Health policy expert Joe Grogan writes:
Another Alzheimer’s drug has yielded promising results, demonstrating a 35% decline in early-disease progression in a trial of 1,736 patients after 18 months. Donanemab, made by Eli Lilly, represents the strongest showing against Alzheimer’s to date. This success follows the Food and Drug Administration’s accelerated approval in January of lecanemab—a similar treatment from Biogenand Eisai—which showed a 27% decline in a trial of 1,795 patients after 18 months.
Yet the Centers for Medicare and Medicaid Services is denying seniors and their families access to these treatments, and rebuffing innovators who have produced the biggest breakthroughs in Alzheimer’s in two decades. Such regulatory overreach must stop.
This is from Joe Grogan, “
The Agency Keeping Alzheimer’s Drugs From Patients,”
Wall Street Journal, May 4, 2023 (May 5 print edition.)
I respect Joe Grogan a lot. He’s a very sharp guy with whom I generally agree on drug policy. But on this issue I disagree. He thinks that taxpayers should pay for these expensive treatments. I think they shouldn’t. I’m glad that the FDA allowed the drug; it should allow more. But that doesn’t mean that taxpayers should pay. Moreover, refusing to subsidize someone for a particular treatment should not be called, as Grogan does, “regulatory overreach.”
Maybe the difference between Joe Grogan and me is over how we view Medicare. Medicare is socialized medicine and I want to move in the direction of limiting and reducing socialized medicine. I want people to take more responsibility for paying for their own medical treatments and not put that on taxpayers. The case holds a fortiori for drugs that have less evidence in their favor, especially when they are so high-priced,
By the way, I’ve written on a related Alzheimer’s drug before (
here and
here) and I notice (somehow I missed it) that co-blogger Scott Sumner has
written cogently on this also and, indeed, beat me to the punch.
READER COMMENTS
Thomas, Hutcheson
May 7 2023 at 10:32am
The question ought to be how much should Medicare be willing to pay for a drug that produces x additional years of quality adjusted life worth $z.
David Henderson
May 7 2023 at 10:46am
You write:
Here’s my edit of your comment:
What I’ve noticed about your comments over the years is not that you ask bad questions: you typically ask reasonable questions. It’s that you tend to think that your question is THE question.
Thomas Hutcheson
May 8 2023 at 9:50am
I guess that is right. I find a topic interesting, but then the issue raised not the one I think is more important. Presumably that improves the overall discussion, right? I hope so at least.
The template seems to be that on grounds Y, Econlog poster X criticizes policy Z which generally I agree is (or might be, depending on the exact facts of the case) worthy of criticism, but I think Y is the wrong or incomplete grounds and that the better criticism is on grounds Y’.
This is nothing specific to Econlog. It’s the template for many of my comments to SlowBoring, In My Tribe, Noah Smith, Brad Delong, etc.
David Henderson
May 8 2023 at 10:23am
I’m glad you see my point. So what you’re really in a given case is “An important issue is” or “A question left out is,” not “The issue is.”
Mark Barbieri
May 7 2023 at 10:56am
I wonder if there is a way to blend two things that you’ve written about recently. One is that we shouldn’t cap drug prices because doing so will reduce investment in useful new drugs. Your writing counters people’s instinctive desire for a free lunch on new drugs.
With this article, you write that Medicare shouldn’t automatically pay high prices for new drugs, essentially subsidizing their development. Your writing counters people’s instinctive belief that they should have free access to all drugs that have been invented.
What if we combined those thoughts. We could promote a policy that Medicaid, Medicare, and standard health insurance policies will only cover existing drugs. Any new drugs that are invented must be paid for out-of-pocket or by purchasing some form of “new drug insurance”, at least until they are out of patent. I wonder if that would be a more politically palatable way to move towards the solution you want.
David Henderson
May 7 2023 at 12:12pm
Interesting though. I’ll ponder.
vince
May 7 2023 at 12:35pm
Excellent suggestion IMO. I’d like to see that expanded to coverages of many other aspects of health insurance for items that many insureds don’t consider necessary. Sort of like buying a basic policy and then purchasing riders.
TMC
May 8 2023 at 8:57am
Too many new drugs out there are valuable because they are better, and cheaper in the the long run. We should have an exception if the drug replaces a more expensive current procedure.
Thomas Hutcheson
May 8 2023 at 9:56am
Just do cost benefit analysis of the new drugs.
Scott Sumner
May 7 2023 at 12:12pm
I strongly agree. Let me add that previous Alzheimer drugs initially produced some gains, but later tests cast doubt on their effectiveness. The well known problem of data mining and publication bias tends to produce some false positives in areas ranging from social science to medical research. I hope this drug works as advertised, but there are reasons to be cautious. In any case, when there is uncertainty the market test is best, or at a minimum least bad.
