The new Alzheimer’s drug is about $50,000 too expensive

Don’t forget to pay.
Don’t forget to pay.
Image: Reuters/Gonzalo Fuentes
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The US Food and Drug Administration (FDA) approved a treatment to slow down the progression of Alzheimer’s disease. The medication, developed by Biogen, will be marketed with the name Aduhelm for a list price of $56,000 a year.

This is the first drug approved for the disease—which affects about 6 million Americans and an estimated 44 million people worldwide—in 20 years, and it’s already highly controversial.

Of the 10 independent experts called to share their assessment of the drug with the FDA, nine recommend not approving it, and one concluded its benefits were unclear. Of the two studies presented by Biogen, one showed no benefits, and the other modest ones. Both, however, had concerning side effects: About 40% of the clinical trial patients developed severe, and potentially life-threatening, brain swelling.

The agency nevertheless approved Aduhelm—which has the generic name aducanumab—albeit conditionally, pending the result of an upcoming large study on its effect. The study will have to be completed by 2030—longer than it would have likely required before approval because it will be hard to find patients willing to potentially receive a placebo when they have access to the actual medication.

A cost-benefit analysis

Aduhelm is supposed to reduce amyloid plaques, protein pieces that aggregate in clumps between the nerve cells of Alzheimer’s patients. The plaques first attack the areas of the brain dedicated to memory and cognitive function, later expanding to other areas.

The FDA feels confident that the drug reduces amyloid plaques, and that therefore it eventually slows the disease, though the evidence in that regard is not as strong.

The FDA’s decision is in part a response to the strong demand for treatment of a merciless disease that impacts a growing number of people and families every year. The enormous appetite for an Alzheimer’s treatment means Biogen, a multinational biotechnology company based in Cambridge, Massachusetts, has the power to set a high price.

“We have established a price for Aduhelm that reflects the overall value this treatment brings to patients, caregivers and society—and one that will enable continuous innovation,” wrote Biogen’s CEO Michel Vounatsos in a letter announcing the drug’s approval.

Previous analyses estimated the revenue from the drug to be between $5 billion and $6 billion a year in the US alone, based on a $10,000 price tag and a smaller reach. But based on the higher price and Biogen’s prediction that the drug will be prescribed for 1 million to 2 million patients in the US, it could generate north of $50 billion a year.

In the US, the majority of such patients are covered by Medicare part B, which deals with treatments delivered in hospitals, and which until now has had a budget of about $35 billion a year. The new drug could easily double that budget, putting a severe strain on Medicare resources without clear benefits, says David Whitrap, the vice-president for communications at the Institute for Clinical and Economic Review (ICER), a Boston-based independent organization that specializes in cost-benefit analysis of medical treatment.

The drug was approved not only for early-stage Alzheimer’s patients—who were part of the clinical trials and, in one, benefited from the drug—but for those dealing with more advanced stages of the disease. This expands the pool of potential patients dramatically, which could strain Medicare’s budget.

A high price for an unproven Alzheimer’s drug

According to ICER, this is far more than the Aduhelm is worth. Considering the incremental benefits of the drug, the risk of side effects, and the fact it doesn’t reverse the course of the disease but, at best, slows down its progress, ICER estimated a fair price tag would be between $2,500 to $8,300 per year.

Even in a best-case scenario, however, the drug is dramatically overpriced. ICER developed a model that only considered the Biogen study that yielded the better results, and that would justify pricing the drug from $11,000 to $23,100 a year—still far below what Biogen is asking. Biogen didn’t respond to Quartz’s request for comment.

So far, the price is set for the American market and doesn’t reflect the final cost to the patient. Drug companies often offer discounts to providers, and insured patients will only have to cover a portion of the cost, estimated to be between $10,000 to $25,000 a year.

This isn’t to say that a drug that effectively halted Alzheimer’s—let alone reversed it—wouldn’t justify a very high price. According to ICER, such a drug would be worth $50,000 to $70,000 a year—but Aduhelm isn’t it.