Biogen said it would cut in half the wholesale price of its Alzheimer’s disease drug Aduhelm in the U.S., a move that comes after the treatment’s high cost spurred concerns that it could strain Medicare and insurers.
The company said in a statement on Monday that it would reduce the annual list price of the treatment to $28,200, to lower out-of-pocket costs for patients and reduce “the potential financial implications for the U.S. health-care system.”
It is unusual for pharmaceutical companies to drastically reduce the cost of a medication soon after it is approved. Aduhelm won backing from the Food & Drug Administration in June, becoming the first new drug for Alzheimer’s in nearly 20 years. The memory-wasting disease affects some 6 million Americans, most of them elderly.
However, the treatment has faced skepticism from doctors and medical experts who aren’t certain that it works and from payers who viewed its $56,000-a-year cost as prohibitive. Private insurers say they need more evidence that Aduhelm actually slows the rate at which Alzheimer’s patients deteriorate. Last month, none of the 25 large insurers that responded to a Bloomberg News survey said that they found the drug to be “medically necessary.”
Many payers have also been waiting to see whether Aduhelm will be covered by U.S. government health programs. Medicare, which covers 63 million elderly or disabled Americans, won’t make a final decision until April, though it had already elected to raise premiums and build a reserve to pay for the treatment in anticipation of demand.
Shares of Cambridge, Massachusetts-based Biogen gained as much as 1.1% in morning trading in New York.
Cutting the price could help Biogen and Japan-based partner Eisai at least partially revive the drug’s commercial prospects after the blowback over its initial price tag. The slow uptake of Aduhelm has weighed on Biogen, which is facing pressure on some of its older blockbusters, most pressingly its multiple sclerosis treatment Tecfidera. Aduhelm had long been expected to be an important part of the company’s future growth.
Biogen said Monday that it plans to take a series of steps to cut costs that are expected to yield $500 million in annualized savings. Further details of those measures will be finalized in coming weeks and made public in the first quarter of next year, the company said.
“These are difficult decisions necessary to sustain our mission to develop medicines for the most devastating neurological diseases. We must bring our cost base in-line so we can continue to invest in future innovation and growth,” CEO Michel Vounatsos said in the statement.