Biogen revenue and profit shrink on Aduhelm costs, slumping sales of multiple sclerosis therapies

A Biogen facility in Cambridge, Massachusetts.

Brian Snyder | Reuters

Biogen on Tuesday reported fourth-quarter revenue and profit that shrank from a year ago, as it recorded charges related to dropping its controversial Alzheimer’s drug Aduhelm and as sales slumped in its multiple sclerosis therapies, the company’s biggest drug category.

Biogen booked sales of $2.39 billion for the quarter, down 6% from the same period a year ago. It reported net income of $249.7 million, or $1.71 per share, for the fourth quarter, down from net income of $550.4 million, or $3.79 per share, for the same period a year ago. Adjusting for one-time items, the company reported $2.95 per share.

The drugmaker’s fourth-quarter earnings per share, both unadjusted and adjusted, saw a negative impact of 35 cents associated with previously disclosed costs of pulling Aduhelm, which had a polarizing approval and rollout in the U.S.

Biogen is cutting costs while pinning its hopes on its other Alzheimer’s drugs, including its closely watched treatment Leqembi, and other newly launched products to replace declining revenue from its multiple sclerosis therapies.

Shares of Biogen closed more than 7% lower on Tuesday.

Here’s what Biogen reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv: 

  • Earnings per share: $2.95 adjusted vs. $3.18 expected
  • Revenue: $2.39 billion vs. $2.47 billion expected

Also on Tuesday, Biogen issued full-year 2024 guidance that calls for adjusted earnings of $15 to $16 per share. Analysts surveyed by LSEG had expected full-year earnings guidance of $15.65 per share.

The drugmaker said it expects 2024 sales to decline by a low to mid-single digit percentage compared with last year. But the company anticipates its pharmaceutical revenue, which includes product revenue and its 50% share of Leqembi sales, to be flat this year compared with 2023.

Multiple sclerosis drug sales slump

Biogen’s fourth-quarter revenue from multiple sclerosis products fell 8% to $1.17 billion as some of the therapies face competition from cheaper generics.

The company’s once-blockbuster drug Tecfidera, which is facing competition from a generic rival, posted revenue that fell 17.8% to $244.3 million in the fourth quarter. Analysts had expected that drug to book sales of $233.1 million, according to FactSet.

Vumerity, an oral medication for relapsing forms of multiple sclerosis, generated $156.4 million in sales. That came in below analysts’ estimates of $174.4 million, FactSet estimates said. 

“We’ve had several years of declining revenue and profit, which is not unusual when you’re dealing with patent expirations,” Biogen CEO Christopher Viehbacher told reporters on a media call Tuesday. He added that one of the key ways Biogen will return to growth is to “reposition the company away from our legacy franchise of multiple sclerosis towards new products.”

Meanwhile, Biogen’s rare disease drugs recorded $471.8 million in sales, up 3% from the same period a year ago. 

Spinraza, a medication used to treat a rare neuromuscular disorder called spinal muscular atrophy, recorded $412.6 million in sales. That came under analysts’ estimate of $443.4 million in revenue, according to FactSet. 

Biogen’s biosimilar drugs booked $188.2 million in sales, up 8% from the year-earlier period. Analysts had expected sales of $196.7 million from those medicines.

Leqembi, other new drugs

The results come amid the rollout of Biogen and Eisai’s Leqembi, which became the first drug found to slow the progression of Alzheimer’s disease to win approval in the U.S. in July.

Eisai, which reported earnings last week, recorded $7 million in fourth-quarter revenue and $10 million in full-year sales from Leqembi.

Biogen CEO Viehbacher told reporters on the media call Tuesday that there are around 2,000 patients currently on Leqembi. That makes Biogen’s target of 10,000 patients by the end of March 2024 look increasingly difficult to hit, but Viehbacher emphasized that the company is focused more on the long-term reach of Leqembi rather than meeting that benchmark. 

“I think what’s important is we are now making progress,” he told reporters. “The 10,000 isn’t really hard and I think we are now really focusing on commercial plans — how do we get to the next 100,000?”

Notably, the low rate of adoption isn’t due to lack of demand: There are some 8,000 U.S. patients currently waiting to get on treatment, executives from Eisai said on an earnings call last week. 

More CNBC health coverage

The companies are also working toward Food and Drug Administration approval of an injectable version of Leqembi, which showed promising initial results in a clinical trial in October. 

Leqembi is currently administered twice monthly through the veins, a method known as intravenous infusion. The injectable form would be a new and more convenient option for administering the antibody treatment to patients, which could pave the way for higher uptake. 

But investors also have their eyes on other newly launched drugs. 

That includes Skyclarys from Biogen’s acquisition of Reata Pharmaceuticals in July. That drug brought in $56 million in fourth-quarter revenue, according to Biogen.

The FDA cleared Skyclarys last year, making it the first approved treatment for Friedreich ataxia, a rare inherited degenerative disease that can impair walking and coordination in children as young as 5.

On Monday, European Union regulators approved Skyclarys for the treatment of Friedreich ataxia in patients ages 16 and up. 

