A person skates past Biogen Inc. headquarters in Cambridge, Massachusetts on Monday, June 7, 2021.
Adam Glanzman | Bloomberg | Getty Images
Biogen faced tough questions from Wall Street analysts Tuesday about the annual cost of $ 56,000 for its newly approved Alzheimer’s drug Aduhelm – a price that executives call “fair” and “responsible”.
Biogen’s shares rose 38% Monday after the FDA announced it had approved the company’s drug scientifically known as aducanumab. It’s the first drug approved by U.S. regulators to slow cognitive decline in people with Alzheimer’s, and the first new drug for the disease in nearly two decades.
The biotech company said it charges $ 56,000 for an annual course of the new treatment, which is higher than the $ 10,000-25,000 price some Wall Street analysts were expecting. This is the wholesale price, and the cost that patients actually pay depends on their health insurance plan.
Some analysts and advocacy groups immediately questioned how the company could justify the price – about five times higher than expected – especially as medical experts continue to debate whether there is enough evidence that the drug actually works and the industry has been criticized for drug prices .
The FDA departed from the advice of its independent panel of external experts, which unexpectedly declined to approve the drug last fall, citing inconclusive data.
“Our only concern here is the annual cost of aducanumab and whether the sticker shock at $ 56,000 a year (we were at $ 10,000) could further stimulate drug price reviews,” Stifel analyst Jeff Preis told investors Monday in a note.
On a call to investors Tuesday morning, Evercore ISI analyst Umer Raffat congratulated the Massachusetts-based company on US approval of the drug before asking executives to explain the price.
“I think there is a discrepancy between some of the words you shared in your press releases like responsibility, access, health equity, and price, especially given the basic care population,” he told executives.
JP Morgan analyst Cory Kasimov later asked executives how much Medicare is likely to pay for the drug and how concerned they are about the industry’s “backlash” on pricing.
Biogen executives said the overall price of the new treatment is “underpinned” by the value it is expected to bring to patients, caregivers and society. They insisted that the price was “responsible” and stated that the disease costs the US billions each year.
The Alzheimer’s Association estimates that more than 6 million Americans are living with the disease. The company said it currently has the capacity to deliver the drug to 1 million patients annually, with more than 900 locations in the U.S. poised to launch the new drug.
“We want to ensure that Aduhelm is affordable for patients and sustainable for health systems,” said one executive.
The company has pledged not to increase the price of the new drug over the next four years. However, executives said they were “open-minded” and suggested reconsidering the price as the company assesses demand over the next few years.
Michel Vounatsos, CEO of Biogen, joined CNBC on Monday and said the drug’s price will allow the company to continue investing in its pipeline of drugs for other diseases. He added that the company works closely with the federal health insurance program Medicare, as well as with private insurers.