Biogen is cutting the price of its Alzheimer's disease drug almost in half starting next year, a move the company hopes will both appease insurers and lower out-of-pocket costs for patients.
Effective Jan. 1, the average list price for Aduhelm will be just north of $28,000, down from the $56,000 Biogen set when the drug was first approved in June. According to CEO Michel Vounatsos, the company chose to lower Aduhelm's price after hearing from stakeholders and concluding that too many patients didn't have access because of financial constraints.
"We recognize that this challenge must be addressed in a way that is perceived to be sustainable for the U.S. healthcare system," Vounatsos said in a statement.
Aduhelm's initial cost stoked fears that many patients wouldn't be able to afford it. Cigna, for example, has estimated that some eligible patients could face $10,000 or more in annual out-of-pocket costs, according to The Wall Street Journal.
There were also concerns that Aduhelm would swamp payer budgets if it was used in even a small portion of the estimated 6 million Alzheimer's patients in the U.S. Medicare, the government insurance plan for people aged 65 and older, became a particular focal point, as it covers many of the patients most likely to receive Alzheimer's treatment. Bracing for the budgetary impact of Aduhelm, the program last month said it would institute the largest premium increase its history.
The Centers for Medicare and Medicaid Services, or CMS, is currently hammering out a single, country-wide policy for Alzheimer's drugs that work like Aduhelm. A draft of the policy, known as an NCD or national coverage determination, should come in January, with a final version slated for April. Many payers — and, by extension, healthcare providers — are waiting to see where CMS stands before establishing their own coverage plans.
For Biogen, securing coverage is critical. Insurance uncertainties have been one of the main factors behind Aduhelm's slower-than-expected launch. The company recorded $300,000 worth of sales from the drug between July and September, far below the $16 million Wall Street had forecasted.
And though Biogen has been trying to get around 900 Alzheimer’s treatment centers to use Aduhelm, only about 120 were doing so as of Oct. 20.
"We are obviously disappointed with the delayed uptake of Aduhelm in the U.S.," Vounatsos said during the company's most recent earnings call.
Biogen is now attempting to boost uptake through a pricing revision. It estimates that around 50,000 patients could go on Aduhelm in 2022, provided they're covered by insurance and have access to diagnostics and specialized centers.
Paul Matteis, an analyst at Stifel, noted how such an influx of new patients would lift Aduhelm revenue above what his team and other analysts have modeled.
"We are big fans of Biogen's decision to cut the price of Aduhelm, and, in our view, this makes some level of reasonable Medicare reimbursement more likely," wrote Paul Matteis, an analyst at Stifel, in a note to clients.
Aduhelm's performance has been especially in focus given how Biogen has banked on the drug to offset problems elsewhere in its business. Generic competition is eating away at Tecfidera, the company's best-selling product, at the same time that another one of its top earners, a therapy called Spinraza, is having to fight for market share thanks to newer, rival treatments from Roche and Novartis.
Biogen forecasts roughly $10.9 billion in total revenue this year, which would represent a nearly 20% decline from the $13.5 billion it brought in 2020.
Against these challenges, Biogen also announced Monday that it will be implementing a series of cost-reduction measures in 2022.
More details are expected early next year, but for now, the company believes its measures will result in approximately $500 million in annualized savings. STAT News has reported how layoffs are on the table. In what would be Biogen's largest ever workforce reduction, more than 1,000 employees could lose their jobs next year under a proposed restructuring plan, details of which were shared with STAT.