Biogen has also partnered with Sage Therapeutics on the first pill for postpartum depression, which won FDA approval in August. But the agency declined to clear the drug for major depressive disorder, which is a far larger commercial opportunity. 

Biogen said that pill, called Zurzuvae, generated roughly $2 million in sales for the fourth-quarter.

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Long Covid is distorting the labor market — and that’s bad for the U.S. economy

Charlotte Hultquist

Charlotte Hultquist

Weeks after Charlotte Hultquist got Covid-19 in November 2020, she developed a severe pain in her right ear.

“It felt like someone was sticking a knife in [it],” said Hultquist, a single mother of five who lives in Hartford, Vermont.

The 41-year-old is one of millions of Americans who have long Covid. The chronic illness carries a host of potentially debilitating symptoms that can last for months or years, making it impossible for some to work.

For about a year, Hultquist was among those long Covid patients sidelined from the workforce. She would fall constantly, tripping just by stepping over a toy or small object on the floor. She eventually learned that the balance issues and ear pain resulted from a damaged vestibular nerve, a known effect of long Covid. After rigorous testing, a physical therapist told Hultquist she had the “balance of a 1-year-old learning to walk.”

Her body — which she said felt like it weighed 1,000 pounds — couldn’t regulate its temperature, causing dramatic swings from cold to hot.

More from Your Health, Your Money

Here’s a look at more stories on the complexities and implications of long Covid:

Her work on the Dartmouth Hitchcock Medical Center’s information desk required a sharp memory of the hospital’s layout — but long Covid dulled that clarity, too. She had to quit her job as a patient care representative in March 2021.

“I couldn’t work when my memory just kept failing,” Hultquist said.

There remain many unknowns about long Covid, including causes, cures, even how to define it. But this much is clear: The illness is disabling thousands, perhaps millions, of workers to such an extent that they must throttle back hours or leave the workforce altogether.

In other words, at a time when job openings are near an all-time high, long Covid is reducing the supply of people able to fill those positions. The dynamic may have large and adverse effects on the U.S. economy.

Long Covid “is certainly wind blowing in the other direction” of economic growth, said Betsey Stevenson, a professor of public policy and economics at the University of Michigan who served as chief economist for the U.S. Department of Labor in the Obama administration.

Up to 4 million people are out of work

Mild symptoms, employer accommodations or significant financial need can all keep people with long Covid employed. But in many cases, long Covid impacts work.

Katie Bach

nonresident senior fellow at the Brookings Institution

Katie Bach, a nonresident senior fellow at the Brookings Institution, has published one of the higher estimates to date. She found that 2 million to 4 million full-time workers are out of the labor force due to long Covid. (To be counted in the labor force, an individual must have a job or be actively looking for work.)

The midpoint of her estimate — 3 million workers — accounts for 1.8% of the entire U.S. civilian labor force. The figure may “sound unbelievably high” but is consistent with the impact in other major economies like the United Kingdom, Bach wrote in an August report. The figures are also likely conservative, since they exclude workers over age 65, she said.

“Mild symptoms, employer accommodations or significant financial need can all keep people with long Covid employed,” Bach said. “But in many cases, long Covid impacts work.”

Impact akin to extra year of baby boomers retiring

Other studies have also found a sizable, though more muted, impact.

Economists Gopi Shah Goda and Evan Soltas estimated 500,000 Americans had left the labor force through this June due to Covid.

That led the labor force participation rate to fall by 0.2 percentage points — which may sound small but amounts to about the same share as baby boomers retiring each year, according to the duo, respectively of the Stanford Institute for Economic Policy Research and the Massachusetts Institute of Technology.

Put another way: Long Covid’s labor impact translates to an extra year of population aging, Goda said.

For the average person, the work absence from long Covid translates to $9,000 in foregone earnings over a 14-month period — representing an 18% reduction in pay during that time, Goda and Soltas said. In aggregate, the lost labor supply amounts to $62 billion a year — equivalent to half the lost earnings attributable to illnesses like cancer or diabetes.

What’s more, foregone pay may complicate a person’s ability to afford medical care, especially if coupled with the loss of health insurance through the workplace.

A separate Brookings paper published in October estimated about 420,000 workers aged 16 to 64 years old had likely left the labor force because of long Covid. The authors — Louise Sheiner and Nasiha Salwati — cite a “reasonable” range of 281,000 to 683,000 people, or 0.2% to 0.4% of the U.S. labor force.

About 26% of long-haulers said their illness negatively affected employment or work hours, according to a July report published by the Federal Reserve Bank of Minneapolis. Those with long Covid were 10 percentage points less likely to be employed than individuals without a prior Covid infection, and worked 50% fewer hours, on average, according to Dasom Ham, the report’s author.

Return to work can be ‘a really frustrating experience’

Outside of these economic models, the labor impact was borne out in numerous CNBC interviews with long Covid patients and doctors who specialize in treating the illness.

Just half of the patients who visit the Mayo Clinic’s Covid Activity Rehabilitation Program can work a full-time schedule, said Dr. Greg Vanichkachorn, the program’s medical director.

