But Who Can Afford It?
Ric Edelman: It's Friday, January 13. We've got some good news and some bad news on the Alzheimer's disease battle. The FDA, here's the good news, has just approved a new drug that if you have early symptoms of the disease, it can slow the cognitive decline. The drug is called Lecanemab. It's made by a Japanese pharmaceutical company called Eisai and the US biotech company Biogen. Remember, it was Biogen that made Aduhelm - that was the Alzheimer's drug that was really controversial a couple of years ago. It got FDA approval too, but a lot of patients got brain swelling and it also really didn't improve anybody's condition very much. And Biogen was charging $56,000 a year for it. In the end, the Veterans Administration and Medicare refused to pay for the drug. And so that drug is really on the sidelines. Virtually nobody's taking it. Now, along comes Lecanemab and we've got some more controversy about this drug because it costs $26,500 a year. Now we've got to recognize that 85% of the patients who could benefit from this drug are covered by Medicare and Medicare says they will not pay for it.
So if Medicare says no, the Medicare patients can't get the drug? Oh, yeah, sure. If you're on Medicare and Medicare won't pay, then you could pay for it. You could write the check yourself. But how many retirees in this country can afford to pay $2,200 a month for a single drug? Half the country's retirees live on Social Security, and the average check is $1,800 a month. Lecanemab is $2,200 a month.
As a practical matter, if Medicare says no, this drug, even though it exists, even though the FDA has approved it, even though it works... It's unavailable. Medicare says the only way they'll cover the drug is if you're enrolled in a clinical trial. Well, that's great, except that there aren't any clinical trials right now, and there are none planned. I am very disappointed.
So the Alzheimer's Association has asked Medicare and Medicaid to change their policy. But that review process takes nine months, even though the FDA has approved the drug, even though there's plenty of supply. Nobody's got any access to it. And this situation, by the way, has never occurred with any other FDA approved drug before.
And it's not just this drug that Medicare is keeping away from you. A new study was just published in JAMA, the Journal of the American Medical Association. They're saying that PET scans can tell you if you have Alzheimer's or dementia and knowing you've got it prompts you to go get treatment, change your lifestyle, the way you eat, stress levels, exercise, etc… In fact, two thirds of the patients who got PET scans did change their behavior because of the test results. The problem is that PET scans cost almost $10,000.
Once again, Medicare won't pay for you to get a PET scan to diagnose Alzheimer's. There are 6 million people in the United States who have Alzheimer's. That number's rising every year. There's going to be 50 million by 2040. Why the big increase? Because so many of us are living so long. The odds of getting Alzheimer's at age 60 is one in 10. But by the time you're 90, it's one in two with everybody living into their 90s. Half of this country's elderly are going to have Alzheimer's.
Imagine if Medicare and Medicaid had to pay $10,000 for every retiree to get a PET scan. It would bankrupt the system. Medicare, for example, would spend as much on Lecanemab as it spends on every other drug it covers combined. This is a sad state of affairs for sure, but it's a realistic one. Money gets in the way of healthcare delivery. It's just the way it is. That's the situation we're in.
So what's the moral of the story? What's the financial planning conclusion for you? Don't reach retirement without lots of money. And that's why financial advisors - you need to make sure you're counseling your client on the likelihood of large amounts of money that they're going to spend on healthcare in retirement.