The Food and Drug Administration has recently approved a new treatment for Alzheimer’s disease. The drug is the first in 18 years to receive FDA approval for the treatment of Alzheimer’s, but has attracted controversy over its efficacy and high cost. Experts estimate that the drug could cost the federal government as much as it spends on NASA or the Environmental Protection Agency.

The new drug, which is named aducanumab but will be known as Aduhelm when sold to customers, is manufactured by Biogen. The drug is administered intravenously via monthly injections. The medication is the first drug approved by the FDA that is designed to prevent cognitive decline in Alzheimer’s patients who are experiencing low-level difficulties with thinking or memory. All other drugs that have received FDA approval are targeted at symptoms of the disease, rather than its progress. Biogen estimates that the drug will cost roughly $56,000 annually, in addition to peripheral costs to track the effectiveness of the drug, such as the cost of brain scans and other diagnostic tests. The drug is intended for use over the course of multiple years.

While approval of the drug has been heralded by Alzheimer’s patient advocate groups due to the paucity of alternatives on the market, the drug itself continues to face substantial criticism. In November 2020, an independent advisory committee to the FDA that analyzed results of clinical trials of aducanumab advised against approval of the drug. The advisory committee, composed of medical experts, was skeptical of whether the drug had been shown effective in trials, with members of the committee pointing out a lack of consistency in any evidence of effectiveness. Ten of the eleven members of the committee voted against approval.

In addition to skepticism from the FDA’s advisory committee, an independent think tank, along with doctors who are experts in Alzheimer’s disease who participated in trials of the drug, also expressed concern over its efficacy and discouraged approval. Evidence from clinical trials also showed a substantial risk of side effects, with 40% of patients in one trial exhibiting signs of brain swelling while taking the drug. Nevertheless, the FDA granted the drug approval through its “accelerated approval” program, which, according to the FDA’s website, allows for “earlier access to potentially valuable therapies for patients with serious diseases where there is an unmet need, and where there is an expectation of clinical benefit despite some residual uncertainty regarding that benefit.” The drug will now undergo additional Phase 4 trials to prove effectiveness, after which the FDA has the right to rescind approval should the trials fail to show that the drug slows the progress of Alzheimer’s.

The approval of aducanumab comes with very real consequences for the federal budget. Some six million Americans have been diagnosed with Alzheimer’s disease, nearly all of whom are eligible for subsidized health care through Medicare. The drug could result in costs amounting to somewhere between $5.8 billion $29 billion in just one year. Since Medicare patients pay a portion of the cost of their prescriptions, these costs would be shared between patients and Medicare, but would still make aducanumab the costliest drug subsidized by Medicare. In fact, the drug could increase Medicare’s total annual spending on drugs administered in doctor’s offices and hospitals by 50%. This single drug could, according to analysts, cause a substantial spike in premiums for Medicare users, as well as an uptick in the cost of supplemental Medicare plans.

After years of efforts by federal budget experts and lawmakers to bring down Medicare spending, this single drug—which experts say shows little evidence of beneficial impact on patients—could negate any savings that come to pass. Joshua Gordon, the Committee for a Responsible Federal Budget’s director of health policy, explained, “it’s so much work to get savings that are really much smaller than this one drug would cost.” Washington University law professor Rachel Sachs called the potential implications from aducanumab “enormous,” adding that this drug could “break American health care.”

Medicare may choose to utilize several uncommon strategies to limit the impact of the drug’s exorbitant cost. Medicare has the authority to offer more limited coverage of the drug than that indicated by the FDA’s approval, which could reduce costs. The Affordable Care Act also authorizes Medicare to conduct randomized testing of the drug by approving it for coverage in certain regions of the US, but not others. Unlike subsidized health care providers in other countries, Medicare does not have the right to negotiate down the price of drugs, though Congress is attempting to change that with currently pending legislation.