“Because of the brain fog issues in addition to physical symptoms, many patients have had a really frustrating experience trying to get back to work,” Vanichkachorn said.

Those able to return, even part-time, sometimes face hostility from employers and co-workers, he added.

For one, many of the hundreds of potential long Covid symptoms are invisible to others, even if disabling for the afflicted. Difficulty meeting a work deadline due to brain fog or extreme fatigue, for example, may not be met kindly by their colleagues.

Long Covid is so different for so many different people.

Alice Burns

associate director of the Program on Medicaid and the Uninsured at health-care nonprofit The Henry J. Kaiser Family Foundation

“There are some people out there who don’t even think Covid exists,” Vanichkachorn said.

Meanwhile, long Covid can put even accommodating employers in a tricky situation. It can take several months for a patient to make progress in treatment and therapy — meaning some businesses may need to make tough retention, hiring and personnel decisions, Vanichkachorn said. Lengthy recovery times mean a patient’s job might be filled in the interim, he said.

And patients’ symptoms can relapse if they push themselves too rigorously, experts said.

“You can bring a [long Covid] diagnosis to your employer, but it doesn’t allow you to say, ‘I need to be part time for X number of months,” said Alice Burns, associate director of the Program on Medicaid and the Uninsured at health care nonprofit the Henry J. Kaiser Family Foundation. “It may be more months or fewer months; it may mean you can return 10% or 80%.

“That’s just because long Covid is so different for so many different people.”

Why the long Covid labor gap matters

Jerome Powell, chair of the Federal Reserve, mentioned Sheiner and Salwati’s long Covid research in a recent speech about inflation and the labor market.

Millions of people left the labor force in the early days of the pandemic, due to factors like illness, caregiving and fear of infection. But workers haven’t returned as quickly as imagined, particularly those outside their prime working years, Powell said. About 3.5 million workers are still missing, he said.

While most of that shortfall is due to “excess” (i.e., early) retirements, “some of the participation gap” is attributable to long Covid, Powell said. Other big contributors to the shortfall include a plunge in net immigration to the U.S. and a surge in deaths during the pandemic, he added.

“Looking back, we can see that a significant and persistent labor supply shortfall opened up during the pandemic — a shortfall that appears unlikely to fully close anytime soon,” the Fed chair said.

That shortfall has broad economic repercussions.

When the U.S. economy started to reopen in early 2021 from its pandemic-era hibernation — around the time Covid vaccines became widely available to Americans — demand for labor catapulted to historic highs.

Job openings peaked near 12 million in March 2022 and remain well above the pre-pandemic high. There are currently 1.7 job openings per unemployed American — meaning the available jobs are almost double the number of people looking for work, though the ratio has declined in recent months.  

That demand has led businesses to raise wages to compete for talent, helping fuel the fastest wage growth in 25 years, according to Federal Reserve Bank of Atlanta data.

While strong wage growth “is a good thing” for workers, its current level is unsustainably high, Powell said, serving to stoke inflation, which is running near its highest level since the early 1980s. (There are many tentacles feeding into inflation, and the extent to which wage growth is contributing is the subject of debate, however.)

A worker shortage — exacerbated by long Covid — is helping underpin dynamics that have fueled fast-rising prices for household goods and services.

But the labor gap is just the “tip of the iceberg,” said Stevenson at the University of Michigan. There are all sorts of unknowns relative to the economic impact of long Covid, such as effects on worker productivity, the types of jobs they can do, and how long the illness persists, she said.

“When you’re sick, you’re not productive, and that’s not good for you or for anybody around you,” Stevenson said of the economic impact.

For example, lost pay might weigh on consumer spending, the lifeblood of the U.S. economy. The sick may need to lean more on public aid programs, like Medicaid, disability insurance or nutrition assistance (i.e., food stamps) funded by taxpayer dollars.

Economic drag will rise if recovery rates don’t improve

In all, long Covid is a $3.7 trillion drain on the U.S. economy, an aggregate cost rivaling that of the Great Recession, estimated David Cutler, an economist at Harvard University. Prior to the pandemic, the Great Recession had been the worst economic downturn since the Great Depression. His estimate is conservative, based on known Covid cases at the time of his analysis.

Americans would forgo $168 billion in lost earnings — about 1% of all U.S. economic output — if 3 million were out of work due to long Covid, said Bach of the Brookings Institution. That burden will continue to rise if long Covid patients don’t start recovering at greater rates, she said.

“To give a sense of the magnitude: If the long Covid population increases by just 10% each year, in 10 years, the annual cost of lost wages will be half a trillion dollars,” Bach wrote.

Charlotte Hultquist

Charlotte Hultquist

Hultquist was able to return to the workforce part time in March, after a yearlong absence.

The Vermont resident sometimes had to reduce her typical workweek of about 20 hours, due partly to ongoing health issues, as well as multiple doctor appointments for both her and her daughter, who also has long Covid. Meanwhile, Hultquist nearly emptied her savings.

