Biogen's new Alzheimer's drug serves as a rallying cry for drug pricing reforms
A coalition of employers and health care purchasers are calling on the top House and Senate leaders to take a hard look at the “astronomical price” of Biogen’s new Alzheimer’s drug Aduhelm and “move boldly” to enact prescription drug pricing reform.
The group EmployersRx, which includes the American Benefits Council and the National Alliance of Healthcare Purchaser Coalitions among others, says that while it strongly supports market solutions to establish reasonable prices, when no market exists — as is the case for aducanumab — “we support allowing the federal government to enter into meaningful negotiations on the price of drugs on behalf of all payers.”
Allowing the government to negotiate prices has been a major sticking point for industry groups and lobbyists, who contend that such negotiations are akin to price controls and will severely constrict the biopharma industry’s ability to win over new VC funding and take risks on potential new treatments.
But if 1 million Medicare beneficiaries receive Aduhelm, which may be on the lower end of Biogen’s expectations, according to the Kaiser Family Foundation, spending on Aduhelm would surpass spending on all other Part B-covered drugs combined. The US insurer for seniors may end up spending more on Aduhelm than on the CDC, or even NASA.
EmployersRx also notes that Medicare’s Part B payment policy provides a financial incentive for clinicians to prescribe higher-cost therapeutic drugs, which may work in Biogen’s, but not Medicare’s, favor. Wall Street biotech analysts, however, have said Aduhelm sales likely won’t reach $7 billion per year until 2025 (and Biogen has until 2030 to complete its confirmatory trial).
“Negotiated prices should align with clinical efficacy, consider the price of the drug in other industrialized countries, and protect true innovation,” EmployersRx said in its letter on Monday to House Speaker Nancy Pelosi (D-CA), House minority leader Kevin McCarthy (R-CA), Senate majority leader Chuck Schumer (D-NY) and Senate minority leader Mitch McConnell (R-KY). “To ensure that these policies do not result in cost-shifting to private payers, and to provide direct relief to families covered by private insurance, it is essential that any policies to directly manage drug prices extend to all payers, not just public programs.”
The coalition of employers and purchasers also raised concerns about the implications of this approval at the FDA, as, “if drug manufacturers know that the FDA will approve drugs with little-to-no value over current treatments, they will lose real incentives to develop truly innovative, lifesaving medications.”
“The unprecedented approval and unjustified pricing of aducanumab provides a cautionary tale of a broken system that is in profound need for reform,” the letter says.
The letter is part of a growing outcry over the decision from the FDA and its implications. Nonprofit watchdog Public Citizen last week called for the top three FDA officials responsible for the approval, including acting commissioner Janet Woodcock, to be removed from their positions.
But SVB Leerink analyst Marc Goodman explained recently in a note to investors how many unknowns there are still on the launch of Aduhelm.
“We don’t know how widespread physicians will prescribe within the spectrum of AD patients. We don’t know how long physicians will recommend that patients stay on the drug or payers will reimburse treatment. What is the right pricing given the complicated dosing titration? Will physicians titrate dosing in line with labeling recommendations? We don’t know yet how difficult CMS and other payers (e.g., Medicare Advantage plans) will make it for reimbursement,” he wrote. “How many patients will discontinue treatment over time? And how will the market factor in future competition from the Eisai and Lilly drugs that have the same mechanism and appear to be more robust in clearing amyloid than Adu?”