Medicare sticks by decision to limit coverage of a controversial Alzheimer's drug to people involved in clinical trials

• CMS said Thursday that it will limit insurance coverage for a controversial new Alzheimer's drug.
• It will only cover drugs given an accelerated FDA approval for patients in clinical trials.

Use of Biogen's controversial Alzheimer's disease treatment will officially be limited to a few thousand patients under The Centers for Medicare and Medicaid Services' coverage decision announced Thursday.

CMS, which is the largest insurer in the US, laid out its final guidelines for covering drugs that treat Alzheimer's disease using antibodies that target a harmful plaque in patients' brains called amyloid beta. Under the coverage policy, drugs that are approved through the traditional Food and Drug Administration approval process will be available to all Medicare and Medicaid recipients. But drugs that receive an accelerated approval, like Aduhelm, will only be available to people involved in clinical trials, due to an increased risk of brain bleeds.

Alzheimer's disease affects around 6 million people in the US. About 5 million of them rely on Medicare, so getting the federal insurer to cover the drug is key for business.

The decision heavily impacts Biogen, which got accelerated approval for its drug Aduhelm in June 2021. The company has struggled to get healthcare practitioners and insurers to embrace Aduhelm, leading to one of the worst drug launches in modern history. It also poses a new challenge for Eli Lilly, which plans to ask for accelerated approval for another Alzheimer's treatment, donanemab, later this year.

The companies did not immediately respond to a request for comment.

The decision is a hiccup after a controversial FDA approval

Biogen ran two late-stage clinical trials of the drug, one of which failed to show any benefits for patients, while the other appeared to show Aduhelm worked. The FDA ultimately decided to approve the drug through a special mechanism called an accelerated approval, which means Biogen can begin selling Aduhelm but needs to run a new clinical trial to prove it works.

Biogen plans to start a 1,300-person study later this year.

Physicians like University of Southern California neurology professor Lon Schneider and Mayo Clinic neurologist Dr. David Knopman have told Insider the drug never should have received an accelerated approval. "The FDA, in using the accelerated approval mechanism, they could not endorse any evidence of demonstrable clinical benefit. That's what their press release said in so many words. That seems illogical to me," Knopman said in June.

Private insurers will need to weigh whether to cover Aduhelm and similar drugs

Private companies that offer Medicare Advantage plans are required to reimburse drugs that are covered by CMS. But if Medicare puts out rules that are vague, Medicare Advantage plans may have more discretion to make their own determinations, according to Desiree Otenti, senior director of medical policy and program implementation at Blue Cross Blue Shield of Massachusetts.

States like Oregon, meanwhile, are hoping to get out of a federal policy that requires their state Medicaid programs — which serve low-income households — to cover drugs like Aduhelm that receive an accelerated approval.

CMS had already raised Medicare premiums to accomodate Aduhelm, which cost $56,000 until Biogen cut the price on Jan. 1. The agency is now reassessing that price hike.

SVB Leerink analyst Marc Goodman had originally thought that Aduhelm sales could reach $31 million in 2021 and $525 million in 2022. But many healthcare centers and insurers have shied away from offering the drug so far. As a result, Aduhelm had made just $3.3 million by the beginning of December, causing its stock to drop by 40%.

A surprise retirement of Biogen's head of Research and Development in November 2021 also shook investor confidence.

This article was originally published in January and has been updated to reflect CMS' final coverage decision.