Hultquist has benefited from different treatments, including physical therapy to restore muscle strength, therapy to “tone” the vagus nerve (which controls certain involuntary bodily functions) and occupational therapy to help overcome cognitive challenges, she said.

“All my [health] providers keep saying, ‘We don’t know what the future looks like. We don’t know if you’ll get better like you were before Covid,'” Hultquist said.

The therapy and adaptations eventually led her to seek full-time employment. She recently accepted a full-time job offer from the New Hampshire Department of Health & Human Services, where she’ll serve as a case aide for economic services.

“It feels amazing to be recovered enough to work full time,” Hultquist said. “I’m very far from pre-Covid functioning but I found a way to keep moving forward.”

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Why oil is down since the Hamas-Israel conflict started and whether that can last

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Here are all the portfolio moves the Club made in this week’s oversold market

People walk by the New York Stock Exchange (NYSE) on February 14, 2023 in New York City.

Spencer Platt | Getty Images News | Getty Images

With the stock market deeply oversold this week, we put cash to work by picking stocks across a range of sectors including energy, technology and materials. We also added a former Club chipmaker to our Bullpen and upgraded a premium beer name to a buy rating. Finally, Friday’s market reversal helped us make good on a pledge to trim a once-downtrodden health-care stock.

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Weight loss drugs boost sales at retail pharmacies, but they may not help profits much

A pharmacist displays boxes of Ozempic, a semaglutide injection drug used for treating type 2 diabetes made by Novo Nordisk, at Rock Canyon Pharmacy in Provo, Utah, U.S. March 29, 2023. 

George Frey | Reuters

Drugmakers aren’t the only ones feeling the impact of the weight loss industry gold rush. 

Retailers with pharmacy businesses, such as Walmart, Kroger and Rite Aid, said increased demand for prescription weight loss drugs helped boost sales for the second quarter. 

But analysts note that those blockbuster treatments are minimally profitable for retail pharmacies – and may even come with margin headwinds.

“More recently, you’re starting to hear retailers talk about these drugs. But I wouldn’t say they’re necessarily beneficiaries of the increased popularity,” Arun Sundaram, an analyst at CFRA Research, told CNBC. “They’re really not making much of a profit on the drugs. So it’s really just a traffic driver and not really a profit pool for retailers.” 

Buzzy drugs like Novo Nordisk‘s obesity injection Wegovy and diabetes treatment Ozempic have skyrocketed in popularity over the last year, with high-profile names like billionaire tech mogul Elon Musk among recent users.

Those treatments are known as GLP-1s, a class of drugs that mimic a hormone produced in the gut to suppress a person’s appetite. 

Other drugmakers, such as Eli Lilly and Pfizer, are developing their own GLP-1s in a bid to capitalize on a weight loss drug market that some analysts project could be worth $200 billion by 2030. An estimated 40% of U.S. adults are obese, making successful treatments a massive opportunity for drugmakers. 

But the boom in demand for GLP-1s is also being felt in other parts of the drug supply chain, including the pharmacies that dispense the prescription drugs to patients. 

Are weight loss drugs profitable? 

On an earnings call Thursday, Walmart CEO Doug McMillon said the company expects weight loss drugs to help drive sales for the rest of the year: “We still expect food, consumables, and health and wellness, primarily due to the popularity of some GLP-1 drugs, to grow as a percent total in the back half.” 

In June, likewise, Rite Aid CFO Matthew Schroeder said a jump in pharmacy revenue and the company’s decision to hike its full-year revenue guidance was “due to the increase in sales volume in Ozempic and other high-dollar GLP-1s.” Schroeder was referring to the hefty price tags of GLP-1s, which range from around $900 to $1,300 in the U.S. 

He said those drugs have high sales amounts per prescription, but emphasized that the increased volume of GLP-1s has a “minimal impact” on Rite Aid’s gross profit. 

Kroger CEO Rodney McMullen similarly said during an earnings call in June that GLP-1 drug “sales dollars are a lot bigger than the margin dollars.” 

“We would expect the GLP-1 type drugs to continue but remember, the impact on profitability is pretty narrow,” he said.

That’s because GLP-1s like Wegovy and Ozempic are branded drugs with “very, very low gross margins,” according to CFRA Research’s Sundaram. 

He said retail pharmacies generate high sales for each GLP-1 prescription they dispense but rake in low profits, which is having a slight negative impact on the overall gross margins of retailers like Walmart and Kroger. 

UBS analyst Michael Lasser similarly highlighted in a recent note that gross margins for Walmart’s U.S. business “would have looked even better had it not been for the contribution of the GLP-1 drugs since these carry very low profit rates.”

A selection of injector pens for the Saxenda weight loss drug are shown in this photo illustration in Chicago, Illinois, U.S., March 31, 2023. 

Jim Vondruska | Reuters

Gross margins for branded medications are 3.5% on average for pharmacies, according to a 2017 study from USC’s Schaeffer Center for Health Policy and Economics. That suggests it may take years before a branded drug significantly contributes to a pharmacy’s bottom line.

