skip to main content
Close Icon We use cookies to improve your website experience.  To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy.  By continuing to use the website, you consent to our use of cookies.
Global Search Configuration

The Butterfly Effect is an elegant analogy to describe the seemingly unpredictable and far-reaching implications of a relatively small and inconsequential event. The US Food and Drug Administration (FDA)’s approval of Aduhelm is not so much a butterfly gently flapping its wings, but rather a sonic boom emanating from a jet engine. Most immediately, it provides a new therapeutic option for millions of patients in dire need of hope, vindicating Biogen’s faith with a revenue stream running into many billions of dollars. Longer-term the reverberations may be felt across the entire industry, throwing into question the evidentiary requirement for drug development, indicating a post-pandemic light touch to regulation, and tilting the argument firmly back towards price controls.

The accelerated approval of Aduhelm (aducanumab) creates a momentous opportunity for Biogen, one that has long been sought after by a range of big pharmas with larger R&D budgets. Companies like Johnson & Johnson, Pfizer, Eli Lilly and Roche have attempted to produce the first new drug for Alzheimer’s disease since memantine in 2003, coming up short and creating a discard pile containing almost 200 failed or suspended programs.

For Biogen, success equals access to the millions of patients currently living with the various stages of Alzheimer’s disease in the US. This is commonly cited as around six million, although may be as many as nine million once the earliest diagnosable patients with prodromal Alzheimer’s are included, according to Datamonitor Healthcare. It should be noted that despite the incredibly broad label awarded to Aduhelm, physicians and payers are likely to stick closely to the studied population of early Alzheimer’s disease, requiring mild cognitive impairment or dementia, in addition to confirmation of amyloid pathology via PET scans or cerebrospinal fluid sampling (https://scrip.pharmaintelligence.informa.com/SC144528/Doctors-Frustrated-By-Lack-Of-Guidance-On-Who-Should-Get-Aduhelm).

Regardless of the exact target population, which will become clearer in time following reimbursement coverage decisions and diagnostic readiness, the commercial opportunity is tremendous. With a manufacturing footprint currently allowing Biogen to address one million patients, and a wholesale acquisition cost of $56k per patient annually, the crudest estimate possible indicates eye-watering sales of $56bn, every single year. More realistically, analyst notes are settling on revenue projections in the range of $7–17bn by 2025, taking into account uptake rates in the target population, rebates and price discounts, duration of treatment, and compliance with repeat intravenous infusions.

This windfall will allow Biogen to further commit to Alzheimer’s R&D and advancing the standard-of-care, noting that the data for Aduhelm suggest that it provides incremental benefit at most, despite thousands of patients studied thus far. Biogen’s late-stage pipeline also includes a second monoclonal antibody against amyloid beta, lecanemab, for which a large proportion of costs will have already been incurred. Earlier approaches against tau, the second abnormal protein biomarker implicated in Alzheimer’s progression, will be pursued with renewed confidence. Competitors, noting the regulatory flexibility to consider biomarker data as approvable, will also be heartened. The total clinical-stage drug pipeline for Alzheimer’s totals nearly 150 separate programs, of which around 15% are targeting amyloid beta, according to Pharmaprojects. Roche and Eli Lilly in particular will be scrutinizing whether there is a near-term path to market for their respective monoclonal antibodies against amyloid beta.

For critics, the regulatory validation of amyloid as a biomarker for Alzheimer’s disease will come to the detriment of therapeutic progress. The overall weight of Alzheimer’s research has focused for over a decade on amyloid, without producing irrefutable clinical evidence, and a change in direction is sorely needed. Other approaches, such as those focusing on tau, neuroprotection, metabolism and/or inflammation, remain underinvestigated and underfunded. The Aduhelm approval will act to reinforce the status quo in Alzheimer’s research, potentially denying patients the kind of therapeutic transformation witnessed in other areas such as immuno-oncology and hepatitis C. Additionally, the logistics of running an Alzheimer’s disease program will now be complicated, at least in the US where patient demand for an investigational approach is lessened by the commercial availability of Aduhelm. While the exact clinical profile of Aduhelm will be discerned by Biogen’s confirmatory post-marketing obligations, it is premature to consider it as the comparator for future clinical trials, replacing placebo. Prior or concomitant Aduhelm use may disqualify patients from a range of different treatment options.

