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Biogen Drug Scrutiny Seen Adding Limits to Medicare Coverage (1)

July 13, 2021, 7:17 PMUpdated: July 13, 2021, 7:41 PM

Medicare will likely agree to cover Biogen Inc.‘s expensive new Alzheimer’s drug Aduhelm in certain circumstances if patients agree to enroll in studies to bolster evidence of its effectiveness.

Health analysts said the administration’s decision to open a national coverage assessment of Aduhelm and other Alzheimer’s drugs targeting brain plaques linked to the disease is a way to ensure the drug is only going to those who could benefit from it.

“It’s highly unlikely that Medicare would issue a non-coverage decision here,” Sean Dickson, director of health policy at the West Health Policy Center, said in an email.

Limiting coverage while gathering more evidence about the drug would also “significantly reduce the risk of a legal challenge” against the Department of Health and Human Services, which would most likely be sued if Medicare decided not to cover the drug at all, Dickson said.

Federal officials announced a review Monday that will assess how well the drug works and the value it offers Medicare patients. After that review, the government will decide how it will cover the drug.

These reviews are common for new medical devices or new procedures and less common for new drugs, said Richard Frank, a health economics and policy professor at Harvard Medical School.

Medicare launches these probes when there’s controversy around a particular treatment, if it’s a big enough deal, or there isn’t enough consensus among the administrative contractors, said Nicholas Bagley, a law professor at the University of Michigan who focuses on administrative law, regulatory theory, and health law. “It doesn’t do a lot of these.”

What makes Aduhelm unique in this situation is the mixed results of its studies and the public outcry following its approval.

Results from studies show Aduhelm reduced the presence of a type of protein called amyloid plaques that are suspected to play a crucial role in Alzheimer’s disease. However, there isn’t clear-cut evidence that the drug will stave off the cognitive decline amyloid plaques are thought to cause.

How Reviews Work

Items or services covered by Medicare must fall into one or more benefit categories—e.g., inpatient hospital services or outpatient doctor visits—and cannot otherwise be excluded from coverage. Additionally, expenses incurred for these items and services must be “reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member,” according to the Social Security Act.

“On one hand we’re anxious to get more effective drugs onto the market quicker, but on the other hand we’re nervous because we’re spending a boatload of money on drugs that haven’t necessarily been shown to work,” Frank said. “We’re constantly trying to balance those things.”

The government “doing these reviews is offering another way to achieve that balance.”

Gail Wilensky, who served as Medicare administrator under President George H.W. Bush, said the current controversy surrounding Aduhelm would be an ideal topic for the Medicare Evidence Development & Coverage Advisory Committee to weigh in on.

The committee hasn’t been used by the last two administrators of the Centers for Medicare & Medicaid Services, Seema Verma and Andy Slavitt.

The group is made up of experts in biologic and physical sciences, public health administration, health care economics, medical ethics, and other relevant fields. With some 100 potential members available for selection, Wilensky said the committee could be reconvened and provide sage advice on how Medicare should move forward with possible coverage.

“I think it makes a great deal of sense,” said Wilensky, an economist and senior fellow at Project Hope. “It’s clear this is controversial and emotional and expensive. So it really seems to me, precisely when you have that kind of combination of characteristics, that turning to an outside group is useful. It’s both a good way to make a better decision and politically smart.”

Evidence Gathering

The Alzheimer’s Association supports a national coverage determination outcome for Aduhelm that includes Coverage with Evidence Development (CED). The CED designation conditions Medicare coverage on the gathering of additional data through a clinical trial or registry in order to better determine a drug’s effectiveness.

Because the Food and Drug Administration approved Aduhelm through an accelerated pathway, Biogen is required to conduct a new randomized, clinical trial to confirm the drug is beneficial to Alzheimer’s patients.

The Alzheimer’s Association says that’s not enough. “We remain concerned that the subsequently announced confirmatory trial will not be conducted in a timeframe and manner that meaningfully informs important near term decision making by policymakers, payers, healthcare providers, and patients and their families,” an association statement said. “A well-constructed CED study would create rapid, open access to crucial information regarding efficacy, safety and equity to help ensure that everyone who might benefit has access.”

Wilensky also supports the CED route but warns it comes with an inherent downside. “You just have to recognize the political aspect, that if it is not as effective as you thought, will you be able to pull coverage or not? Once you have people used to having something covered, taking it away is not such an easy proposition unless there are overwhelmingly negative aspects,” she said.

While coverage with evidence development ensures you’ll have more data on which to base your coverage decision, the pressure to continue coverage “is going to be very strong,” Wilensky added.

Medicare officials expect the review to take roughly nine months.

The FDA’s approval of Aduhelm last month sparked outcry in the medical community that there wasn’t sufficient evidence to show it worked. The agency suggested a more narrow indication than originally approved in a label update earlier this month. The drug should be used for patients with “mild cognitive impairment” or those in a “mild dementia stage of disease,” the label now reads.

Medicare at a Disadvantage

The vast majority of Aduhelm patients will be eligible for Medicare, which means private insurers can’t create cost discipline to negotiate the price down.

“That helps to explain why Aduhelm was priced so aggressively,” Bagley said, positing that private insurers would have negotiated a better price. “The number would not have been $56,000 a year.”

Medicare historically doesn’t factor costs into its coverage decisions. “That’s why the stakes here are really high. Lurking underneath this is a drug that was priced very aggressively, and agency that doesn’t have the statutory power—or at least hasn’t claimed the statutory power—to pay less for the drug,” he said.

—With assistance from Jeannie Baumann

(Updates with additional reporting, starting in the seventh paragraph.)

To contact the reporter on this story: Jacquie Lee in Washington at jlee1@bloomberglaw.com, Tony Pugh in Washington at tpugh@bloombergindustry.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com