In contrast, gross margins for generic drugs – the cheaper equivalents of branded medications – are 42.7% on average for pharmacies. 

There are several reasons for the lower margins of branded drugs. For one, branded drugs don’t directly compete with other medications because they have patent protections. That gives drug manufacturers more power when they negotiate drug discounts with wholesalers, which purchase medications and distribute them to pharmacies. 

As a result, there is “little room for wholesalers and pharmacies to capture large margins due to their relative lack of negotiating power,” according to the Association for Accessible Medicines, a trade association representing the manufacturers and distributors of generic prescription drugs. 

What other impacts do retailers face?

But there are also other impacts of GLP-1s to consider beyond a retailer’s pharmacy business.

For companies like Walmart and Kroger, GLP-1 drugs may be indirectly impacting other business categories in a positive way.

That makes some analysts less worried about margin headwinds in pharmacy: “The gross margin headwind is less of a risk overall for Walmart because any footstep in the door often ends up with multiple items in a basket,” KeyBanc analyst Bradley Thomas told CNBC. 

“Walmart is generally not a quick store that you just pop in on the way home,” he said. “They’re going to make multiple purchases, and I think we’re seeing a lot of discretionary categories actually see a lift from some of this incremental traffic they’ve been getting lately.” 

Thomas added that GLP-1 drugs only fall under one part of Walmart’s business: “If you’re listing off the most important things that are driving Walmart’s strong sales performance right now, it’s probably not making the top 10,” he said. 

It’s a slightly different situation for Rite-Aid and similar companies like CVS Health and Walgreens.

Those companies have retail pharmacies but also other business segments that are directly affected in different ways by the boom in GLP-1 drugs.

For example, CVS also operates a health insurer and pharmacy benefit manager, or PBM, which maintains formularies and negotiates drug discounts with manufacturers on behalf of insurers and large employers.

The increased demand for GLP-1 drugs is likely more of a headwind for health insurers since they have to cover the costly drugs for beneficiaries, but CVS says “the risk is manageable” in that business division.

Meanwhile, PBMs may benefit more from the increase in GLP-1 use since they negotiate significant discounts on drugs and drive competition between manufacturers – but they often don’t pass along all of the savings to insurers.

“Each of the businesses kind of has GLP-1 in them and they are impacting them in a variety of different ways,” CVS CEO Karen Lynch said during an earnings call last month.

Correction: The Association for Accessible Medicines is a trade association representing the manufacturers and distributors of generic prescription drugs. An earlier version misstated its name.

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FDA approves Alzheimer’s drug Leqembi, paving way for broader Medicare coverage

The Food and Drug Administration on Thursday fully approved the Alzheimer’s treatment Leqembi, a pivotal decision that will expand access to the expensive drug for older Americans.

Medicare announced shortly after the FDA approval that it is now covering the antibody treatment for patients enrolled in the insurance program for seniors, though several conditions apply.

Leqembi is the first Alzheimer’s antibody treatment to receive full FDA approval. It is also the first such drug to receive broad coverage through Medicare.

Leqembi is not a cure. The treatment slowed cognitive decline from early Alzheimer’s disease by 27% over 18 months during Eisai’s clinical trial. The antibody, administered twice monthly through intravenous infusion, targets a protein called amyloid that is associated with Alzheimer’s disease.

Medicare coverage is a crucial step to help older Americans with early Alzheimer’s disease pay for the treatment. With a median income of about $30,000, most people on Medicare cannot afford the $26,500 annual price of Leqembi set by Eisai without insurance coverage.

Medicare had previously only agreed to cover Leqembi for patients participating in clinical trials after the treatment received expedited approval in January. This policy had severely restricted access to the drug.

To be eligible for coverage, patients must be enrolled in Medicare, diagnosed with mild cognitive impairment or mild Alzheimer’s disease, and have a doctor who is participating in a data-collection system the federal government has established to monitor the treatment’s benefits and risks.

Joanna Pike, president of the Alzheimer’s Association, the lobby group that advocates on behalf of people living with the disease, said although Leqembi is not a cure, it will help patients in the early stages of the disease maintain their independence, conduct their daily lives, and spend more time with their families.

“This gives people more months of recognizing their spouse, children and grandchildren,” Pike said in a statement Thursday. “This also means more time for a person to drive safely, accurately and promptly take care of family finances, and participate fully in hobbies and interests.”

But the treatment carries serious risks of brain swelling and bleeding. Three patients who participated in Eisai’s study died. FDA scientists have said it is unclear if Leqembi played a role in these deaths.

Alzheimer’s disease is the most common cause of dementia among older adults and the sixth leading cause of death in the U.S., according to the FDA.

Dr. David Knopman, a neurologist who specializes in Alzheimer’s disease at the Mayo Clinic in Minnesota, said Leqembi clearly demonstrated a benefit to patients in Eisai’s trial, though he cautioned the efficacy of the treatment was modest.

Knopman said appropriately diagnosed and informed patients should be able to decide for themselves whether they want to take Leqembi after weighing the benefits and risks of the treatment as well as the potential logistical challenges of finding a place to receive the twice-monthly infusions.

