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Analysts say Medicare decision could spell the demise of Biogen’s Alzheimer’s drug

If government insurance coverage is limited to patients in clinical trials, the prospects for a treatment touted as a blockbuster last year will be dim.

Biogen has a lot riding on the future of Aduhelm.Steven Senne/Associated Press

After the Food and Drug Administration approved Biogen’s controversial drug, Aduhelm, in June, experts predicted the first new Alzheimer’s medicine in nearly two decades would generate billions of dollars in sales for the Cambridge-based company.

But if Medicare sticks to its extraordinary preliminary decision on Tuesday to cover the $28,200-a-year treatment only for patients who participate in clinical trials, the medication once touted as an all-but-certain blockbuster is unlikely to generate any meaningful revenue, according to two industry analysts.

Indeed, the decision could even kill the drug.

“The restrictions and language are pretty strong indictments of Aduhelm’s presence on the US market,” Brian Skorney, an analyst at the investment bank Baird, wrote investors after the federal government said it would only cover Medicare beneficiaries in studies that confirm the drug is safe and effective. If Medicare maintains that stance when it issues its final policy in April, Skorney added, it “will effectively limit Aduhelm sales to be a rounding error for Biogen.”

Skorney believes there isn’t enough evidence showing that Aduhelm works. In his view, the medicine should not have been cleared by the FDA over the objections of its independent panel of scientific advisers. The panel voted 10-0, with one member uncertain, in November 2020 to recommend it not be approved. The Centers for Medicare and Medicaid Services, Skorney wrote, made a “courageous decision” to hit the brakes on Aduhelm.


Brian Abrahams, a biotech analyst with RBC Capital Markets and a physician, had a similar view. He said in a note to investors that CMS’s decision will “essentially eliminate any meaningful go-forward revenue” from the drug and could, if finalized, “effectively spell the end for Aduhelm.”

The decision could also fuel speculation that Biogen, one of the state’s oldest and biggest biotechs, may become a takeover target for another pharmaceutical company, he said.


A Biogen spokeswoman said it doesn’t comment “on market rumors or speculation.” But the company acknowledged that if Medicare’s decision stands, Aduhelm’s prospects are dim. Biogen said in a statement that it was “imperative to change this draft decision” and that the government’s position “denies nearly all Medicare beneficiaries from accessing Aduhelm.”

Questions about Medicare’s preliminary decision remain unanswered, including how many beneficiaries could get Aduhelm in a clinical trial, who would run such a study, and which hospitals would be trial sites.

Biogen is already testing Aduhelm in another trial required by the FDA in June to confirm that the drug is safe and effective. That trial involves 1,300 Alzheimer’s patients, Abrahams said, some of whom are getting a placebo. If Medicare covers the drug for patients in that trial, he said, it would generate less than $40 million in revenue for Biogen.

In theory, Abrahams said, Biogen could expand the trial to include more patients, but that would require coordination between the FDA and CMS and could pose logistical challenges.

Biogen said Medicare’s requirement for further study “would be duplicative” of evidence it already gathered and continues to collect. The company also said it would probably take more than a year to begin enrolling patients in a new trial. In the meantime, the company said, “thousands of patients progress each day from mild to moderate disease,” and the treatment no longer becomes an option for them.

The FDA initially approved Aduhelm for all patients with Alzheimer’s, a progressive and fatal memory-robbing disease estimated to afflict about 5.8 million Americans. But after drawing widespread criticism that there was scant evidence to support that, the agency said the drug was indicated for people with mild Alzheimer’s-related cognitive impairment, about 1.5 million Americans.


Several experts said Medicare’s preliminary decision marked a highly unusual case of the agency balking at fully covering a drug that had been approved by the FDA. Medicare has occasionally declined to cover an FDA-approved medical device or technology, but experts couldn’t cite a precedent for doing that with an approved drug.

Harry Johns, chief executive of the nonprofit Alzheimer’s Association, said the decision represented “shocking discrimination against everyone with Alzheimer’s disease,” especially Black, Hispanic and female patients. Those patients, he said, are disproportionately affected by the disease. By limiting Medicare coverage to people in clinical trials, he said, “access to treatment would now only be available to a privileged few, those with access to research institutions.”

But Dr. Sam Gandy, who runs a center for cognitive health at New York’s Mount Sinai Health System, which has opted not to offer the drug to patients over concerns about its safety and effectiveness, was pleased. Gandy said he and other Aduhelm critics have repeatedly called for “proper randomized, placebo-controlled clinical trials, and [to] show us the data establishing meaningful clinical benefit.”

One of the most closely watched experimental drugs in recent history, Aduhelm is a monoclonal antibody made from the immune cells of healthier older people and administered in monthly intravenous infusions. It reduces a sticky protein called amyloid that clumps into plaques in the brains of people with Alzheimer’s. Some doctors believe amyloid buildup causes cognitive impairment, although that’s unproven and strongly contested by some experts.


The medicine generated contradictory results in two late-stage clinical trials. In one study, people with Alzheimer’s who received the drug declined 22 percent more slowly on average than those who got a placebo. The other trial failed to reach its goal.

As a result, many analysts and scientific experts were shocked by Aduhelm’s approval, which came amid pressure from families of people with Alzheimer’s and their advocates. The FDA cleared the drug under a less common “accelerated approval pathway” reserved for medicines that fill a serious unmet need. (The last Alzheimer’s drug had been approved in 2003.)

The FDA typically uses this approach when regulators are uncertain about the clinical benefits of a drug and rely on another measure that suggests it would help patients. In this case, that was Aduhelm’s reduction of amyloid plaques. That reduction, Biogen said, was “reasonably likely to predict” that the drug will benefit such patients.

But some experts have also been worried about the drug’s potential side effects. About 40 percent of patients who received the highest dose in clinical trials showed abnormalities on MRI scans, indicating brain swelling or tiny hemorrhages. More than three-quarters of those imaging abnormalities caused no symptoms, but about 6 percent of patients on the highest dose had to stop taking the drug.


About 80 percent of potential Aduhelm patients are old enough to receive Medicare, the federal health insurance program for people 65 and older, making coverage crucial. Private health insurers typically take their cue from Medicare, but Massachusetts’s two biggest insurers, Blue Cross Blue Shield of Massachusetts and Point32Health, said last year they won’t cover Aduhelm.

In addition, at least 16 university affiliated hospitals across the US, including Mass General Brigham, said they weighed the benefits and risks of the drug and won’t offer it to patients, according to a recent story published by STAT.

Amid anemic sales of Aduhelm, Biogen announced last month that it would slash the price of the drug, originally set at $56,000-a-year, in half and restructure the company to cut $500 million in costs. More than 1,000 employees are expected to lose their jobs in the largest-ever round of layoffs, according to STAT.

Biogen, which specializes in treatments for neurological disorders, has made the Alzheimer’s drug a key element of its long-term business strategy. The biotech added 1,700 employees to its global workforce in 2020, at least partly in anticipation of approval. It also built a $1 billion plant in Switzerland to help manufacture the medicine.

Jonathan Saltzman can be reached at jonathan.saltzman@globe.com.