Biogen’s CEO defended the $56,000 price tag

CEO Michel Vounatsos on Monday said in an interview that he believed charging $56,000 per year for his company’s newly-approved Alzheimer’s medication was “fair,” citing years of “no innovation” in the marketplace.

The drug is a massive windfall for Biogen, especially given the fact that just two years ago, the company halted both Phase 3 clinical studies because the drug did not demonstrate effectiveness.

There are about 6 million people suffering from Alzheimer’s in the U.S. Even if only the approximately 2 million people with mild disease use the drug, Biogen will rake in $112 billion. Appearing on CNBC’s “Power Lunch,” Vounatsos said the price of the drug, sold as Aduhelm, was a reflection of “two decades of no innovation,” and said it would allow Biogen to fund medications for other diseases.

He also vowed that his company would not raise the price of Aduhelm for at least the next four years.

Notably, he said Biogen has up to 9 years to complete the FDA-mandated study so he wasn’t concerned the agency would actually pull it from the market.

Coverage questions: The price tag, combined with the questions about the drug’s effectiveness, might mean private insurance plans could decline to cover the cost. But Medicare is required to cover most, if not all, FDA-approved drugs. The implications of that cost on the U.S. healthcare system, and on seniors who will need to pay the premiums, are potentially staggering.

Price criticism: The Institute of Clinical and Economic Review (ICER), a nonprofit that analyzes the clinical and economic value of medical care, slammed both the FDA’s approval and the price tag. ICER initially estimated that the drug would be cost effective if it were priced between $2,500 and $8,300 per year — if it actually showed even a small benefit for patients.

“No one should assume that approving a drug with such conflicting and uncertain evidence will necessarily help patients and families,” the group said. “FDA has failed in its responsibility to protect patients and families from unproven treatments with known harms.”