Medicare coverage

To receive coverage, Medicare is requiring patients to find a health-care provider participating in a registry system that collects real-world data on the drug’s benefits and risks. The system is controversial. The Alzheimer’s Association and some members of Congress are worried this requirement will create barriers to treatment.

There are concerns that the number of health-care providers participating in such registries will be limited, and that people in rural towns and other underserved communities will have to travel long hours to find such a provider.

The Centers for Medicare and Medicaid Services has set up a nationwide portal to make it easy for health-care providers to submit the required data on patients receiving Leqembi. The free-to-use portal went live moments after the FDA decision on Thursday.

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Rep. Anna Eshoo of California, the ranking Democrat on the House Subcommittee on Health, and Rep. Nanette Barragan, D-Calif., raised concerns in a letter to CMS last month that patients could struggle to find a doctor participating in the system.

Alzheimer’s is typically diagnosed with the help of a PET scan to detect the amyloid protein associated with the disease or in some cases with a spinal tap. Medicare currently only covers one PET scan per lifetime for dementia. It is unclear if the program plans to change that policy.

There’s also concern that there could be too few specialist physicians and locations to administer the infusions if Leqembi is broadly embraced as a treatment and patient demand for the antibody is high.

Some studies have estimated that wait times for antibody treatments like Leqembi could range from months to even years over the next decade depending on demand.

Tomas Philipson, who advised the FDA commissioner and CMS administrator during the second Bush administration, said the registry is an unnecessary hurdle and Medicare should drop it, but he doesn’t believe the requirement will create an insurmountable barrier to patients accessing Leqembi.

If demand for Leqembi is high, doctors will have an incentive to participate in the registry and the drug companies will want to help, said Philipson, an expert on health-care economics at the University of Chicago.

How high demand will be for Leqembi is uncertain, he said. Families worried about the serious side effects may opt not to take the treatment, while others will decide the benefits outweigh those risks, he said.

High cost

Leqembi’s price tag and the treatment’s benefit-risk profile are controversial.

Medicare patients treated with Leqembi will pay 20% of the medical bill after they meet their Part B deductible, according to CMS. Costs may vary depending on whether the patient has supplemental Medicare coverage or other secondary insurance, according to the agency.

Patients could face up to $6,600 in annual out-of-pocket costs for Leqembi even with Medicare coverage, according to a study published in the journal JAMA Internal Medicine. The treatment could cost Medicare up to $5 billion a year depending on how many people receive the infusions, the study estimated.

Sen. Bernie Sanders, I-Vt., chair of the Senate Health Committee, has called Leqembi’s price “unconscionable” and in a letter last month asked Health and Human Services Secretary Xavier Becerra to take action to reduce the cost.

Sanders said patient out-of-pocket costs for Leqembi would amount to a sixth of many seniors’ total annual income and noted the high cost of the treatment could increase premiums for everyone on Medicare.

Eisai says its $26,500 annual list price for Leqembi is lower than the company’s estimate of $37,600 for the total value of the treatment for each patient. The Institute for Clinical and Economic Review, a nonprofit that analyzes health-care costs, estimated in April it should be priced at $8,900 to $21,500 per year.

Though Leqembi could prove costly to Medicare, Philipson said delaying coverage of the treatment would result in significant increased health-care spending as people with mild Alzheimer’s disease, which can be managed at home, progress to more serious disease that requires expensive nursing home care.

Philipson and his colleagues at the University of Chicago estimated that delaying Medicare coverage of Alzheimer’s antibody treatments by one year would result in $6.8 billion in increased spending. By 2040, health-care spending would rise by $248 billion.

Clinical benefit

Thursday’s full FDA approval comes after a panel of six outside advisors voted unanimously in June in support of the drug’s clinical benefit to patients. The panel was unusually small because some members recused themselves due to conflicts of interest.

The American Academy of Neurology stated in a February letter to CMS that there is a consensus among its experts that Eisai’s clinical trial of Leqembi was well designed and the results were “clinically and statistically significant.”

Some nonprofit groups such as Public Citizen, a consumer advocacy organization, strongly opposed FDA approval of Leqembi. A representative from Public Citizen told the advisory panel that the evidence for the drug’s benefit does not outweigh significant risks of brain swelling and bleeding.

And representatives from the National Center for Health Research and Doctors for America, also nonprofits, told the panel that Eisai’s clinical trial did not include enough Black patients, who are at higher risk for Alzheimer’s disease.

Leqembi has technically been approved for the U.S. market since January, when the FDA cleared the treatment under an accelerated pathway. The FDA uses expedited approvals to save time and get drugs to patients suffering from serious diseases more quickly.

But Medicare refused to cover the Leqembi at that time, asking for more evidence that the expensive treatment had a real clinical benefit for patients that outweighed the risks.

The program’s cautious coverage policy stems from the FDA’s controversial 2021 approval of another Alzheimer’s antibody treatment called Aduhelm, also made by Eisai and Biogen.

