Biogen shares slide as Medicare restricts cover of Alzheimer's treatments

The coverage decision by US Centers for Medicare and Medicaid Services (CMS), the health agency that runs Medicare, crushes any hopes of the drug Aduhelm gaining traction.

Aduhelm, Biogen's controversial recently approved drug for early Alzheimer's disease, is seen at Butler Hospital, one of the clinical research sites in Providence, Rhode Island, US, June 16, 2021. (photo credit: JESSICA RINALDI/POOL VIA REUTERS)
Aduhelm, Biogen's controversial recently approved drug for early Alzheimer's disease, is seen at Butler Hospital, one of the clinical research sites in Providence, Rhode Island, US, June 16, 2021.
(photo credit: JESSICA RINALDI/POOL VIA REUTERS)

A decision by the US Medicare to limit coverage of Alzheimer's treatments including Biogen's Aduhelm will hit sales of the controversial drug and dim prospects for similar treatments looking to enter the market, Wall Street analysts said.

Shares of Biogen Inc fell 9% to $220.44 before the bell, while shares of other drugmakers developing similar treatments such as Eli Lilly and Co, Roche Holdings and Eisai Co Ltd fell between 2% and 4%.

Biogen had been banking on the government's coverage decision to help drive up sales of Aduhelm, which was approved in June, against the US FDA's outside advisors' opinion that the treatment's clinical benefits had not been proven.

The coverage decision by US Centers for Medicare and Medicaid Services (CMS), the health agency that runs Medicare, essentially crushes any hopes of Aduhelm gaining traction anytime soon, J.P. Morgan analyst Cory Kasimov said.

Analysts said the move could result in negligible Aduhelm sales in 2022 and 2023. The treatment brought in sales of $300,000 in the third quarter, compared with the average analyst estimate of $10.79 million.

A sign marks a Biogen facility, some of whose employees have tested positive for the coronavirus after attending a meeting in Boston, in Cambridge, Massachusetts, US, March 9, 2020. (credit: REUTERS/BRIAN SNYDER/FILE PHOTO)A sign marks a Biogen facility, some of whose employees have tested positive for the coronavirus after attending a meeting in Boston, in Cambridge, Massachusetts, US, March 9, 2020. (credit: REUTERS/BRIAN SNYDER/FILE PHOTO)

Last month, Biogen cut Aduhelm price to $28,200 for an average-weight person after facing slower-than-expected US sales on complaints from hospitals about its high cost.

CMS said on Tuesday it plans to cover Alzheimer's treatments for only patients enrolled in a trial, citing the need for further evidence on their benefits and risks.

"We agree with CMS there is a need to obtain more clinical data on efficacy, which will be essential to ensuring these new medications deliver real value to patients before broadening access," Matt Eyles, president and CEO of trade group America's Health Insurance Plans, said.

The final CMS coverage terms, due in April, are expected to apply to all drugs in the class.