WASHINGTON — Medicare said Tuesday it will limit coverage of a $28,000-a-year Alzheimer’s drug whose benefits have been widely questioned, a major development in the nation’s tug-of-war over the fair value of new medicines that offer tantalizing possibilities but come with prohibitive prices.
The initial determination from the Centers for Medicare and Medicaid Services, or CMS, means that patients taking Biogen’s Aduhelm medication will have to be part of clinical trials to assess the drug’s effectiveness in slowing the progression of dementia. Medicare’s national coverage determination would become final this spring, following a public comment period and further evaluation by the agency.
“Alzheimer’s disease is a devastating illness that has touched the lives of millions of American families,” Medicare administrator Chiquita Brooks-LaSure said in a statement. “CMS has been and remains committed to providing the American public with a clear, trusted, evidence-based decision that is made only after a thorough analysis of public feedback on the benefits and risks of coverage for Medicare patients.” The requirement for clinical studies applies to the entire class of drugs of which Aduhelm is a pioneer, monoclonal antibodies directed against amyloid.
Aduhelm’s initial launch price of $56,000 a year led to an increase of nearly $22 in Medicare’s monthly “Part B” premium for outpatient care, the largest ever in dollar terms but not percentage-wise. Medicare attributed about half of this year’s increase to contingency planning for Aduhelm. Faced with skepticism over its medication, Biogen recently slashed the price to $28,200, but Medicare enrollees were already on the hook for the $170.10 premium. Health and Human Services Secretary Xavier Becerra has directed Medicare to reassess the premium increase.
Medicare does not traditionally take cost into account when evaluating coverage, but rather whether a treatment is “reasonable and necessary” in caring for program enrollees. But the high price of Aduhelm and the fact that most of the 6 million Americans with Alzheimer’s are old enough to be covered by Medicare stretched the limits.
“Biogen came to market with an eye-popping price tag,” said Tricia Neuman, a Medicare expert with the nonpartisan Kaiser Family Foundation. “Even after they slashed their drug’s price in half, it is still more than $28,000, which is not insignificant. At that price, it is clearly an issue for the Medicare program, premiums and out-of-pocket costs.”
Aduhelm has sparked controversy since its approval by the Food and Drug Administration last June, which came against the recommendation of the agency’s outside advisers.
The medicine, administered by IV in a doctor’s office, hasn’t been shown to reverse or significantly slow Alzheimer’s. But the FDA said that its ability to reduce clumps of plaque in the brain is likely to slow dementia.
Many experts say there is little evidence to support that claim. And a federal watchdog and congressional investigators are conducting separate probes into how FDA reviewed the medication. Of particular concern are several undocumented meetings between FDA reviewers and company executives in the run-up to the drug’s approval.
The Institute for Clinical and Economic Review, a nonprofit think tank focused on drug pricing, pegged Aduhelm’s actual value at between $3,000 and $8,400 per year based on its unproven benefits.
Biogen has defended its medication and pricing. But in announcing the price cut days before the Christmas holidays, the company acknowledged that cost had become a stumbling block.
“Too many patients are not being offered the choice of Aduhelm due to financial considerations and are thus progressing beyond the point of benefitting from the first treatment to address an underlying pathology of Alzheimer’s disease,” CEO Michel Vounatsos said at the time. “We recognize that this challenge must be addressed in a way that is perceived to be sustainable for the U.S. health care system.”
Some insurers have balked at paying for the drug, while several medical centers across the country have been either slow to decide on using it or said they weren’t planning to prescribe it for now.
Biogen’s Vounatsos said this week that the company now has about 220 sites treating patients with Aduhelm. In October, the company said a total of 120 sites had infused at least one patient.
Biogen said in June, shortly after the FDA approval, that about 900 sites in the U.S. have the equipment and expertise to immediately begin giving the drug, which requires monthly infusion.
The FDA has said Aduhelm is appropriate for patients with mild symptoms or early-stage Alzheimer’s. But that agency has asked Biogen for more research.
Because the drug is administered in a doctor’s office, Medicare pays for it under its Part B outpatient benefit, which is partly financed by enrollee premiums.
The financial impact of high-cost drugs tends to fall most heavily on patients with serious diseases such as cancer, rheumatoid arthritis or multiple sclerosis. But with Aduhelm, the pain would be spread among Medicare recipients generally, not just Alzheimer’s patients needing the drug.
That’s turned the drug into a case study of how one pricey treatment can swing the needle on government spending and impact household budgets. People who don’t have Alzheimer’s would still be on the hook for the cost of Aduhelm, since it’s big enough to affect their premiums.
Alzheimer’s is a progressive neurological disease with no known cure, affecting about 6 million Americans. The vast majority are old enough to qualify for Medicare, which covers more than 60 million people, including those 65 and older, and disabled people under 65.
Ricardo Alonso-Zaldivar, The Associated Press. Associated Press Science Writers Tom Murphy in Indianapolis and Matthew Perrone in Washington contributed.