Medicare’s proposal that it will cover Alzheimer’s drugs such as Biogen’s embattled Aduhelm only in clinical trials could have a simple but difficult result for the pharmaceutical industry: chaos.
The draft decision released yesterday is a response to the June choice by the Food and Drug Administration to grant the medicine an accelerated approval, going against a committee of the FDA’s expert advisers. That sets up an unusual dynamic: Generally, Medicare, the government’s health benefit for people 65 and older, covers medicines once the FDA approves them. For some medicines, it is required to do so. But in this case, Medicare is trying to put a genie back in the bottle, requiring that Biogen and other drug makers do studies that were not required by the FDA before Medicare will agree to cover Alzheimer’s drugs.
Biogen, the FDA, and Medicare have stumbled into a battle that two opposing camps within the drug industry have been quietly hungering for for years. The Aduhelm saga will test what happens when the decision to pay for a drug in the U.S. is further decoupled from the decision to make it available for patients to purchase. The idea has long appealed to some venture capitalists and startups, partly because it appeals to their libertarian streak. It also could mean that, with responsibility split, the FDA would approve drugs sooner on less data, which might help startups reach profitability faster. But it also appeals to those who think that the U.S. health care system needs to do more to control the price of medicines, who think such instances would drive down drug costs. In other words, over the long run, it might be worse for big pharmaceutical firms because it would lower peak sales.
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