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December 22, 2021

Biogen announces a 50% price cut for its Alzheimer's drug

Daily Briefing

    Biogen on Monday announced a 50% price reduction for its new Alzheimer's drug, Aduhelm—and since the potential cost of covering the drug was a factor in CMS' calculation of 2022 Medicare premiums, advocates are now calling for the agency to lower premiums.

    3 questions providers must ask themselves about Aduhelm’s approval

    Background

    Biogen originally sought FDA approval for Aduhelm in 2019, after a company analysis of clinical trial data found a high dose of the medication provided a small benefit in slowing cognitive decline, and that the drug was effective at removing the beta-amyloid proteins associated with Alzheimer's disease.

    Following Aduhelm's conditional FDA approval on June 7, Biogen announced the drug would be priced at $56,000 per year, with each monthly infusion costing $4,300.

    However, since Aduhelm's approval, critics have raised several concerns over the Alzheimer's drug, including uncertainty about the drug's efficacy, side effects, and the potential financial burden for Medicare, commercial insurers, and patients.

    For instance, according to analysts at Cowen, if the drug is used to treat just 8% of Americans with mild Alzheimer's by 2025, it could yield $7 billion in revenue by 2025. In comparison, Medicare Part B's most significant cost expenditure in 2019 was $2.9 billion for the macular degeneration drug Eylea, followed by $2.7 billion for the cancer medication Keytruda.

    In addition, because traditional Medicare patients must pay a 20% coinsurance rate on medications after meeting their deductible, some patients could face more than $10,000 in annual out-of-pocket costs, said Juliette Cubanski, a Medicare policy expert at the Kaiser Family Foundation.

    "A therapy of this cost is going to have enormous implications for everyone," said Joseph Ross, a pharmaceutical policy expert at Yale University, who sits on a committee that advises Medicare on some coverage decisions. "And by everyone, I literally mean you, too. There's going to be some 60- and 70-year-olds on your plan. If they start getting this treatment, you will see your premiums will go up."

    Biogen cuts the price of Aduhelm in half

    In October, Biogen released its third quarter financial report, which marked Aduhelm's first full quarter of market availability. The report stated that the drug had garnered $300,000 in revenue, falling short of the forecasted $12 million expected by Biogen and Wall Street analysts.

    At the time, Biogen CEO Michel Vounatsos told Wall Street analysts that the company was "not panicking" about the drug's low sales, adding that the primary cause behind Aduhelm's slow uptake stemmed from the "lack of clarity on reimbursement," which he said CMS would clarify by 2022.

    Vounatsos added that the company had no plans to lower Aduhelm's price tag because "price doesn't come up as the first worry." 

    However, Biogen on Monday announced that Aduhelm's annual price would decrease from $56,000 to $28,200.

    According to Vounatsos, Biogen reduced the price of Aduhelm in an attempt to "facilitate patient access to these innovative Alzheimer's treatments" as CMS evaluates whether the drug should be covered. He added that the challenge of improving patient access to Aduhelm "must be addressed in a way that is perceived to be sustainable for the U.S. health care system."

    Advocates call for lower Medicare Part B premiums

    Last month, CMS announced that Medicare Part B premiums would increase by almost 15% in 2022, which the agency said was due to:

    • The impact of the Covid-19 pandemic
    • The potential impact of coverage for Aduhelm
    • Differences between actual Medicare performance and estimated costs from previous years
    • Potential legislation that may affect Medicare costs
    • The expected relationship between incurred and cash expenditures

    And while CMS is still determining whether it will pay for Aduhelm, federal regulators said they had to plan for a "high-cost scenario of Aduhelm coverage." CMS is expected to release a proposed decision memo regarding Aduhelm's coverage on Jan. 12, with a final decision expected three months later MedCity News reports.

    According to Modern Healthcare, many patient advocates are now calling on CMS to reduce Medicare part B premiums in light of Aduhelm's significant price reduction.

    "It would be an unprecedented move, but I don't think it would be an unwarranted move, given that a big part of the reason why the increase for 2022 is as large as it is is because of the price of this drug," Cubanski said.

    According to Sen. Ron Wyden (D-Ore.), "With this price decrease for Aduhelm, there is even less justification for the planned increase in Medicare Part B premiums. The wheels of government must turn quickly when it comes to protecting seniors."

    "If they didn't reverse that… then I would be pretty unhappy as a Medicare beneficiary," said George Vradenburg, chair and co-founder of UsAgainstAlzheimers.

    While Cubanski agreed that price drop would be good news for Medicare spending if the program decides to cover the drug, ultimately, she said, "I don't think the price matters when it comes to a doctor's judgment about whether this drug is good for their patients." (Walker, Wall Street Journal, 12/20; Herman, Axios, 12/20; Vinluan, MedCity News, 12/20; Goldman, Modern Healthcare, 12/20) 

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