Alzheimer’s drug feeds U.S. healthcare cost spiral

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Pharmaceutical tablets and capsules are arranged in the shape of a U.S. dollar sign on a table in this picture illustration taken in Ljubljana August 20, 2014. Picture taken August 20. REUTERS/Srdjan Zivulovic

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NEW YORK, June 7 (Reuters Breakingviews) - A problem with America’s way of delivering healthcare is that it asks patients to put a price on hope. In part because the sick, or their insurers, are free to overpay for procedures and drugs that may not be useful or necessary, the country shells out more than most developed nations, without always getting better results. Biogen’s (BIIB.O) new Alzheimer’s drug, approved by the U.S. Food and Drug Administration on Monday, is an example of the “do whatever it takes” medical dilemma.

Biogen’s drug was the latest in a long series of attempts to help patients by removing clumps of proteins called amyloid beta from patients’ brains. The new drug, aducanumab, does indeed seem to remove those clumps, but it’s not clear this actually amounts to effective treatment of Alzheimer’s. In November, a panel of experts convened by the FDA concluded it didn’t. The regulator has cleared the drug for use anyway, at least for the time being.

The revenue that could create is tantamount to a bonanza. Perhaps 1.5 million Americans are eligible for the drug, based on Biogen estimates. The company said the price will be $56,000 per year. Assuming a quarter of eligible patients take it, that’s over $20 billion of revenue. The drugmaker run by Michel Vounatsos made around $13 billion in total revenue last year.

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Drug launches often surprise to the downside, and the uncertainty over whether Biogen’s therapy will be widely used is higher than most. The lack of strong efficacy may dissuade doctors from prescribing it, and insurers may try not to reimburse. The FDA also has the option to pull the drug from the market if a subsequent study Biogen will perform doesn’t show patient benefit. And Biogen has to share profit with partner Eisai (4523.T). The market added $18 billion to Biogen’s market capitalization on Monday, which – while a lot of money for a company worth $43 billion at Friday’s close – implies investors are cautious.

But even if demand disappoints, giving patients the option of demanding a drug of uncertain value risks exacerbating a wider crisis of U.S. medical spending. That makes the FDA’s decision questionable. The country already spends 18% of GDP on healthcare according to government figures, twice what Organisation for Economic Co-operation and Development members spend on average. Alzheimer’s is a cruel foe; so is a bloated, ruinous healthcare system.

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CONTEXT NEWS

- The U.S. Food and Drug Administration approved Biogen’s aducanumab as the first treatment to address what is believed to be an underlying cause of Alzheimer’s Disease. The drug aims to reduce clumps of a protein called amyloid beta from patients in the earlier stages of the disease.

- The FDA will require Biogen to conduct a new trial to verify the drug’s clinical benefit. If the trial fails to do so, regulators can initiate proceedings to withdraw approval. In the meantime, patients will be able to request the treatment. Biogen said the drug will be priced at $56,000 per year.

- In March 2019, Biogen and partner Eisai said they were stopping development of aducanumab after independent monitors said it was unlikely to show benefit to patients. Later that year, the company said more detailed analysis showed patients in the earlier stages of the disease showed some benefit from the drug in one of the studies. In November 2020, a panel of experts convened by the FDA concluded there was insufficient evidence to prove the drug was effective in treating Alzheimer’s.

- Biogen has estimated there are approximately 1.5 million Americans who would be eligible for treatment.

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