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A pedestrian passes the Biogen Inc headquarters in Cambridge, Massachusetts, on Monday, June 7, 2021.
Adam Glanzmann | Bloomberg | Getty Images
Biogen’s new Alzheimer’s drug, Aduhelm, could cost Medicare billions of dollars a year, according to an analysis published Thursday by the nonprofit Kaiser Family Foundation.
The Food and Drug Administration on Monday approved the company’s drug, the first drug approved by US regulators to slow cognitive decline in people with Alzheimer’s disease and the first new drug for the disease in nearly two decades.
The biotech company said it charges $56,000 per year for the new treatment, above the $10,000-25,000 price some Wall Street analysts had expected. This is the wholesale price, and the out-of-pocket cost for patients will depend on their health coverage.
Alzheimer’s disease is estimated to affect more than 6 million Americans, the vast majority of whom are 65 years of age or older. Biogen said it expects about 80% of Alzheimer’s patients to be covered by Medicare, the federal health insurance program for seniors.
It remains unclear how many Medicare beneficiaries will take Biogen, but even a conservative estimate would lead to a “significant increase” in healthcare spending, according to the KFF.
In 2017, nearly 2 million Medicare beneficiaries used one or more of the Alzheimer’s treatments covered by Medicare Part D, according to the KFF, which analyzed claims data. The group said that if a quarter of those recipients were described as Aduhelm instead, and Medicare paid 103% of the $56,000 in the near term, “the total spending on Aduhelm in just one year would be about $29 billion.”
The KFF said Aduhelm will be covered under Medicare Part B, which generally covers doctor-administered drugs approved by the Food and Drug Administration.
“If 1 million Medicare beneficiaries receive Aduhelm, which may even be at the bottom line of Biogen’s expectations, spending on Aduhelm alone would exceed $57 billion in one year — far exceeding spending on all other Part B drugs combined,” group said. Segment B spending totaled $37 billion in 2019.
Biogen has faced some criticism from Wall Street analysts and advocacy groups who have questioned how the company could justify the price, especially as medical experts continue to debate whether there is enough evidence that the drug actually works and the industry faces criticism over drug prices.
On a call with investors Tuesday morning, Evercore ISI analyst Umer Raffat congratulated the Massachusetts-based company on the US approval of the drug before asking executives to explain its price.
“I think there’s a disconnect between some of the words you shared in your press releases, like responsibility, access, health equity, versus the price point, especially given the primary care community,” he told executives.
Biogen executives said Tuesday that the overall price figure for the new treatment is “backed” by the value it is expected to bring to patients, caregivers and society. They insisted the price is “responsible,” noting that the disease costs billions of US dollars each year.
The company has committed not to raise the price of the new property during the next four years. However, the executives said they were “open” and suggested they could rethink pricing as the company assesses demand over the next few years.
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