Alzheimer's: Why actuaries shouldn't bet on a cure

There are some promising drugs in the Alzheimer's pipeline, but a panel of experts asked to predict the potential financial impact of new treatments was not optimistic that a cure is imminent.

Roy Beveridge, an oncologist who is chief medical officer for the insurer Humana, told a group of actuaries this week in Philadelphia that he expected to see cancer cures before drug developers figure out how to stop dementia.

"We're not spending preparatory time around that," he said when asked how an Alzheimer's cure would affect the company. "Maybe I should be, but I'm not. I spend much more time thinking about the care issue."

Beveridge was part of a panel discussion at the annual health meeting of the Society of Actuaries, which brought more than a thousand numbers crunchers to the Philadelphia Marriott Downtown. Their job is to predict risks and costs. They were treated to workshops with titles such as New Topics in Medicare Advantage Risk Adjustment; Updates on NAIC Health RBC Formula; and ACA Impact, How Best Practices Became an ASOP.

People with dementia, who can live for years with increasing disability, are especially costly: The United States likely will spend $236 billion this year on their medical care, long-term care, and hospice. As one panelist pointed out, however, much of their care is provided - without pay - by family members. Because of the aging baby-boom generation, the number of people with dementia is likely to nearly triple by 2050 to 13.8 million.

Patricia Danzon, an economist at Penn's Wharton School with a special interest in drug pricing, said 17 dementia drugs were currently in phase III trials and 60 others are in phase II.

Some likely will provide enough benefit that insurers will have to cover them. "While we all would love to have a cure, the science is advancing very slowly," Danzon said. "The reality is it's likely to be incremental, palliative improvements for the next few years. They are likely to be quite expensive."

This situation presents what Robyn Stone, senior vice present of research for LeadingAge, called "a real conundrum for the actuarial world." It's hard to predict whether new treatments will increase or reduce costs. A drug that eases or delays symptoms may prolong the period before serious disability, without changing the ultimate need for intensive caregiving. That could increase total costs.

Vince Bodnar, chief actuary for LTCG, which provides actuarial services to the long-term-care insurance industry, cautioned fellow actuaries that even a highly effective Alzheimer's drug will reduce costs only so much. Dementia is a disease of the elderly, and many have other serious health problems. A new Alzheimer's drug "won't completely take away people's disabilities," he said.

Bodnar said that new technology may allow people to stay in their homes longer, but Stone questioned that. People with cognitive degeneration, she said, need more supervision than machines can provide, and the home is not the most efficient place to care for seriously disabled people.

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