Dobson | DaVanzo Releases Analysis on Potential Medicare and Medicaid Savings for an Alzheimer’s Disease Therapy over 10 years

Published Monday, April 19, 2021

In 2020, 5.8 million Americans aged 65 and older (11% of the total population in this age group as of 2019) were diagnosed with Alzheimer’s Disease (AD) [1]. To determine Medicare and Medicaid expenditures for beneficiaries and total societal expenditures associated with the clinical introduction of a potential AD treatment for Medicare beneficiaries, we used the 2020-2021 total AD population over 65 as a baseline. Using a step-down approach and factoring in a take-up rate, we determined the target population that would benefit from the potential AD treatment to be 80,248, or approximately 1.4% of the initial population, gradually increasing each year to 205,153 by 2031. In addition, the analysis focuses on a 10-year time frame (2022-2031) and, specifically, on the Medicare population over 65. Our estimated 10-year cost savings assume the introduction of a novel AD medication that delays disease progression by six months for year 1 (2022), twelve months for year 2 (2023), eighteen months for year 3 (2024), and twenty-four months for all following years until 2031. A delay of this length represents a dramatic roll back in the progression of the disease where the costs are significantly higher than in the earlier stages of the disease. We assumed an aggressive take-up rate of the novel AD medication, starting at 25% in 2022 and gradually increasing to 50% in 2031. This analysis estimates our total 10-Year Savings as: $1.24 billion for Medicare (including beneficiary copayments), $26.42 billion for Medicaid and Non-Medicaid Nursing Home Costs, and $11.86 billion for Informal Care and Support Costs for a total of $39.52 billion. You can read an executive summary of the analysis and download the full report here.

Potential Medicare savings are limited because the study only focuses on those costs associated with Medicare spending that are directly associated with AD or ~11% of the total Medicare expenditures for AD patients [2]. For Medicaid savings, the analysis specifically focuses on costs and savings generated from Nursing Home (NH) Care for Medicare beneficiaries. It is estimated that close to two thirds of nursing home residents in the US have some type of cognitive impairment like AD [3]. The informal caregiving cost estimates account for both a population that enrolls in nursing home care and a population that never enrolls in nursing homes. Greater savings are achieved through reductions in broader societal expenditure burden like formal Medicaid long-term care expenditures and informal caregiving and support expenditures than from Medicare and Medicare Copayments.

A drug that would delay AD disease progression by up to two years would increase quality of life by preserving and extending patients’ independence for a longer time, thus transforming the AD drug space. A drug that delays AD disease progression by two years also promises significant social returns relative to costly drugs that extend life for much shorter time frames. The most important benefit of the potential AD treatment is likely not monetary, but rather quality of life due to a delay in the debilitating neurodegenerative sequelae of AD. Biogen, Inc. commissioned Dobson DaVanzo & Associates, LLC, a health economics and policy consulting firm, to conduct this study.


[1] Alzheimer’s Association. (2020), 2020 Alzheimer's disease facts and figures. Alzheimer's Dement., 16: 391-460.

[2] Pyenson, B., Sawhney, T. G., Steffens, C., Rotter, D., Peschin, S., Scott, J., & Jenkins, E. (2019). The real-world medicare costs of alzheimer disease: considerations for policy and care. Journal of managed care & specialty pharmacy, 25(7), 800-809.

[3] Gaugler, J. E., Yu, F., Davila, H. W., & Shippee, T. (2014). Alzheimer’s disease and nursing homes. Health Affairs, 33(4), 650-657.