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Biogen’s Alzheimer’s drug may value Medicare billions of {dollars} a yr, report finds 

A pedestrian walks previous Biogen Inc. headquarters in Cambridge, Massachusetts, on Monday, June 7, 2021.

Adam Glanzman | Bloomberg | Getty Photographs

Biogen‘s pricy new Alzheimer’s drug, Aduhelm, may value Medicare billions of {dollars} a yr, in response to an evaluation revealed Thursday by the non-profit Kaiser Household Basis.

The Meals and Drug Administration on Monday accepted the firm’s drug, the primary remedy cleared by U.S. regulators to gradual cognitive decline in individuals residing with Alzheimer’s and the primary new drugs for the illness in almost 20 years.

The biotech firm stated it’s charging $56,000 for an annual course of the brand new therapy, greater than the $10,000 to $25,000 worth some Wall Avenue analysts have been anticipating. That is the wholesale worth, and the out-of-pocket value sufferers will truly pay will rely upon their well being protection.

Alzheimer’s illness is estimated to have an effect on greater than 6 million Individuals, the overwhelming majority of whom are age 65 and older. Biogen has stated it expects about 80% of Alzheimer’s sufferers to be lined by Medicare, the federal medical insurance program for the aged.

It’s nonetheless unclear what number of Medicare beneficiaries will take Biogen’s drug, however even a conservative estimate would result in a “substantial improve” in Medicare spending, in response to KFF.

In 2017, almost 2 million Medicare beneficiaries used a number of Alzheimer’s therapies lined below Medicare Half D, in response to KFF, which analyzed claims information. The group stated if 1 / 4 of these beneficiaries are prescribed Aduhelm as a substitute and Medicare pays 103% of $56,000 within the close to time period, “whole spending for Aduhelm in a single yr alone can be almost $29 billion.”

Aduhelm can be lined below Medicare Half B, KFF stated, which typically covers FDA-approved physician-administered drugs.

“If 1 million Medicare beneficiaries obtain Aduhelm, which can even be on the low finish of Biogen’s expectations, spending on Aduhelm alone would exceed $57 billion {dollars} in a single yr – far surpassing spending on all different Half B-covered medication mixed,” the group stated. Whole Half B spending was $37 billion in 2019.

Biogen has confronted some criticism from Wall Avenue analysts and advocacy teams who questioned how the corporate may justify the value, particularly as medical specialists proceed to debate whether or not there’s sufficient proof that the drug truly works and the business faces criticism over drug costs.

On a name with traders Tuesday morning, Evercore ISI analyst Umer Raffat congratulated the Massachusetts-based firm on the drug’s U.S. approval earlier than asking executives to elucidate its worth.

“I do suppose there is a disconnect between a few of the phrases that you’ve got shared in your press releases, like accountability, entry, well being fairness, versus the value level, particularly given the first care inhabitants,” he instructed executives.

Biogen executives stated Tuesday the entire worth determine for the brand new therapy is “substantiated” by the worth it’s anticipated to deliver to sufferers, caregivers and society. They insisted the value is “accountable,” noting the illness prices the U.S. billions annually.

The corporate has dedicated to not elevating the value of the brand new drug over the following 4 years. That being stated, executives stated they’re “open-minded” and instructed they might rethink the value as the corporate assesses demand over the following few years.

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