 

Accelerated Approval Indicative Of Light-Touch Regulation

It is an important distinction to note that Aduhelm is approved for Alzheimer’s disease based on the reduction in amyloid beta plaques observed during clinical development. This is not supported by any statistically significant improvement in cognitive or functional measures, as Biogen halted its two pivotal clinical trials in an interim futility analysis, creating a muddied efficacy picture. Rather, the FDA asserts the link between biomarker and clinical endpoints is strong enough to warrant an accelerated approval. This is highly controversial, considering the wealth of evidence to the contrary for other antibody and small molecule approaches, but nevertheless underscores the immense unmet need for a disease-modifying Alzheimer’s disease drug. Set against this, the finer details of the amyloid hypothesis are likely to be a moot point for many patients and caregivers when deciding whether to initiate treatment.

Accelerated approvals based on surrogate efficacy measures are typically the domain of oncology drugs. Since 2010, an analysis of Biomedtracker data shows that nine out of 10 of every accelerated or conditional approval has been for a cancer indication, although in recent years they are beginning to pervade the wider drug development environment. Last year brought multiple accelerated approvals for infectious diseases (separate from COVID-19 agents), while there are also recent examples in hematology and metabolic conditions. Aduhelm represents the first such endorsement in neurology and may signal increasing regulatory receptiveness to biomarkers across a range of neurodegenerative diseases.

With this latest precedent, drug developers for Parkinson’s disease, Huntington’s disease, amyotrophic lateral sclerosis (ALS), and others will certainly draw parallels and seek clarity on the evidentiary requirement for a biomarker-based approval. Particularly with the FDA Division of Neurology, prior regulatory interactions are open for re-interpretation, as the Aduhelm decision directly contradicts past recommendations. Directly quoting from a 2018 guidance document, “There is unfortunately at present no sufficiently reliable evidence that any observed treatment effect on such biomarker measures would be reasonably likely to predict clinical benefit.”

Prior accelerated approvals have been carefully matched to a particular patient population, where the risk-benefit is likely to be most favorable and closely aligned to clinical trial participants. It is all the more surprising then, considering the contention of available data, that Aduhelm’s label bears no recognition to the ENGAGE and EMERGE studies. Rather than specifying early Alzheimer’s disease patients above a certain symptom threshold and with confirmed amyloid pathology, physicians in theory have full discretion over eligibility (https://pink.pharmaintelligence.informa.com/PS144439/Biogen-Gets-Almost-Shockingly-Broad-Label-For-Alzheimers-Drug-Aducanumab).

FDA observers will be questioning whether this is evidence that the regulator is operating with a flexible, light-touch policy, purposefully shifting the balance of power away from prudent caution and rather empowering physicians, payers and market forces to ultimately decide medicines’ fates. At face value, the alternative conclusion is less pleasant. Without a permanent commissioner in place, the regulator is unwilling to make tough decisions that may upset public opinion and patient advocacy. As the US emerges from the worst effects of the pandemic, there are certainly lessons from the successes of regulatory flexibility on COVID-19 vaccine and therapeutic development, and also painful reminders of an abdication of duty concerning hydroxychloroquine and convalescent plasma. Restoring an equilibrium that enforces appropriate standards while also mirroring the innovation coming from biopharma is a delicate balancing act, and will take time and clear heads to calibrate properly (https://pink.pharmaintelligence.informa.com/PS144462/Aduhelm-Approval-Raises-Concerns-About-US-FDA-Leadership-Senate-Finance-Chair-Suggests)

