The state’s second-biggest health insurer is threatening to limit or not cover Biogen’s new Alzheimer’s drug, accusing the Cambridge biotech of putting “excessive corporate profits” ahead of patients by charging $56,000 a year for the controversial treatment.
Michael Sherman, chief medical officer for Point32Health, the insurance company formed by the recent merger of Tufts Health Plan and Harvard Pilgrim Health Care, said Biogen should cut the cost of the drug called Aduhelm by a factor of roughly 10, to $5,400, given the medicine’s questionable benefits and potential risks.
If Biogen doesn’t lower the price, Sherman said, Point32Health may not cover the drug for 1.1 million customers, most of whom get their insurance through their employers and make up about half of its membership. Or, he said, the insurer will impose restrictions, such as requiring periodic brain-imaging tests to prove patients are benefitting from the drug. The insurer has made no coverage decisions yet.
“If Biogen were to come to us with a fair price, we would strongly consider covering it for individuals who may need it,” Sherman, who served as chief medical officer for Harvard Pilgrim for 10 years, said in an interview.
If Biogen doesn’t lower the price, he said in an e-mail, the Cambridge-based biotech is “demonstrating their willingness to put excessive corporate profits ahead of the welfare of the patients whom we all serve.”
Point32Health is the first health insurer in Massachusetts that has publicly objected to the price of Aduhelm and could be a bellwether for the industry.
A Biogen spokeswoman, Allison Parks, said the drug company declined to comment.
Biogen is facing a fierce backlash over Aduhelm, which the US Food and Drug Administration approved on June 7 over the objections of the agency’s scientific advisory committee, including three members who quit in protest, saying Biogen had failed to prove it is effective. It is the first new Alzheimer’s drug to get cleared by the FDA since 2003 and is expected to be a multi-billion-dollar blockbuster, despite the doubts of many experts that it works.
The nonprofit Alzheimer’s Association lobbied strenuously for the drug’s approval despite contradictory results from two late-stage clinical trials. But the advocacy group has called the price “simply unacceptable” and urged Biogen to lower it.
So have lawmakers on Capitol Hill, some of whom have also skewered the FDA for approving the medicine. Representative Jim Cooper, a Tennessee Democrat, said that his wife recently died of Alzheimer’s and that effective therapies are needed for the devastating form of dementia.
“But this drug doesn’t seem to work,” he said in a statement, according to a Bloomberg story Tuesday. “Charging $56,000 for a drug that doesn’t work is a scam.”
One of the biggest concerns is the cost of Aduhelm to Medicare. Analysts have predicted that Medicare and its enrollees, who pay a share of their prescription drug costs, will spend anywhere from $5.8 billion to $29 billion on the drug annually, which could be more than what the US government spends on some entire agencies, such as NASA.
The vast majority of people with Alzheimer’s are 65 and older and thus covered by the federal Medicare program. With FDA approval, the drug is automatically covered under Part B.
But it’s possible some restrictions will be put in place that will slow access to Medicare beneficiaries, industry experts have said. The regional contractors that process Medicare claims could move to limit coverage. And the Centers for Medicare and Medicaid Services, or CMS, may be asked to conduct a study to establish nationwide standards for Aduhelm, a process called the National Coverage Determination, which could take months or even a year to complete.
Sherman said that Point32Health must follow the guidance of the federal government for how the insurance company covers Aduhelm for people on Medicare Advantage, the government-funded program provided by private insurers.
But Point32Health, which has about 1.1 million customers who receive government-funded insurance, will have flexibility on whether it covers Aduhelm for its other commercial customers, Sherman said.
“We are not rushing to create an affirmative coverage policy,” he said. “We’re not saying no, but we are hoping that [Biogen] rethinks their price expectations and comes forward with something that will promote market access.”
“If Biogen chooses to maintain their pricing, our policies are likely to be restrictive,” he added.
In recent years, drug companies have won approval of medicines far more expensive than Aduhelm, but those medications have typically been for rare diseases that affect thousands of people, not millions.
In 2019, for example, AveXis, a subsidiary of the Swiss drug giant Novartis, priced Zolgensma, a revolutionary gene therapy, at $2.1 million to treat children under the age of 2 with spinal muscular atrophy, a rare disease that kills more infants than any other inherited disorder. Zolgensma is a one-time treatment.
Aduhelm is far less expensive, but it requires monthly intravenous infusions and will have a much bigger impact on the health care system. Alzheimer’s afflicts an estimated 5.8 million Americans and is the sixth leading cause of death in the United States. Biogen has said the drug is designed to slow cognitive decline in people with early symptoms of the disease, about 1 million to 2 million in the US, but the FDA label doesn’t restrict it only to early Alzheimer’s patients.
In recommending that Biogen charge only $5,400, Sherman was using the midpoint of what the Boston drug-pricing watchdog, the Institute for Clinical and Economic Review, or ICER, suggested in a draft report in early May, before the drug won FDA approval.
That group said Biogen had generated “insufficient” evidence to conclude that the drug would help patients. Citing worrisome potential side effects, including brain swelling that didn’t usually cause serious symptoms, ICER said the drug warranted an annual price tag of $2,500 to $8,300, if approved.
Amy McHugh, a spokeswoman for Blue Cross Blue Shield of Massachusetts, said the state’s largest insurer is still reviewing the benefits of the new drug and how to cover it. The review process, she said, typically takes one to four months.
Lora Pellegrini, president of the Massachusetts Association of Health Plans, a trade group that represents Point32Health and more than a dozen smaller insurers, said its members are consulting with experts and reviewing research before deciding how to cover the drug. They will also watch how Medicare handles coverage of Aduhelm.
“At the end of the day, will it be effective? That all has to be weighed,” Pellegrini said. “There’s a lot of debate about whether it is effective at this point.”
Priyanka Dayal McCluskey and Felice Freyer of the Globe staff contributed to this report.
Jonathan Saltzman can be reached at firstname.lastname@example.org.