The FDA’s advisory committee declined to endorse Aduhelm because the data did not support a clinical benefit to patients. Three advisors resigned after the agency’s decision to approve the treatment anyway.

Knopman is one of the advisors who resigned over the FDA’s decision on Aduhelm. He said the data for Leqembi is different. Eisai conducted a clean trial that showed the antibody had a modest clinical benefit for patients, Knopman said.

An investigation by Congress subsequently found that the FDA’s approval of Aduhelm was “rife with irregularities.”

Sanders, in his letter to Becerra, said the FDA “has a special responsibility to restore the public trust after its inappropriate relationship with Biogen during the agency’s review of a prior Alzheimer’s drug, Aduhelm.”

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FDA advisors recommend that new Covid vaccines target an omicron XBB variant this fall

A woman receives a booster dose of the Moderna coronavirus disease (COVID-19) vaccine at a vaccination centre in Antwerp, Belgium, February 1, 2022.

Johanna Geron | Reuters

The U.S. Food and Drug Administration‘s independent panel of advisors on Thursday recommended that updated Covid shots for the fall and winter target one of the XBB variants, which are now the dominant strains of the virus nationwide. 

The committee unanimously voted that the new jabs should be monovalent — meaning they are designed to protect against one variant of Covid — and target a member of the XBB family.

Those strains of Covid are descendants of the omicron variant, which caused cases to surge to record levels early last year. They are some of the most immune-evasive strains to date.

Advisors also generally agreed that the new shots should specifically target a variant called XBB.1.5. The panel only discussed that specific strain selection and did not vote on the matter.

XBB.1.5 accounted for nearly 40% of all Covid cases in the U.S. as of early June, according to data from the Centers for Disease Control and Prevention. That proportion is slowly declining, and cases of the related XBB.1.16 and XBB.2.3 variants are on the rise. 

Advisors noted that XBB.1.5 appears most ideal for the fall since vaccine manufacturers Pfizer, Moderna and Novavax have already started to develop jabs targeting the strain.

“The 1.5 looks good. It seems like it’s the most feasible to get across the finish line early without resulting in delays and availability,” said Dr. Melinda Wharton, a senior official at the National Center for Immunization and Respiratory Diseases. “The vaccine we can use is the vaccine that we can get. And so it feels like this would be a good choice.”

The FDA typically follows the advice of its advisory committees, but is not required to do so. It’s unclear when the agency will make a final decision on strain selection.

There is also uncertainty about which age groups the FDA and CDC will advise to receive the updated shots this fall.

But the panel’s recommendation is already a win for Pfizer, Moderna and Novavax — all of which have been conducting early trials on their respective XBB.1.5 shots ahead of the meeting.

“Novavax expects to be ready for the commercial delivery of a protein-based monovalent XBB COVID vaccine this fall in line with today’s [advisory committee] recommendation,” said John Jacobs, the company’s president and CEO.

The U.S. is expected to shift vaccine distribution to the private sector this fall. That means the vaccine makers will start selling their new Covid products directly to health-care providers and vie for commercial market share. 

The panel’s recommendation coincides with a broader shift in how the pandemic impacts the country and the world at large. 

Covid cases and deaths have dropped to new lows, governments have rolled back stringent health mandates like masking and social distancing and many people believe the pandemic is over altogether.  

But Dr. Peter Marks, head of the FDA’s vaccine division, said the agency is concerned that the U.S. will have another Covid wave “during a time when the virus has further evolved, immunity of the population has waned further and we move indoors for wintertime.”

Updated Covid vaccines that are periodically updated to target a high circulating variant will restore protective immunity against the virus, said Dr. David Kaslow, a senior official in the FDA’s vaccine division. 

It’s a similar approach to how the strains are selected for the annual flu shot. Researchers assess strains of the virus in circulation and estimate which will be the most prevalent during the upcoming fall and winter.

But it’s unclear how many Americans will roll up their sleeves to take the updated shots later this year. 

Only about 17% of the U.S. population — around 56 million people —have received Pfizer and Moderna’s boosters since they were approved in September, according to the CDC.

More than 40% of adults 65 and older have been boosted with those shots, while the rate among younger adults and children ranges between 18% and 20%.

Those boosters were bivalent, meaning they targeted the original strain of Covid and the omicron subvariants BA.4 and BA.5. 

Pfizer, Moderna and Novavax shot data

During the meeting, Pfizer, Moderna and Novavax presented preliminary data on updated versions of their shots designed to target XBB variants. 

Moderna has been evaluating shots targeting XBB.1.5 and XBB.1.16 — another transmissible omicron descendant, according to Rituparna Das, the company’s vice president of Covid vaccines. 

Preclinical trial data on mice suggests that a monovalent vaccine targeting XBB.1.5 produces a more robust immune response against the currently circulating XBB variants than the authorized bivalent shot targeting BA.4 and BA.5, according to Das. 

She added that clinical trial data on more than 100 people similarly demonstrates that the monovalent XBB.1.5 vaccine produces protective antibodies against all XBB variants. All trial participants had previously received four Covid vaccine doses.

