Millions of patients and their caregivers breathed a collective sigh of relief when drugmaker Eli Lilly recently announced its new experimental Alzheimer’s medication appears to slow cognitive decline by 35%. The Food and Drug Administration could approve the new treatment, donanemab, as soon as this year.
It’s an encouraging development, but we’ll need more than a few cutting-edge drugs to reverse the future course of Alzheimer’s disease. According to the Alzheimer’s Association, 6 million Americans currently live with Alzheimer’s, and that number is projected to surpass 12.5 million by 2050.
The growing prevalence of Alzheimer’s isn’t just a human tragedy. It’s also an economic issue that will add fuel to the fire in terms of our future debt crises. In the coming decades, the cost of long-term care for millions of additional Alzheimer’s patients would overwhelm government health care spending and dramatically cut productivity among caretakers — unless scientists develop new drugs that cure the debilitating dementia, or at least significantly delay and lessen its onset.
President Joe Biden says he is committed to supporting research into effective Alzheimer’s treatments. The stated first goal of the Biden administration’s National Plan to Address Alzheimer’s disease is to “prevent and effectively treat Alzheimer’s disease and related dementias by 2025.”
That’s strangely optimistic, considering the administration is blocking access to treatments that likely slow the disease’s progress.
Last year, the administration announced that Medicare would effectively refuse to cover an entire class of promising, FDA-approved Alzheimer’s treatments. The Centers for Medicare & Medicaid Services, or CMS, which oversees Medicare, doubled down earlier this year, rejecting a request from patients to rescind the restrictive policy.
But Medicare’s policies are just one example of how the Biden administration says one thing and does another.
Last year, the president signed innovation-deterring drug price controls into law as part of the Inflation Reduction Act. He proposed ramping up those price controls in his recent budget. Draft guidance released by the CMS in March would make the IRA’s damage to innovation even worse. And senior administration officials have cast doubt on the FDA’s “accelerated approval” program because of a recent House investigation into the FDA review process for an Alzheimer’s treatment. Biotech companies often rely on that program for experimental Alzheimer’s drugs.
The administration’s desire to avoid spending on Alzheimer’s treatments is cutting the healthy life spans of seniors and could cost Americans even more in the future — by disincentivizing investments into Alzheimer’s research.
Consider the fact that in 2020, the Alzheimer’s Association reported that Medicare and Medicaid spending on Alzheimer’s patients currently costs taxpayers about $206 billion per year. By 2050, should we fail to make meaningful advancements in treating the disease, the annual cost of Alzheimer’s will surpass $1.1 trillion.
Medical innovations that slow the progression of Alzheimer’s symptoms from mild to moderate by just one year would slash health care costs by more than $34,000 per Alzheimer’s patient and reduce the cost per caregiver by $7,800, according to a recent study I co-wrote at the University of Chicago.
These are overall savings, but the savings for Medicare over the next decade from similar treatment advancements would also be significant. Delaying Alzheimer’s progression would save the government up to $340 billion. Across the economy, the value of new treatments that slow the progression of Alzheimer’s could eclipse $1.2 trillion over the next 10 years.
And if we fail to develop better treatments, the productivity losses and premature exits from the workforce by caregivers will lower tax revenues and compound the direct medical costs of Alzheimer’s care.
Caring for a loved one with Alzheimer’s is often a full-time job — albeit an unpaid one. According to the Alzheimer’s Association, about 11 million Americans are caregivers for a family member with Alzheimer’s or another type of dementia. The economic value of their labor in 2022 was $339.5 billion. The lifetime cost of caring for someone with dementia, 70% of which falls to family members, is estimated to be close to $400,000.
The demands of providing care to someone with Alzheimer’s are often incompatible with the demands of a 9-to-5 job. As a result, over 1 in 6 Alzheimer’s caregivers exit the paid workforce. And 18% reduce their hours from full to part time.
The Biden administration, in blocking Alzheimer’s treatment, seems to think its tightfisted actions are in taxpayer’s best interests. But it is deeply mistaken. If price controls and other anti-innovation policies end up forestalling the development of more Alzheimer’s treatments, the cost will be measured not only in hundreds of thousands of lives cut short — but also in trillions of dollars in unnecessary costs.
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ABOUT THE WRITER
Tomas Philipson is an economist at the University of Chicago and was a member and acting chairman of the White House Council of Economic Advisers from 2017 to 2020. He is a consultant to companies in several industries, including pharmaceutical companies involved in Alzheimer’s development.
