Opinion | Can We Limit the Consequences of FDA’s Aduhelm Approval?

On July 22, 2021, Michael Gusmano, PhD, MA, and Karen J. Maschke, PhD, shared their perspective on FDA’s controversial aducanumab (Aduhelm) decision and discussed whether Medicare would pay for the drug. As part of MedPage Today‘s review of the past year’s top events, Gusmano follows-up with his insights on what has happened since the approval and the ongoing drug coverage disputes.

A drug developed by Biogen for the treatment of Alzheimer’s disease, aducanumab (Aduhelm), was approved in June using the FDA’s accelerated approval pathway. The vast majority of experts, including the agency’s own advisory committee, have raised concerns about the drug’s safety and effectiveness, and the quality of clinical trial data on which the approval was based. Along with the potential clinical and social implications of the FDA’s decision, the financial consequences are enormous. Biogen’s preliminary charge for the drug was $56,000 a year per patient — although they have just announced they will cut this in half. Even with this reduction, given the large number of Medicare beneficiaries with Alzheimer’s disease, the drug could add billions of dollars in additional Medicare spending each year.

Despite these concerns, there is hope that public and private payers may act as checks on the FDA’s decision, significantly limiting the potential problems caused by refusing to cover the drug.

There is some evidence that private insurance companies are already doing this. A month after the FDA’s approval, several private health insurers announced they would not cover the drug, and sales of Aduhelm have been well short of expectations. This early response from private insurance companies is causing financial problems for Biogen, whose stock price has plummeted in the months since FDA approval of the drug. A recent report indicated that Biogen plans to cut expenses by at least $500 million and will lay off more than 1,000 employees, largely due to the disappointing sales of Aduhelm.

But perhaps even more important than the initial response from the private sector is Medicare’s decision about whether to cover Aduhelm. Although it almost always does, Medicare is not required to cover a drug just because it has been approved by the FDA. Currently, coverage determinations for aducanumab are being made at the local level by Medicare Administrative Contractors who represent 12 jurisdictions across the country. But on July 12, 2021, CMS opened a National Coverage Determination (NCD) analysis to determine whether Medicare will establish a national Medicare coverage policy for Aduhelm.

The NCD process, which takes 6 months for an initial determination and 9 months for a final decision, is designed to help CMS decide whether the drug meets the Medicare law’s “reasonable and necessary” standard for coverage. The process, which was established by statute, involves an intensive review of the clinical evidence in published clinical studies and/or professional society guidelines, along with public comments, to determine coverage. The result of the NCD process could lead to a few possible outcomes: a decision to cover the drug nationally; to limit coverage to a subset of the Medicare population; to leave the decision in the hands of Medicare Administrative Contractors; or to refuse to cover the drug at all.

Until the results of the NCD are available next April, Medicare coverage will continue to depend on the decisions of Medicare Administrative Contractors in each of 12 jurisdictions across the U.S. This has already led to an increase in costs for Medicare beneficiaries. Based on the assumption that Medicare would cover the drug, Medicare’s “Part B” outpatient premium increased by $21.60 a month for 2022. CMS indicated that about half of this increase reflects the expected costs of administering Aduhelm because it is delivered intravenously in a physician’s office, a service that would be covered by Medicare Part B.

In addition, in September 2021, CMS advised state Medicaid programs that they must cover Aduhelm as an outpatient drug. States may limit the use of the drug by developing stringent medical necessity criteria, but they are required to cover the drug because it has been approved by the FDA. A survey conducted for the National Association of Medicaid Directors in October estimated that Aduhelm could cost the Medicaid program an additional $1.9 billion in 2022. Another study, published by the Kaiser Family Foundation, argued that, even with Medicaid drug rebates, covering Aduhelm could lead to “substantial” increases in Medicaid spending. This decision has alarmed Medicaid directors who view this as an inappropriate cost-shift from the Medicare program to the Medicaid program.

Regardless of the outcome of the NCD process, there is a concern that the reliance on the NCD mechanism lets the FDA off the hook for lowering the bar for approval, and lets Biogen off the hook for not conducting adequate clinical trials in the first place. This also means that CMS has to use even more tax dollars to pay for the additional data collection and analysis. While it is prudent for CMS to take this step, it is important to acknowledge that taxpayers are now subsidizing industry-led research and paying for the FDA’s questionable approval decision.

Some proponents of using the NCD process in this case have argued, quite sensibly, that the review should involve the “minimum set of essential data elements” to speed up the process and make it less costly. Nevertheless, relying on Medicare and other payers to limit the damage of the FDA decision may be useful in this situation — but it is an imperfect solution. It does not address the potential cost shift to Medicaid (although states may be able to address this by severely limiting the drug’s use), and even more concerning, this approach may set a dangerous precedent, particularly given the historic reluctance of CMS to use the NCD process for drugs.

Will the NCD approach create an incentive for industry to get fast FDA approval for interventions, based on questionable data, hoping that it can still get public and private payers to foot the bill?

Michael K. Gusmano, PhD, MA, is a research scholar at The Hastings Center, and a professor of health policy and associate dean for academic programs in the College of Health at Lehigh University.