Life Sciences Perspectives
January 14, 2022

Medicare Agrees to Limited Payment for New Alzheimer’s Drug

On January 11, 2022, the Centers for Medicare and Medicaid Services (CMS) released a proposed National Coverage Determination (NCD) decision memo limiting Medicare coverage for Biogen’s new Alzheimer’s drug, Aduhelm.  Under the terms of the NCD – despite FDA’s 2021 approval of the drug – CMS will only pay for Aduhelm for Medicare beneficiaries who are enrolled in a qualifying clinical trial to assess the drug’s safety and its effectiveness in slowing the progression of Alzheimer’s.  CMS stated, “[B]ased on the public comments submitted previously and evidence CMS reviewed, the potential for harm, and important questions that remain, we have determined that coverage with evidence development through clinical trials is the right decision for Medicare patients, clinicians, and caregivers, and we look forward to receiving feedback on the proposal.”  The proposed NCD is open to public comment for thirty (30) days, and a final decision from CMS is expected on April 11.  If the proposed NCD is finalized, CMS must evaluate each submitted clinical trial to verify that it meets the qualifying criteria specified in the proposed NCD.

Aduhelm has been approved by FDA for the treatment of Alzheimer’s since June 2021.  This is the first drug approved by FDA for the treatment of Alzheimer’s in almost 20 years.  In 2019, two clinical trials for Aduhelm were paused due to data showing the drug was of no benefit to patients’ cognitive function. However, after Biogen re-analyzed one of its trials, it decided to apply to the FDA for approval. The FDA used the accelerated approval process but can withdraw Aduhelm from the market if Biogen’s new clinical trial demonstrates that the drug is ineffective. The FDA pivoted on the approval itself, later recommending Aduhelm only in patients with mild cognitive impairment or mild dementia. Patient advocacy groups such as the Alzheimer’s Association played an important role in pressuring FDA to approve Aduhelm, given the minimal advancements in drug treatment in the space.

Since receiving FDA approval, Biogen has faced tough scrutiny about Aduhelm’s efficacy and cost.  Aduhelm’s initial annual price of $56,000 elicited widespread criticism.  In December 2021, Biogen announced that it would reduce the drug’s price to $28,200 for some patients.   Biogen most likely reduced the price in response to slower than anticipated sales and CMS’s announcement it would increase Medicare’s monthly Part B premium for outpatient care in anticipation of the Aduhelm’s price impact.  Adding to Biogen’s challenges, an FDA advisory committee agreed almost unanimously that the clinical trials did not provide strong enough evidence to corroborate Aduhelm’s efficacy data.  However, based on the clinical trials it did review, FDA claimed that Aduhelm could reduce clumps of plaque in the brain, which is likely to slow dementia.  The discrepancy between the advisory committee’s and FDA’s findings coupled with broad criticism of the FDA led the Department of Health and Human Services Office of Inspector General to conduct a probe into the FDA’s approval process for Aduhelm.

Adding to the complexity, State Medicaid programs have also been vocal in protesting CMS’s decision.  Unlike Medicare, Medicaid is required to cover all FDA-approved drugs regardless of a drug’s clinical efficacy.  Therefore, had Medicare determined not to cover Aduhelm, all costs would shift to the state Medicaid programs.  Though some states and insurers have already declined to cover Aduhelm, CMS’s ruling is likely to influence other payors to refuse coverage.

While some commenters and industry observers have questioned whether CMS’s decision with respect to Aduhelm somehow creates a new, default secondary clinical testing and approval threshold for drug makers, it is more likely that the Medicare agency’s decision on Aduhelm reflects the unique circumstances posed by the drug (i.e. unclear efficacy concerns, conflicting FDA guidance, and an unusually high price point).  Whether CMS will make a habit of limiting coverage for innovative drugs only to beneficiaries participating in additional clinical trials remains to be seen, but is not likely.  We will continue to monitor trends and developments at CMS with respect to coverage and payment decisions on new therapeutics and treatments, including additional research and testing requirements that the agency may impose.

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