New Alzheimer's drug from Biogen, Eisai gets government approval, but faces long road ahead
A new Alzheimer's drug from Eisai and Biogen (BIIB) is now fully approved by the FDA, opening the door for long-awaited Medicare coverage and greater access to the treatment for patients.
The Centers for Medicare and Medicaid Services (CMS) announced full coverage of the treatment, Leqembi, immediately following the FDA's approval Thursday. The treatment, a twice-monthly infusion for early-stage Alzheimer's, previously received unanimous support from an external advisory committee to the FDA.
It is the second attempt for Eisai and Biogen, which suffered a disastrous rollout — and subsequent rollback— of Leqembi's predecessor, Aduhelm.
And while there appears to be more optimism around Leqembi, the road ahead is riddled with speed bumps. Wall Street's reaction Friday suggested as much.
Shares of both Biogen and Eisai took hits Friday, with Biogen stock down more than 2% amid a broad market rally. Shares of Eisai trading in Japan fell more than 4% on Friday.
Analysts at SVB Securities, however, expressed more relative optimism around the news, writing in a note on Friday, "We don’t believe these label updates will impact the uptake of Leqembi. ... We continue to expect a slow ramp in 2023 and acceleration moving into 2024."
Burdensome caveats
Leqembi initially received conditional approval in January, which kept Medicare users from accessing the treatment unless they were willing to pay out of pocket and stymied Eisai and Biogen's commercial prospects. Pressure began to recede once the Department of Veterans Affairs (VA) agreed to cover the treatment.
And with CMS now also agreeing to cover the treatment, the companies could see benefits from the approval in the second half of 2023. But this approval comes with some burdensome caveats.
Those caveats include close monitoring of patients and collection of data for adverse events. A registry has been set up to follow patients and gain greater insight into the prevalence of serious side effects.
In clinical trials conducted by Eisai and Biogen, 17% of participants on Leqembi experienced brain bleeding, and it remains to be seen how much that and brain swelling is seen in the real world.
In addition, the FDA included a testing requirement to identify those higher at risk for serious side effects and discuss these risks with patients.
Several headwinds
Leqembi is also the second attempt by the duo to target plaque buildup in the brain — known as amyloid beta — and faces several headwinds in addition to the requirements from the US government.
In addition to the burden on clinicians and patients, the high costs could add up. Commercial payors have stayed silent on how they will plan to cover the treatment — and if prior authorization will be required. And Medicare's coverage still requires 20% coinsurance after a patient's deductible is met.
A recent estimate put the burden on Medicare at between $2 billion and $5 billion annually, based on the $26,500 per year price tag for Leqembi. That could increase Medicare beneficiary premiums, according to research from JAMA.
High costs could also become a political challenge for the company, with Sen. Bernie Sanders (I-Vt.) among those who have been pushing back on the price of the new Alzheimer's drugs, saying they could bankrupt Medicare.
"According to the Kaiser Family Foundation, if only 10% of the 6.7 million older adults with Alzheimer’s disease take Leqembi at Eisai and Biogen’s proposed price, it would cost Medicare $17.8 billion, which is nearly half of what Medicare Part B spent on all drugs in 2021," Sanders said last month prior to the treatment's approval.
And that's before it faces competition from Eli Lilly's (LLY) donanemab, which reported positive Phase 3 data in May and is expected to receive approval.
Analysts at JPMorgan noted Friday that the uptick in costs from these new drugs may not have been factored into Medicare Advantage plan pricing.
"It is possible Leqembi approval (and the potential traditional approval of Donanemab) could drive some incremental costs in 2H23 but the bigger question is likely around potential 2024 impact. MA plans have some cushion in their bids for unexpected trend increases, but it is unclear how potential Leqembi/Donanemab costs factor in vs. expectations," the analysts said.
Among Medicare Advantage plan sponsors Humana (HUM) could see the highest impacts with Cigna (CI) likely facing more muted challenges.
Another headwind for the treatment will be limited patient access. While Medicare coverage helps provide the treatment to millions more patients, the burden of a twice-weekly infusion could hamper patient uptake in the near term.
The aforementioned challenges with Aduhelm are also likely to weigh on Leqembi as the duo overcome skepticism in the clinical community about the seriousness of the side effects.
Still, Wall Street sees some upside.
BMO Research analysts noted that while the approval was expected, "investor attention now turns to building out the market for patient access."
JPMorgan noted that UnitedHealth (UNH) and CVS (CVS) are likely to see the most upside from the approvals, as they both operate home infusion businesses, which could offset the pressures on their Medicare Advantage costs, the analysts said.
Follow Anjalee on Twitter @AnjKhem
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