Biogen‘s Alzheimer treatment triggers debate regarding its real-world benefits

Biogen (NASDAQ: BIIB) launched in June a new Alzheimer’s disease drug but its uptake so far has been slow, leading one notable Wall Street analyst to recommend a cautious approach towards the stock.

Cost of Biogen’s Alzheimer’s treatment criticized

There is a debate currently regarding the high cost of the drug, which is $56,000, and whether it is effective in Alzheimer’s treatment despite encouraging trial results. There is also concern about whether it is worth the money, but considering AD is a devastating disease, people will want access to it at any cost. Wedbush’s Laura Chico delved into the issue on CNBC’s “Worldwide Exchange,” noting that there is a lot of uncertainty about whether the drug’s cost can translate into real-world benefits. Laura said:

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We have certain clinical outcomes that were evaluated in the trials, but translating that into a real world benefit is very complicated. You’ve had agencies like ICER come out and evaluate the drug and determine it’s really not cost-effective. And that the pricing would need to be considerably lower for it to be effective.

Laura expects the problem to persist going forward, and translating the treatment cost into real-world benefit will be challenging. According to the Alzheimer’s Association of Kaiser, AD has a significant impact on society, estimated to be hundreds of billions of dollars. Unfortunately, making a decision will be challenging for families given the high cost of the Biogen treatment.  As a result, there should be a coverage determination that will make the drug accessible. Laura stated:

“Medicare has instituted a national coverage determination, and we should get a little bit more clarity on how they’re going to handle reimbursing the drug by early 22.”

Wedbush analyst has a neutral rating on Biogen

The Wedbush analyst is cautious in Biogen stock and has a “Neutral” rating because the controversy is unlikely to end soon.  She explained:

“Our estimates for out of have been below consensus, and I think we’re going to continue to see more of these headlines pop up and the controversy is probably not going to abate in the near term. So we’re staying cautious on that.”

According to Laura, the controversy coupled with growing generic competition for the company’s flagship drug Tacfidera and the competitive conditions in the SMA sector will be challenging for Biogen.