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Strengthening America’s Financial Future

Even with a deal on the debt ceiling reached and default avoided, America’s financial future looks grim. Legislators did little to reform Medicare, which is primary driver of year-on-year cost increases.

In a new study for the University of Chicago, former White House Council of Economic Advisers Chair Tomas Philipson shows that that losses from delaying coverage of new Alzheimer’s treatments by just one year could top $545 billion. Roughly a third of that cost would be driven by increased Medicare and Medicaid spending.

The Centers for Medicare and Medicaid Services recently made the decision to restrict coverage for a new class of FDA-approved Alzheimer’s treatments, presumably to save money. But Philipson’s research shows this policy will have precisely the opposite effect. Historically such delays can last up to 17 years. This would amount to catastrophic losses that pile onto our national debt through direct medical costs and lost productivity among caregivers.

Writing in The Hill, Philipson dives deeper into the challenge — and the opportunity:

Alzheimer’s is a progressive disease with equally progressive costs that grow as a patient requires more attention from the medical system and caretakers. New treatments can slow the progression of the disease in its early stages, allowing people to live independently for longer periods of time.

FDA approved a treatment made by Biogen and Eisai in January that slowed the progression of disease by 27 percent over 18 months. And Eli Lilly just announced a phase 3 trial result showing its treatment did so by 35 percent over the same period. Half of patients in the trial showed no clinical progression of disease after one year. These gains imply enormous cost-reductions for Medicare if implemented quickly.

These scientific advances are bringing hope, but time is a luxury few can afford. The Alzheimer’s Association estimates that about 2,000 people transition from a mild to a moderate form of the illness each day, putting some of them out of reach to benefit from newly available treatments.

You can read the study here and the Op-Ed here.