Biogen gets FDA approval for Alzheimer's treatment

Julie Hyman and Anjalee Khemlani breakdown what the FDA’s approval of Biogen’s Alzheimer’s drug will mean for the pharmaceutical industry as Biogen experienced a surge in shares and releases the cost of the treatment.

Video Transcript

JULIE HYMAN: Shares of Biogen are trading a little bit lower this morning, but they were up 38% yesterday on the news that the FDA has approved their medication to treat Alzheimer's. Our Anjalee Khemlani has been covering the story for us. And there's a lot of controversy around it.

But first of all, start with the basics here. What is this drug? What is it meant to do? And also, as we learned this morning, what's the cost?

ANJALEE KHEMLANI: That's right, Julie. I think we'll start with that cost first because that is the thing-- that sticker price-- that is shocking people. $56,000 per year per patient, and that is split up over the intravenous infusions throughout the year. Most of it is said to be really covered by Medicare because these patients are Medicare-eligible. Still some cost sharing there, though, for about 20% of that.

What we know about it is that it's supposed to slow the decline of Alzheimer's. So, it's not really a cure. It's not, in some-- by some expert opinions, it's not a blockbuster drug. But for the company, it really will be, based on the really high demand for anything for Alzheimer's.

You looking at the numbers, we have about six million Americans living with Alzheimer's today. That number is set to more than double by 2050, to 12.7 million. So, a lot of potential in that market.

Meanwhile, we know that the cost of it, of course, again, is really the thing that is catching everyone's attention. On a call this morning with analysts, the company maintained what has become an industry standard of noting the value add to a person's life, basically saying that the improvement to a person's life is covered by this cost. But also knowing that the profit share for Biogen is about 55% there.

JULIE HYMAN: But the value add is in dispute, isn't it, Anjalee? That's the whole-- it's not just the cost, right? I have read some real critiques of the FDA this morning for approving this drug at all. Biogen almost didn't go ahead with even doing experiments, continuing experiments with this drug a couple of years ago, because their initial studies showed it wasn't really effective.

And then they somehow found data that showed it was. But it's not effective in everyone. It's not even effective in a majority of Alzheimer's patients, is it?

ANJALEE KHEMLANI: Well, and that's not actually atypical. There are many drugs out there that are minimally improving or have some minimal effect and still get approved, still have high costs. And that has been one of the biggest criticisms of the FDA and of the drug industry for quite some time, especially in the recent past, as attention has been focused on drug pricing.

So, yes, that is what experts are worried about, is that the trial itself did show that an independent panel did call out that it wasn't showing as much improvement. It was likely going to not be a useful product. Then, closer to the end of 2020, there was another panel and meeting, and they looked at it and said the opposite. So, there was a lot of attention on this.

The real key issue here is that it's the first drug to come in a couple decades for Alzheimer's. So, that's where a lot of the pent-up demand is coming from. There are other companies out there also pursuing this market. It's a very big market, as we saw through the numbers.

So, that's where all the anticipation is coming from. But this is not atypical of the industry or for the FDA. And it is part of what has been coming into play with criticisms of drug pricing.

JULIE HYMAN: So, what happens now? When exactly does the drug go to market? And the FDA is actually saying Biogen still has to do testing on it. But is there really a chance that it could go to market and then be pulled from the market if that testing doesn't confirm its effectiveness?

ANJALEE KHEMLANI: Well, the only way that it would have any halt is if there was any major side effects. Already we know that some side effects throughout the trial was a painful brain swelling. And that could be something that gets some attention, if enough-- like we saw with the vaccines, for example. I think that's the most recent thing that the general public is aware of and can relate to when it comes to understanding how clinical trials work and how side effects are viewed.

So, if something really major happens and there are enough cases building up in patients, that could likely result in a halt of some sort or some kind of action. But as it stands right now, it's pretty much ready to go to market. The company has already noted that there are thousands of locations ready to use it. It is sort of labor intensive in its delivery, so it does require being in a hospital. And so you've got a lot of clinician oversights in its delivery.

So, anything that does come up is likely to get reported more quickly than if it was just an oral treatment and it's up to the individual to say something or up to the doctors to say something. So, how it happens, we'll see. Everyone is still sort of watching this right now. Definitely is an interesting discussion, and experts are watching this very closely right now.

JULIE HYMAN: Yes, indeed. Definitely we'll be watching it closely.

And you bring up a good point, by the way, talking about how it's administered in a hospital. That $56,000 does not capture the full cost, because you have to do screening ahead of time and because of the way the drug is administered. Anjalee Khemlani, thank you so much. Appreciate it.