The Costs of Alzheimer's Disease and the Value of Effective Therapies

Published Online: November 11, 2011
Richard G. Stefanacci, DO, MGH, MBA, AGSF, CMD

Every 69 seconds, a person in the United States develops Alzheimer’s disease (AD). By 2050, this rate is expected to double. Total direct costs of AD and dementia (AD/D) are estimated at $183 billion, and are expected to increase to $1.1 trillion by 2050. In 2010, unpaid care was valued at an estimated $202 billion. Caregivers of patients with AD are usually family members, and provide up to 70 hours of care per week. By delaying institutionalization of an AD patient, a savings of $2029 per month in direct healthcare costs could be realized; therefore, caregiver support is a significant factor in controlling costs. It is important for those with AD/D to have prescription plans that optimize access to AD/D therapies. Among older adults who previously did not have prescription coverage, 80% are now enrolled in Medicare Part D. Three preferred AD/D agents (donepezil, extended release galantamine hydrochloride, and memantine hydrochloride) have been identified by an expert panel. It is important, given the clinical course of AD, especially with progression to moderate-tosevere disease, that physicians continue to have access to preferred medications as demonstrated through evidence-based clinical evaluations. Many Medicare Part D beneficiaries are subject to a gap in prescription coverage known as the “donut hole,” including 64% of patients with AD. Because of the increased out-of-pocket expenditures associated with this coverage gap, some patients stop taking their medication completely or reduce medication use. It is critical to avoid lapses in maintenance therapy, as functional and cognitive abilities cannot be regained. Numerous clinical trials have demonstrated the pharmacoeconomic benefits of appropriate and preferred AD therapies; greater therapeutic availability may lead to better adherence and therefore improved outcomes.

(Am J Manag Care. 2011;17:S356-S362)

An estimated 35.6 million people worldwide have Alzheimer’s disease and other dementias (AD/D).1 The total costs associated with dementia are $604 billion (2010 US dollars), or approximately 1% of the world’s gross domestic product.1 The majority (70%) of global costs come from Western Europe and North America.1 In the United States, total direct costs of AD/D are $183 billion (2011 US dollars), and are expected to increase to $1.1 trillion by 2050. The estimated value of informal care is approximately $202 billion (2010 US dollars).2 It is estimated that 5.4 million Americans have AD. An estimated 5.2 million are at least 65 years old, while 200,000 are less than 65 years old and suffering from younger-onset Alzheimer’s.2 The Alzheimer’s Association estimates that half a million Americans less than 65 years of age have some form of dementia, and 40% of them have AD. Every 69 seconds, a person in the United States develops AD. By 2050, this rate will double to a new AD case every 33 seconds.3 In 2003, approximately 31% of caregivers listed AD as their patient’s primary disorder; this figure escalated to 49% in 2009. These rising figures are attributed not only to an increasing prevalence of AD, but also an increasing public awareness and understanding of the condition, resulting in more frequent and earlier diagnoses.3

AD Caregiver Burden

The majority of care for AD patients comes from their families. Approximately 94% of those who assist a patient with AD/D care for a relative, and 21% of those live in the same household as the patient.3 This care carries a significant cost, not only financial, but emotional and physical. Compared with noncaregiver controls matched by age, gender, race, and marital status, AD caregivers are harnessed with a constellation of physical, psychological, emotional, and financial burdens.4-7 AD caregivers visit their physicians 46% more and have 71% more prescriptions than noncaregivers.4 Six percent of AD caregivers care for their spouse.3 Studies reveal that the acute psychological stress of caring for a spouse with AD may result in higher diastolic blood pressure,5 higher plasma norepinephrine,7 and may elicit a hypercoagulable state in the elderly who have cardiovascular disease.6 More than 40% of family members and other unpaid caregivers of patients with AD rate their stress levels as high to very high, and a third of family caregivers exhibit symptoms of depression. In their patients’ last year of life, 59% of these caregivers described themselves as “on call” 24 hours a day.2

Family members are typically the primary caregivers of dementia patients, providing up to 70 hours of care per week. Direct costs of caring for dementia in the community have been estimated at 4.5 times less than that in facilities. Because each month’s delay in institutionalization may save as much as $2029 in direct healthcare costs, counseling, education, and support of caregivers are important cost controls in dementia management.8 Moreover, recognition of AD symptoms by caregivers can facilitate appropriate therapy for the severity of AD while patients are still under the care of loved ones.

