Biogen's Alzheimer's drug could cost Medicare billions of dollars a year: report

A pedestrian walks previous Biogen Inc. headquarters in Cambridge, Massachusetts, on Monday, June 7, 2021.

Adam Glanzman | Bloomberg | Getty Images

Biogen‘s pricy new Alzheimer’s drug, Aduhelm, could cost Medicare billions of dollars a 12 months, in accordance with an evaluation published Thursday by the nonprofit Kaiser Family Foundation.

The Food and Drug Administration on Monday accredited the company’s drug, the primary medicine cleared by U.S. regulators to gradual cognitive decline in folks residing with Alzheimer’s and the primary new medication for the illness in almost twenty years.

The biotech firm mentioned it’s charging $56,000 for an annual course of the brand new therapy, larger than the $10,000 to $25,000 worth some Wall Street analysts had been anticipating. That’s the wholesale worth, and the out-of-pocket cost sufferers will truly pay will depend upon their well being protection.

Alzheimer’s illness is estimated to have an effect on greater than 6 million Americans, the overwhelming majority of whom are age 65 and older. Biogen has mentioned it expects about 80% of Alzheimer’s sufferers to be lined by Medicare, the federal medical health insurance program for the aged.

It remains to be unclear what number of Medicare beneficiaries will take Biogen’s drug, however even a conservative estimate would result in a “substantial increase” in Medicare spending, in accordance with KFF.

In 2017, almost 2 million Medicare beneficiaries used a number of Alzheimer’s therapies lined below Medicare Part D, in accordance with KFF, which analyzed claims information. The group mentioned if a quarter of these beneficiaries are prescribed Aduhelm as an alternative and Medicare pays 103% of $56,000 within the close to time period, “total spending for Aduhelm in one year alone would be nearly $29 billion.”

KFF mentioned Aduhelm shall be lined below Medicare Part B, which typically covers FDA-approved physician-administered drugs.

“If 1 million Medicare beneficiaries receive Aduhelm, which may even be on the low end of Biogen’s expectations, spending on Aduhelm alone would exceed $57 billion dollars in a single year — far surpassing spending on all other Part B-covered drugs combined,” the group mentioned. Total Part B spending was $37 billion in 2019.

Biogen has faced some criticism from Wall Street analysts and advocacy teams who questioned how the corporate could justify the value, particularly as medical consultants proceed to debate whether or not there’s sufficient proof that the drug truly works and the trade faces criticism over drug costs.

On a name with traders Tuesday morning, Evercore ISI analyst Umer Raffat congratulated the Massachusetts-based firm on the drug’s U.S. approval earlier than asking executives to clarify its worth.

“I do think there’s a disconnect between some of the words that you’ve shared in your press releases, like responsibility, access, health equity, versus the price point, especially given the primary care population,” he informed executives.

Biogen executives mentioned Tuesday the whole worth determine for the brand new therapy is “substantiated” by the worth it’s anticipated to convey to sufferers, caregivers and society. They insisted the value is “responsible,” noting the illness prices the U.S. billions every year.

The firm has dedicated to not elevating the value of the brand new drug over the subsequent 4 years. That being mentioned, executives mentioned they’re “open-minded” and instructed they could rethink the value as the corporate assesses demand over the subsequent few years.

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