Biogen sinks 10% after Medicare limits coverage of new Alzheimer's drug Aduhelm

• Biogen stock dropped 10% early Wednesday after Medicare said it would limit coverage of the company's Alzheimer's disease drug.
• Medicare will only cover patients who are enrolled in clinical trials evaluating Aduhelm, a drug that costs $28,000 a year.
• Biogen urged Medicare to grant broader access to Aduhelm in its final decision due in April.

Investors knocked Biogen stock down by more than 10% early Wednesday after the US Centers for Medicare and Medicaid Services set a limit on its coverage of Aduhelm, the company's drug to treat Alzheimer's disease.

In a preliminary decision released late Tuesday, Medicare said it would cover Aduhelm and other drugs in the same class only if patients are enrolled in qualifying clinical trials.

"Throughout this National Coverage Determination process, CMS has been and remains committed to providing the American public with a clear, trusted, evidence-based decision that is made only after a thorough analysis of public feedback on the benefits and risks of coverage for Medicare patients," the agency said in a statement.

Medicare's final decision on coverage is due on April 11. Leading up to that, the agency will take public comments for 30 days.

Shares dropped as much as 10.5% to $216 in premarket trade. Soon after regular trading began, Biogen stock was down 9%.

The US Food and Drug Administration granted accelerated approval of the Alzheimer's therapy in June. But Aduhelm has been controversial, as the FDA's backing went against the recommendation of its outside advisers. While the FDA said it can slow dementia by reducing plaque in the brain, it has yet to demonstrate it can reverse or slow Alzheimer's significantly.

Amid the skepticism, Biogen last month slashed the price of Aduhelm by roughly 50%, to $28,000, to expand patient access to the injectable drug. It had said with insurance coverage and access to diagnostics and specialized centers that about 50,000 patients could potentially initiate treatment this year.

"Biogen believes that the proposed coverage with evidence development decision for anti-amyloid therapies denies nearly all Medicare beneficiaries from accessing Aduhelm," the company said in a statement Tuesday.

"It is imperative to change this draft decision to be aligned with reimbursement for other therapies for progressive diseases, where patients have immediate and equal access to medicines approved by the FDA. The FDA's accelerated approval was supported by clinical data showing that Aduhelm impacted the underlying pathology of Alzheimer's disease."