Medicare Beneficiaries With Dementias Have Significant Comorbidities

Medicare beneficiaries at least 65 years of age with AD/D typically have 1 or more comorbid conditions impacting healthcare utilization and cost (Table 1).2 Patients with AD/D and serious comorbidities are more likely to be hospitalized than those without AD/D. Also, patients with AD have longer hospital stays, and their overall healthcare expenditures are higher.2 Based on results from a 2004 survey, the average prescription drug cost for a community-dwelling Medicare patient with AD/D was $3198 versus $2203 (2010 US dollars) for that of a non-AD/D patient.2 A study of 2006 Medicare claims compared AD/D and non-AD/D costs per service in patients with coronary heart disease, diabetes, congestive heart failure (CHF), and cancer requiring hospital care, physician care, skilled nursing facility care, and home healthcare.2 All costs were higher for patients with AD/D and a serious medical condition than those without AD/D and a serious medical condition, with the exception of payments for physician visits in patients with CHF (which were lower in those with AD/D). In 7 of the 16 comparisons, costs for patients with AD/D were more than double that of those without AD/D.

The Concentration and Persistence of Expenditures in AD/D Medicare Beneficiaries

Due to its high cost and increasing prevalence, AD/D is a great concern to Medicare and Medicaid. In order to identify cost-containment targets, Lin et al recently researched theextent of concentration and persistence in total healthcare and prescription drug expenditures among elderly patients with AD/D. They analyzed cross-sectional data of expenditures incurred by the top 10%, 25%, and 50% of beneficiaries to predict expenditure persistence over a 2-year period.9 Nearly half of the total health expenditures and one-third of all drug expenditures were incurred by the top 10% of beneficiaries. The largest expenditure in the top 10% group was inpatient care, while in the bottom 50% group, physician visits and prescription drugs were the major cost drivers. Persistence in expenditures was very strong, particularly for prescription drugs. The strongest predictors of persistence were comorbidities and prior expenditures.

On average, Medicare patient payments for healthcare services are also significantly higher for those with AD/D compared with those without AD/D. Similarly, long-term care service costs are significantly higher for patients with AD/D. Increased hospitalization and physician service costs are the primary drivers of persistent and higher expenditures in patients with AD/D.

A year later, Lin et al compared hierarchical condition category (HCC) risk-adjustment measures used by the Centers for Medicare & Medicaid Services (CMS) against other measures in predicting Medicare costs of AD/D patient care. The CMS-HCC and Chronic Illness and Disability Payment System–Medicare had higher overall and subgroup predictive power for total expenditures compared with other diagnosis-based measures.10 The prescription drug HCC also exhibited greater predictive power compared with other measures in identifying AD/D patients with extremely high drug expenditures. These CMS-HCC and prescription HCC measures are more accurate in cost prediction than other measures for determining overall costs of AD/D to Medicare. These studies encourage making and documenting the AD/D diagnosis when it is present.

AD/D Management Payer and Formulary Intricacies

A number of government payer entities exist; they span all settings through which funds are channeled for the management of AD/D. The Figure depicts how Medicare is designed to disburse funds.11 Medicaid is primarily the responsible payer for long-term care in nursing homes.

Among older adults, who prior to the availability of Medicare Part D did not have prescription coverage, 80% are enrolled in Medicare Part D today.8 Because of the benefit of pharmacologic therapy in AD, it is important for patients with AD/D to have prescription plans that optimize therapeutic access. In 2006 (at the beginning of Medicare Part D), a Novartis Pharmaceuticals survey revealed that just 56% of clinician respondents felt they knew enough about Medicare Part D to comment on it, and 72% expected that it would increase medication-related problems.8

Medicare drug plans that elect to follow United States Pharmacopeia (USP) guidelines provide at least 2 medications in each AD class. Therefore, they have 2 cholinesterase inhibitors (ChEIs) and memantine on formulary. In addition, there are 6 protected classes. Most medications in those classes need to be available for patients with AD; these include all antidepressant, anticonvulsant, and antipsychotic medications.8 Despite these guidelines, accessibility is still a problem. Access can be impeded by prior authorization requirements, while some drugs are excluded from coverage by law (eg, benzodiazepines) and cannot be appealed.8 Benzodiazepines are slated to be covered in 2013. Those drugs that are not excluded by law and are not on a plan formulary can be appealed.

PDF is available on the last page.
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