David Henderson
May 7 2023 at 12:13pm
Well said. thanks, Scott.
Dylan
May 7 2023 at 3:15pm
I mostly agree, but there is a problem with the market test for drugs because in the absence of well designed RCTs the state of knowledge doesn’t always advance. There are multiple examples of drugs that had been on the market for decades that everyone just knew they worked. The FDA wanted an RCT just as a box checking exercise mostly and rewarded companies that would go through the work with a period of market exclusivity. And then, the trial is done and turns out, nope, the drugs don’t work after all. I hope that things like big data and better statistical models can one day make it so that real world evidence is as good as an RCT, but we’re not there yet.
Scott Sumner
May 8 2023 at 1:20am
To be clear, I think drugs should be tested. I just don’t believe the government should tell me what drugs I can and cannot consume.
Dylan
May 8 2023 at 6:08am
I agree in principle, I’m less sure on utilitarian grounds. I can imagine a world where we get something much like the FDA but run by the insurance companies. That would be better on some dimensions and likely worse on others. I don’t think it would unleash pent up innovation in the biotech space that’s been held back by regulatory oversight. The rate limiting step is still fundamental biological understanding.
Jon Murphy
May 8 2023 at 7:17am
Why not have a testing agency that is independent of the insurance companies? It seems to me that would be the more likely outcome rather than agencies run by insurance companies.
Dylan
May 8 2023 at 8:28am
I should have said funded by the insurance companies not run by them. I’m thinking of a model similar to FINRA where the agency is funded through fees on the insurance companies, but not directly controlled by them.
And honestly, the healthcare market is so complex and intertwined and I’m not sure I can spot all the first order effects of this kind of reform, let alone all the downstream ones. Maybe on net it would be positive or maybe negative, I wouldn’t want to even guess without thinking through it a lot more carefully than I have so far.
Mactoul
May 8 2023 at 5:31am
The FDA decision approving lecanemab was very controversial within FDA itself. Multiple people in the committee that approved resigned. Simply put, the drug doesn’t work. The fancy numbers are for surrogate endpoints. Amyloid tangles are reduced but it is only a hypothesis that reducing amyloid will do anything to change the course of Alzheimer’s.
And there are some serious side-effects as well.
steve
May 8 2023 at 11:11am
A high death and complication rate for what seems like a marginal, if real, positive effect. We are desperate enough for a cure that the FDA is approving pretty marginal drugs. Medicare, and insurance companies, have a fiscal responsibility to those they insure. Not paying very high prices for dubious drugs sounds like a responsible idea. This may be something the market can resolve but it’s going to difficult. Not clear who would collect the data. The population able and willing to afford the costs out fo pocket not likely to be representative of the general population. Will take a long time to figure out as end point is fuzzy and will be complicated, I think, by strong placebo effect as people will desperately want the drug to work.
Steve
vince
May 8 2023 at 3:27pm
Private insurers must pay at least 80% of premiums on healthcare. If paying high prices for dubious drugs is a profitable way back into it, they will do it. It’s a perverse incentive.
SK
May 8 2023 at 2:15pm
It is still a bit too soon to say of what benefit this drug is over time for Medicare to pay for it. What if no further progression in slowing down the disease, which sadly means too many might not even find the disease controllable. Will it maintain cognitive function at current level after taking? Lots to be considered and of course the amyloid plaque hypothesis is just that; it is still unclear if they are causative or arise from the disease process.
Arterial plaque for ex is a result of of ASCVD and statins do not stop the progression of the plaque formation in most cases, but stabilizes it so people with underlying disease have a dramatically Lower risk of a coronary event.
We do need so see more re the Alzheimer drugs with regard to their longer term benefits.
I do agree: we need to see people pay more and not look to gov to suck it up. Just wait until the semaglutide drugs get approved across the board for obesity and drug companies push Medicare to fund the cost. The Medicare system is already a loser if one just looks at inflows of premiums paid vs outflows for cost of meds.
James Howard Sherrard
May 8 2023 at 4:48pm
David, I agree with you; Alzheimer’s is primarily a illness of elders, and as the population ages many more people will have the illness. The cost to treat this illness will be prohibitive in the next 20 to 30s years as the general populations get older and exhibit symptoms of Alzheimer’s. The bad news your rank-and-file people that have worked and paid taxes their whole life will not have the money to treat it either. Alzheimer’s has been around for hundreds of years, back then people just died of old age, bet many were Alzheimer’s. They became fail, slow moving staying in bed all day, now there is a name to the illness. If the US Government intends to socialize these end-of-life medications, we as a people will need to look at the total budget for defense, other social programs, and smaller government..
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