a significant financial loss compared to administration under outpatient status.


FDA approval is the first step of a long process to routine use, but awareness is the first step to ensure that when the day comes, you are prepared. Finding out that the infusion was not covered with the receipt of an overpayment letter is a much less desirable outcome.


Read the full article here.

Author Bio: Dr. Ronald Hirsch is Vice President of the Regulations and Education Group at R1 RCM Inc. Dr. Hirsch was a general internist and HIV specialist and practiced at Signature Medical Associates, a multispecialty practice located in Elgin, IL. He was Medical Director of Case Management at Sherman Hospital in Elgin, IL from 2006 to 2012, where he was Chairman of the Medical Records Committee from 1995 to 2012, and also served on the Medical Executive Committee. Dr. Hirsch is certified in Health Care Quality and Management by the American Board of Quality Assurance and Utilization Review Physicians, certified in Revenue Integrity by the National Association of Healthcare Revenue Integrity, and on the Advisory Board of the American College of Physician Advisors. He is on the editorial board of RACmonitor.com. He is the co-author of The Hospital Guide to Contemporary Utilization Review, with the third edition published in 2021.