The Food and Drug Administration’s approval Friday of a new drug for Alzheimer’s disease ushers in a sought-after treatment option for the many people in the U.S. who are diagnosed with the memory-robbing condition each year.
For Eisai, the pharmaceutical developer behind the drug, the approval is both a major milestone and a significant test. A successful market launch of the medicine, called Leqembi, could change the Japan-based company’s future. But it must overcome doubts around how much the drug will actually help patients, concerns over its safety risks and resistance to its potential impact on healthcare costs.
Eisai’s first challenge is the drug’s price, which the company set at $26,500 per year for the average eligible patient.
That cost is below what Eisai’s partner Biogen initially set for the companies’ previous Alzheimer’s drug Aduhelm, which was approved in 2021 only to become mired in controversy and criticism. Biogen later halved Aduhelm’s price, from $56,000 a year to around $28,000, but sales never picked up and the company essentially shut down its marketing efforts.
Yet, Leqembi’s price tag is above one estimate of what a cost-effective price might look like and, given the large number of people who might eventually receive treatment, is likely to draw its share of pushback, too.
“I think anytime prices come in above the value-based price, what ends up happening is that while you may be treating the patients you’re thinking of — those with Alzheimer’s disease — you’re harming other people in the system,” said David Rind, chief medical officer for the Institute for Clinical and Economic Review, an influential group which previously estimated Leqembi would be cost effective at a price between $8,500 and $20,600 a year.
“With something as big as Alzheimer’s disease for Medicare, even at a value-based price there would be real burden on the budget,” Rind added, referring to the federal insurance program for older adults.
Leqembi’s approval also comes a week after a congressional investigation sharply criticized Biogen for setting Aduhelm's price “unjustifiably high” in order to “maximize revenue,” despite knowing the cost would strain Medicare's budget.
Eisai appears to have taken great pains in attempting to thread the needle between cost concerns and its objectives as a for-profit company. Upon securing approval, the company issued a lengthy press release laying out the process by which it arrived at Leqembi’s price.
The statement describes a mathematical model Eisai used to calculate per-patient societal value of Leqembi, which it put at $37,600 per year. Drugmakers rarely pull back the curtain on their pricing decisions, making Eisai’s disclosure unusual.
“Eisai decided to price Leqembi below quantified societal value at the wholesale acquisition cost of $26,500 per year ... aiming to promote broader patient access, reduce overall financial burden, and support health system sustainability,” the company said in its statement. (Unlike with Aduhelm, Eisai led Leqembi’s development and was responsible for setting its price.)
In the near term, though, very few patients will be able to receive insurance coverage for treatment. Many of those who would be eligible are on Medicare, which in April of last year issued a restrictive policy on Alzheimer’s drugs like Leqembi.
Under the policy, coverage for Alzheimer’s drugs approved on an accelerated basis, as Leqembi was, is restricted only to patients who are enrolled in a clinical trial. Eisai and Biogen plan to soon ask for full approval based on recent results from a large clinical trial that showed Leqembi significantly slowed decline versus a placebo. Even then, Medicare coverage would still have limitations.
“While this news is exciting, without insurance and Medicare coverage of this class of treatments, access will be limited to only those who can afford to pay out-of-pocket,” Joanne Pike, CEO of the Alzheimer’s Association, said in a statement.
The group, which has advocated heavily for approval of new Alzheimer’s drugs, said it’s submitted a formal request to the CMS to change its coverage policy.
In its own statement Friday, the CMS confirmed Leqembi would fall under its policy, but noted it’s examining “available information and may reconsider its current coverage based on this review.”
For its part, Eisai expects uptake of Leqembi will be gradual, estimating that the eligible patient population will reach approximately 100,000 individuals by its third year on the market. Adoption “will increase gradually over the mid-to-long term given the time required to advance new screening and diagnostic technologies,” Eisai added.
In notes to clients, analysts on Wall Street described Eisai’s assumptions as conservative, forecasting sales could reach several hundred million dollars by next year. Estimates of peak sales, which assume broader coverage over time, generally reach into the billions of dollars.
“While there's likely to be complaints from some stakeholders that Leqembi's demonstrated clinical benefit is too incremental to command such a price, we think this level of pricing is unlikely to generate the intense scrutiny that followed the initial [$56,000] Aduhelm price tag,” wrote Brian Skorney, an analyst at Baird, in a client note.
“We don’t expect this price to stunt demand for a product that, in the best case scenario, could slow clinical decline by multiple years,” he added.
Jonathan Gardner contributed reporting.