The simmering controversy over Biogen's new drug for Alzheimer's disease reached a boiling point this week, as the medical debate surrounding its benefit took on political stakes.
On Wednesday, Medicare proposed to restrict coverage of the drug to only patients who are enrolled in clinical trials, triggering intense backlash from the company, industry groups and patient advocates. Biogen, which desperately needs its treatment to succeed financially, is planning a full-on lobbying campaign to reverse the ruling.
The draft policy from the Centers for Medicare & Medicaid Services, which is set to be finalized by April, sparked a selloff in shares of Biogen as well as companies like Eli Lilly and Eisai that are developing drugs that work in a similar way as Biogen's.
Based on the policy's details, executives and investors fear that any newly approved Alzheimer's drugs will also be held to the same requirements and, more broadly, that national reimbursement decisions may no longer follow Food and Drug Administration approvals as a matter of course.
CMS' proposal will "set a dangerous precedent as a matter of policy and discourage investment in future innovation for the treatment of Alzheimer's," Biogen CEO Michel Vounatsos said in a call with Wall Street analysts Thursday.
The counter-argument from policymakers, insurers and some doctors is that Medicare's legal requirement to cover treatments and procedures that are "reasonable and necessary" doesn't extend to drugs, like Biogen's, with conflicting data in clinical trials.
Drugmakers "think they get FDA approval and it's an automatic for Medicare," said Robert Berenson, a former Medicare official who now serves as a fellow at the Urban Institute, in an interview. "Reasonable and necessary for Medicare is not identical to what FDA says."
Medicare's policy is what's known as a "national coverage determination," or NCD, and covers all drugs that remove a sticky protein called amyloid from the brains of Alzheimer's patients. CMS will reimburse treatment, but only if patients are enrolled in a randomized controlled trial, a type of study in which some volunteers are given a placebo to determine a drug's effectiveness.
This approach is typically used with medical procedures and not with drugs, primarily because the scientific questions of safety and efficacy are meant to be resolved by an FDA approval. But in the case of Biogen's drug, called Aduhelm, that isn't at all clear.
The FDA granted accelerated approval on the basis of Aduhelm's ability to remove amyloid, a surrogate marker of effectiveness. The decision effectively sidestepped intense debate at the agency and among its advisers over whether the drug actually slowed patients' cognitive and functional decline. Two trials gave conflicting answers on that question, and were both initially ended early before Biogen revisited the data and found one had succeeded.
As the policy applies to anti-amyloid drugs broadly, it could apply to three others in late-stage clinical trials — Eli Lilly's donanemab, Roche's gantenerumab and lecanemab from Eisai, which is partnered with Biogen.
"With this proposal, CMS is writing off an entire class of medicines before multiple products have even been reviewed by FDA," said PhRMA, the powerful drug lobby, in a statement.
But policy experts countered that the agency probably has the flexibility to cover those drugs, provided their clinical trials can show a significant slowing of cognitive decline. "If a company can show that then that's wonderful," said Rachel Sachs, a law professor at Washington University. "[CMS] is saying what companies need to show to obtain coverage."
For a drug like donanemab, it's unclear whether CMS would consider the currently available data persuasive enough for broad coverage. Lilly has only completed a Phase 2 trial, which showed the drug slowed disease progression versus placebo but only enrolled a small number of patients.
Biogen's coming pressure campaign
For Biogen, the draft policy avoids a worst-case scenario, though not by much. While not an outright denial of coverage, the various restrictions proposed by CMS could end up limiting the number of patients who receive Aduhelm through Medicare to the hundreds or several thousands.
Unsurprisingly, Biogen expressed outrage at the draft, and is already mounting a campaign to revise it before a final version comes in April. It's likely to be joined by its drugmaker peers and their allies in patient advocacy groups, several of which issued blistering criticisms of CMS after the decision was made public. (CMS plans to take comments on its proposal for 30 days.)
"I can't believe that the final NCD position will be similar to the draft," Vounatsos said on Thursday's call.
There is some precedent for easing a national coverage policy, too. Several years ago, the agency rolled back a similarly restrictive coverage plan for cancer cell therapies on the basis it would be too burdensome for providers — an example Biogen executives cited.
Aduhelm, which is approved to treat a much wider patient population, is a much different case, however, and CMS may not retreat too far from the strict stance it's set out.
"I think the basic decision [on Aduhelm] they will likely hold firm on," Berenson said.
Even analysts on Wall Street are skeptical Biogen will be able to meaningfully sway regulators.
"They want to engage with CMS and express their view, and talk about how they think depictions of their clinical data are inaccurate," Paul Matteis, an analyst at the investment bank Stifel, said in an interview. "But it just seems like a Hail Mary."
Matteis isn't alone in that view. Analysts at Raymond James don't expect to see any significant changes between the draft and final policies. The team at Mizuho Securities, meanwhile, went so far as to remove nearly all Aduhelm sales from its valuation of Biogen stock.
The proposed NCD "does look more onerous than expected and unless it receives significant revisions, makes the potential for any meaningful near-term revenue from [Aduhelm] even less likely," Brian Abrahams of RBC Capital Markets wrote in a note to clients this week. Previously, the consensus among analysts was that Aduhelm sales would reach $311 million this year, a figure that now "would seem unachievable by orders of magnitude," according to Abrahams.
Investors also don't appear too optimistic. Following the announcement from CMS, Biogen's share price dropped about 8%, erasing roughly $2.7 billion in market value. The company's shares are currently worth a little more than half of what they traded at last June, when the FDA approved Aduhelm.
A shaky future?
Biogen has been banking on Aduhelm to compensate for problems elsewhere in its business. But with grim near-term sales prospects, the company is likely to come under greater investor pressure to bring in new products through a deal.
Analysts who spoke to Biogen Thursday noted that executives claimed to be open to the possibility of mergers and acquisitions. The same day, STAT News, citing a person familiar with the situation, reported that Biogen is working with Goldman Sachs to identify companies it could buy.
Historically, though, Biogen has been averse to big-ticket deals. And some have a hard time believing that stance would change, at least until the uncertainties surrounding Aduhelm are worked out.
"To do a meaningful acquisition, I would imagine people internally have to be on the same page about what's happening next," said Matteis from Stifel. Yet, Biogen has a very active and often incongruous board, a CEO under fire, and an executive team that has seen several key members exit over the past two years, with the most recent being longtime scientific head Al Sandrock.
"It just doesn't seem realistic to me that they're going to be doing a multibillion-dollar deal over the next few months," Matteis said.