Medicare faces plan to limit coverage of Biogen’s Alzheimer’s drug
The simmering controversy over Biogen’s new drug for Alzheimer’s disease reached a boiling point this week, as the medical debate surrounding its benefits took on political stakes.
On Wednesday, Medicare proposed restricting coverage of the drug to only patients enrolled in clinical trials, sparking a backlash from society, industry groups and patient advocates. Biogen, which desperately needs its treatment to succeed financially, is planning a full lobbying campaign to overturn the decision.
The Centers for Medicare & Medicaid Services draft policy, which is expected to be finalized by April, has sparked a sell-off in shares of Biogen as well as companies like Eli Lilly and Eisai that are developing drugs that work the same way. manner than those of Biogen.
Based on the details of the policy, executives and investors are concerned that any newly approved Alzheimer’s drug will also be subject to the same requirements and, more broadly, that national reimbursement decisions will no longer automatically follow drug approvals. the Food and Drug Administration.
CMS’s proposal “will set a dangerous policy precedent and discourage investment in future innovation for the treatment of Alzheimer’s disease,” Biogen CEO Michel Vounatsos said on a call with analysts. of Wall Street on Thursday.
The counter-argument from policymakers, insurers and some doctors is that Medicare’s legal obligation to cover “reasonable and necessary” treatments and procedures does not extend to drugs, like Biogen’s, with data inconsistent in clinical trials.
Drugmakers “think they get FDA approval and it’s automatic for Medicare,” said Robert Berenson, a former Medicare official who is now a member of the Urban Institute, in an interview. “Reasonable and necessary for Medicare is not the same as what the FDA says.”
Medicare’s policy is what’s called a “National Coverage Determination,” or NCD, and covers all drugs that remove a sticky protein called amyloid from the brains of patients with Alzheimer’s disease. CMS will reimburse the treatment, but only if patients are enrolled in a randomized controlled trial, a type of study in which certain volunteers are given a placebo to determine the effectiveness of a drug.
This approach is generally used with medical procedures and not with drugs, mainly because the scientific questions of safety and effectiveness are supposed to be answered by an FDA approval. But in the case of Biogen’s drug, called Aduhelm, it’s not at all clear.
The FDA granted accelerated approval based on Aduhelm’s ability to remove amyloid, a surrogate marker of efficacy. The decision effectively avoided intense debate within the agency and among its advisers over whether the drug actually slowed patients’ cognitive and functional decline. Two trials gave conflicting answers on this question, and both were initially terminated early before Biogen re-examined the data and found one that was successful.
As the policy applies to anti-amyloid drugs broadly, it could apply to three others in late-stage clinical trials – Eli Lilly’s donanemab, Roche’s gantenerumab and Eisai’s lecanemab, which is in partnership with Biogen.
“With this proposal, CMS is canceling an entire class of drugs before multiple products have even been reviewed by the FDA,” PhRMA, the drug lobby powerhouse, said in a statement.
But policy experts countered that the agency likely had the flexibility to cover these drugs, provided their clinical trials could show a significant slowing of cognitive decline. “If a company can show that, that’s wonderful,” said University of Washington law professor Rachel Sachs. “[CMS] says what companies need to show to get coverage.”
For a drug like donanemab, it’s unclear whether CMS would consider the currently available data compelling enough for broad coverage. Lilly has only completed a phase 2 trial, which showed the drug slowed disease progression compared to placebo, but enrolled only a small number of patients.
Biogen’s next pressure campaign
For Biogen, the proposed policy avoids a worst-case scenario, but not by much. While not an outright denial of coverage, the various restrictions proposed by CMS could end up limiting the number of patients who receive Aduhelm through Medicare to hundreds or thousands.
Unsurprisingly, Biogen has expressed outrage at the project and is already organizing a campaign to revise it before a final version arrives in April. He is likely to be joined by his drugmaker peers and their allies in patient advocacy groups, several of whom issued vehement criticism of CMS after the decision was made public. (CMS plans to collect feedback on its proposal for 30 days.)
“I can’t believe the final NCD position will be similar to the draft,” Vounatsos said during Thursday’s call.
There is also precedent for relaxing a national coverage policy. Several years ago, the agency canceled an equally restrictive coverage plan for cancer cell therapies on the grounds that it would be too burdensome for providers — an example cited by Biogen executives.
Aduhelm, which is approved to treat a much wider patient population, is a very different case, however, and CMS cannot stray too far from the strict stance it has set out.
“I think the basic decision [on Aduhelm] they’ll probably hold on,” Berenson said.
Even Wall Street analysts are skeptical of Biogen’s ability to meaningfully influence regulators.
“They want to engage with CMS and voice their point of view, and talk about how they think representations of their clinical data are inaccurate,” said Paul Matteis, an analyst at investment bank Stifel, in a statement. interview. “But it sounds like a Hail Mary.”
Matteis is not the only one to be of this opinion. Raymond James analysts do not expect to see significant changes between the draft and the final policies. The Mizuho Securities team, meanwhile, went so far as to remove almost all of Aduhelm’s sales from its Biogen stock valuation.
The proposed NCD “appears more expensive than expected and unless it receives significant revisions, it offers the possibility of significant short-term revenue from [Aduhelm] even less likely,” RBC Capital Markets’ Brian Abrahams wrote in a note to clients this week. Previously, the consensus among analysts was that Aduhelm’s sales would hit $311 million this year, a figure that now “would seem unattainable by orders of magnitude,” according to Abrahams.
Investors don’t seem too optimistic either. Following CMS’s announcement, Biogen’s stock price fell about 8%, wiping out about $2.7 billion in market value. The company’s stock is currently worth just over half of what it traded last June, when the FDA approved Aduhelm.
A shaky future?
Biogen has banked on Aduhelm to offset problems elsewhere in its business. But with a bleak near-term sales outlook, the company is likely to come under increased pressure from investors to offer new products as part of a deal.
Analysts who spoke to Biogen on Thursday noted that executives said they were open to the possibility of mergers and acquisitions. On the same day, STAT News, citing a person familiar with the situation, reported that Biogen was working with Goldman Sachs to identify companies it could buy.
Historically, however, Biogen has been averse to big deals. And some find it hard to believe that this position would change, at least until the uncertainties surrounding Aduhelm are resolved.
“To make a meaningful acquisition, I imagine people internally need to be on the same page about what happens next,” Stifel’s Matteis said. Yet Biogen has a very active and often incongruous board of directors, a CEO under fire from critics and a management team that has seen several key members leave over the past two years, the most recent being the long-time chief scientific officer. date Al Sandrock.
“It just doesn’t seem realistic to me that they’ll do a multi-billion dollar deal in the next few months,” Matteis said.