True Cost Of Aduhelm’s $56k Price Will Be Borne By Other Drugmakers

Perhaps unlike any other expensive specialty drug in recent times, the cost burden of Aduhelm will fall heavily on the US taxpayer, drawing an added level of scrutiny. Owing to the typical disease onset occurring beyond the age of 65 years, Biogen expects around 80% of eligible patients to be covered by Medicare Part B. The majority of these patients are enrolled in the traditional fee-for-service model, with the remainder via Medicare Advantage plans offered by private insurers. There will be pressure on the Centers for Medicare and Medicaid Services (CMS) to provide access as equitably and widely as possible via a national coverage determination (https://pink.pharmaintelligence.informa.com/PS144446/All-Alzheimers-Eyes-On-Medicare-CMS-Will-Take-The-Lead-On-Tailoring-Access-To-Aduhelm). Although this must be reconciled with the $56k annual cost of treatment, not to mention additional expense associated with infusion and imaging procedures. With limited power to negotiate on pricing, the consequences of a budget-busting new approval such as Aduhelm may be realized in several different ways.

Most immediately, the CMS coverage policy may need to be greatly more restrictive than the product label, which is almost a certainty considering its broad state. Requiring confirmation of amyloid pathology and certain thresholds of cognitive and functional ability will help to refine the patient population to better reflect those eligible for Biogen’s Phase III program. This ensures that neurologists at dedicated medical centers with access to PET scans and/or lumbar punctures remain the key prescribers. For those patients receiving Aduhelm via private insurance, Biogen has signaled its flexible intent via a value-based contract with Cigna, tying in reimbursement towards patient outcomes. Various forms of co-pay assistance schemes will be available, as is the norm to reduce out-of-pocket costs.

Regardless of this, Aduhelm is set to become the single largest expense item within Medicare Part B, eclipsing clear therapeutic breakthroughs and medical necessities such as cancer immunotherapies and drugs for macular degeneration. Without controls, Aduhelm alone has the potential to double expenditure within Part B, which currently operates a budget of approximately $35bn annually. This level of budget impact is certain to reignite the pricing debate in a way not seen since Gilead drew such ire for its pricing of hepatitis C therapies. Unlike Sovaldi, Aduhelm is neither a cure, nor has it demonstrated downstream societal and economic benefit, despite Biogen seeking to frame the conversation against the backdrop of an estimated $600bn in direct and indirect costs due to Alzheimer’s disease (https://pink.pharmaintelligence.informa.com/PS144480/Aducanumab-And-The-US-Pricing-Debate-A-New-Hook-But-Still-A-Fuzzy-Picture).

The huge unmet need and personal nature of Alzheimer’s disease may shield Biogen from public criticism, although it will not get a free pass from legislators and policy makers. The sheer scale of its budget impact at a $56k price point means that countermeasures will be necessary. While Biogen is toasting its success, the true cost will be borne by taxpayers, other drug companies and potentially patients with other medical necessities. Patient access to other Part B drugs may suffer as a consequence, and calls to instigate pricing reform across the entire biopharmaceutical industry will grow louder. While the Biden administration has dropped prior proposals such as reference pricing, the current agenda is to provide CMS with the power to negotiate directly with pharmaceutical companies. This would represent a proportionate and sensible approach in response to the acute need to provide Aduhelm equitably to patients with Alzheimer’s disease, although it could well cascade into lower drug prices across other insurers and for all specialty pharmaceuticals.

 

Next steps

Getting a demo tailored to your needs is the best way to see how our solutions will help you gain an advantage.

Request live demo now:

Our team is ready to hear from you for a particular request or area of interest. Please do not hesitate to reach out and discuss.

Contact us for product technical and account support.

  • US Toll-Free   : +1 888 670 8900 
  • US Toll             : +1 212-600-3520
  • UK & Europe : +44 (0) 208 052 0700

Have an immediate and specific information need?

Browse and buy from 1000s of analysis and research reports now: