Biogen’s new Alzheimer’s drug could cost Medicare billions of dollars a year, report finds

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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, might price Medicare billions of {dollars} a 12 months, in response to an evaluation published Thursday by the nonprofit Kaiser Family Foundation.

The Food and Drug Administration on Monday authorized the company’s drug, the primary remedy cleared by U.S. regulators to sluggish cognitive decline in folks dwelling 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 remedy, larger than the $10,000 to $25,000 value some Wall Street analysts had been anticipating. That’s the wholesale value, and the out-of-pocket price sufferers will really 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 improve” in Medicare spending, in response to KFF.

In 2017, almost 2 million Medicare beneficiaries used a number of Alzheimer’s therapies lined beneath Medicare Part D, in response to KFF, which analyzed claims knowledge. The group mentioned if 1 / 4 of these beneficiaries are prescribed Aduhelm as an alternative and Medicare pays 103% of $56,000 within the close to time period, “complete spending for Aduhelm in a single 12 months alone could be almost $29 billion.”

KFF mentioned Aduhelm can be lined beneath Medicare Part B, which typically covers FDA-approved physician-administered medicines.

“If 1 million Medicare beneficiaries obtain Aduhelm, which can even be on the low finish of Biogen’s expectations, spending on Aduhelm alone would exceed $57 billion {dollars} in a single 12 months — far surpassing spending on all different Part B-covered medicine mixed,” 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 might justify the value, particularly as medical specialists proceed to debate whether or not there’s sufficient proof that the drug really works and the trade faces criticism over drug costs.

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

“I do assume there is a disconnect between a number of the phrases that you’ve got shared in your press releases, like accountability, entry, well being fairness, versus the value level, particularly given the first care inhabitants,” he informed executives.

Biogen executives mentioned Tuesday the overall value determine for the brand new remedy is “substantiated” by the worth it’s anticipated to deliver to sufferers, caregivers and society. They insisted the value is “accountable,” 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 following 4 years. That being mentioned, executives mentioned they’re “open-minded” and urged they might rethink the value as the corporate assesses demand over the following few years.

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