A new Alzheimer’s drug from Eisai and Biogen (BIIB) is now fully FDA approved, opening the door to long-awaited Medicare coverage and greater patient access to treatment.
The Centers for Medicare and Medicaid Services (CMS) announced full coverage for Leqembi’s treatment immediately after FDA approval Thursday. The treatment, a twice-monthly infusion for early-stage Alzheimer’s, previously received unanimous support from an FDA external advisory committee.
It’s the second attempt for Eisai and Biogen, who endured a disastrous rollout — and subsequent rollback — of Leqembi’s predecessor, Aduhelm.
And while there seems to be more optimism in Leqembi, the road ahead is riddled with speed bumps. Wall Street’s reaction on Friday indicated that.
Biogen and Eisai shares suffered setbacks on Friday, with Biogen stock falling more than 2% amid a broad market rally. Japan-traded Eisai shares fell more than 4% on Friday.
However, analysts at SVB Securities were relatively optimistic about the news, writing in a note on Friday: “We do not believe these label updates will have any impact on the launch of Leqembi. … We continue to expect a slow increase in 2023.” and acceleration into 2024.”
Onerous reservations
Leqembi initially received conditional approval in January, barring Medicare users from accessing the treatment unless they were willing to pay out of pocket and hurting Eisai’s and Biogen’s commercial prospects. The pressure began to ease when the Department of Veterans Affairs (VA) agreed to take over the treatment.
And with CMS now also agreeing to handle the treatment, the companies could benefit from the approval in the second half of 2023. However, this approval comes with some onerous limitations.
dr Seth Gale points to evidence of Alzheimer’s disease on PET scans at Brigham And Women’s Hospital in Boston, Massachusetts, United States, March 30, 2023. Portal/Brian Snyder
These caveats include closely monitoring patients and collecting data on adverse events. A registry was set up to monitor patients and gain better insight into the prevalence of serious side effects.
The story goes on
In clinical trials conducted by Eisai and Biogen, 17% of Leqembi participants experienced cerebral hemorrhage, and it remains to be seen how severe this and brain swelling will be in the real world.
Additionally, the FDA introduced a testing requirement to identify those who are at higher risk for serious side effects and to discuss those risks with patients.
Multiple headwinds
Leqembi is also the duo’s second attempt to tackle brain plaque build-up – known as amyloid beta – and is encountering several headwinds in addition to US government requirements.
In addition to the burden on doctors and patients, the high costs could add up. Commercial payers have not commented on how they intend to take on the treatment – and whether prior approval will be required. And Medicare coverage still requires 20% co-insurance after a patient’s deductible is met.
A recent estimate puts Medicare’s burden at $2 billion to $5 billion per year, based on Leqembi’s $26,500 per year price tag. This could increase premiums for Medicare beneficiaries, according to a study by JAMA.
High costs could also become a political challenge for the company, with Sen. Bernie Sanders (I-Vt.) among those who have slashed prices on the new Alzheimer’s drugs on the grounds they could bankrupt Medicare.
“According to the Kaiser Family Foundation, it would cost Medicare $17.8 billion if just 10% of the 6.7 million older adults with Alzheimer’s disease took Leqembi at the price suggested by Eisai and Biogen, which is almost half that.” what Medicare Part B spent on all drugs in 2021,” Sanders said last month ahead of the treatment’s approval.
Sen. Bernie Sanders (I-VT) holds a press conference on Capitol Hill on March 7, 2023. Portal/Evelyn Hockstein
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 on Friday that the cost increases of these new drugs may not have been reflected in the Medicare Advantage plan’s pricing.
“It’s possible that approval of Leqembi (and potential traditional approval of donanemab) could result in additional costs in 2H23, but the bigger question probably concerns the potential impact in 2024. The MA plans have one in their offerings some buffer for unexpected trend increases, but that is unclear. “How the potential cost impact of Leqembi/donanemab compares to expectations,” the analysts said.
Among Medicare Advantage plan sponsors, Humana (HUM) could see the biggest impact, while Cigna (CI) is likely to face more muted challenges.
Another headwind for treatment will be limited patient access. While Medicare coverage is helping millions more patients receive treatment, the burden of a twice-weekly infusion could hamper patient uptake in the short term.
The above challenges with Aduhelm are also likely to weigh on Leqembi as the duo has overcome skepticism in the clinical community regarding the severity of the side effects.
Still, Wall Street sees some upside potential.
Analysts at BMO Research noted that while the approval was expected, “investor attention is now focused on expanding the patient access market.”
JPMorgan noted that UnitedHealth (UNH) and CVS (CVS) are likely to get the most benefit from the approvals since they both operate home infusion businesses, which could offset the pressure on their Medicare Advantage costs, analysts said.
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