Das said that comprehensive protection against XBB strains is likely due to the fewer unique mutations between the variants, which means their composition is similar.

There are only three unique mutations between the variants XBB.1.5 and XBB.1.16, according to Darin Edwards, Moderna’s Covid vaccine program leader. By comparison, there are 28 mutations between omicron BA.4 and BA.5.

That means the immune response an updated shot produces against XBB variants will likely be similar, regardless of which specific variant it targets, Edwards said.

Pfizer also presented early trial data indicating that a monovalent vaccine targeting an XBB variant offers improved immune responses against the XBB family. 

The company provided specific timelines for delivering an updated vaccine, depending on the strain the FDA selects. 

Pfizer will be able to deliver a monovalent shot targeting XBB.1.5 by July and a jab targeting XBB.1.16 by August, according to Kena Swanson, the company’s senior principal scientist.

Pfizer won’t be able to distribute a new shot until October if the FDA chooses a completely different strain, Swanson said.

Novavax did not provide a specific timeline for delivering a shot targeting XBB.1.5, but noted that an XBB.1.16 shot would take eight weeks longer.

Novavax unveiled preclinical trial data indicating that monovalent vaccines targeting XBB.1.5 and XBB.1.16 induce higher immune responses to XBB subvariants than bivalent vaccines do. 

Data also demonstrates that an XBB.1.5 shot produces antibodies that block XBB.2.3 from binding to and infecting human cells, according to Dr. Filip Dubovsky, Novavax’s chief medical officer.

Dubovsky said the trial results support the use of a monovalent XBB.1.5 shot in the fall.

Novavax’s jab uses protein-based technology, a decades-old method for fighting viruses used in routine vaccinations against hepatitis B and shingles.

The vaccine works differently than Pfizer’s and Moderna’s messenger RNA vaccines but achieves the same outcome: teaching your body how to fight Covid.

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Google’s ex-CEO Eric Schmidt tapped for federal biotech commission that allows members to keep biotech investments

On Dec. 30, leaders of the House and Senate Armed Services committees announced the selection of former Google CEO Eric Schmidt and 11 others to serve on a new federal commission on biotechnology.

Tasked with reviewing the biotech industry and suggesting investments that would benefit U.S. security, the National Security Commission on Emerging Biotechnology is expected to have a prominent voice on policy and federal spending in the cutting-edge industry.

The appointment, however, doesn’t require commission members to divest their own personal biotech investments — even as they help shape U.S. policy overseeing the industry. Through a venture capital firm known as First Spark Ventures, Schmidt holds stakes in several biotech companies, placing him in a position to potentially profit if those companies are the beneficiaries of a new wave of federal biotech spending.

A person familiar with Schmidt’s thinking, who asked not to be identified, told CNBC on Jan. 19 that he wouldn’t be involved in selecting or monitoring any federal investments in the sector and that he isn’t involved in decision-making about First Spark’s investments. The person also said he would comply with all disclosure rules.

Then, on Jan. 25, after a series of emails and conversations with CNBC about the potential conflict of interest, the person said Schmidt will donate 100 percent of the “net profits” from his investment in First Spark to charity. The person didn’t say when Schmidt made the decision to donate profits, adding that he hasn’t yet named any recipient charities.

Due to the nature of venture capital investments, it could take years before a company is sold or goes public.

“This is a potential horror show,” Walter Shaub, the former director of the U.S. Office of Government Ethics, said of the new commission. “Congress created this commission without adequate safeguards against conflicts of interest.”

Shaub, an attorney who’s now a senior ethics fellow at the nonpartisan nonprofit Project on Government Oversight, said members of the commission are exempt from criminal conflict of interest laws that might otherwise require them to recuse themselves or divest certain holdings because it was set up by Congress and not the executive branch.

“These are individuals who are going to be helping to shape federal policy on the intersection of biotechnology and national security, and it’ll be legal for them to make recommendations that benefit their own personal financial interests,” Shaub said. “Because much of the work could be classified, the public may have no way to gauge how their financial interests are influencing their recommendations.”

A spokesperson for the Senate Armed Services Committee, which will oversee the commission, said Schmidt and other members were selected by bipartisan leaders in the House and Senate and are expected to follow government ethics rules.

“Every member on this commission is required to adhere to all government ethics policies,” the spokesperson said. “The commission itself is designed to prevent undue influence, and Congress will provide careful oversight throughout the commission’s work.”

The commission’s incoming chairman, Dr. Jason Kelly, doesn’t plan to relinquish his role as CEO of Boston biotech company Ginkgo Bioworks, which specializes in genetic engineering.

“Jason is serving on this commission in his personal capacity,” said Joseph Fridman, an executive at Ginkgo Bioworks. He didn’t address whether Kelly planned to divest any potential equity in the company as well. “I’ll also note that, in general, we regularly implement measures at Ginkgo to maintain our position as a trusted partner of the U.S. government.”

Schmidt’s decision to donate his profits “reinforce(s) that he volunteers for these roles for all the right reasons,” said the person familiar with his thinking. “The primary purpose is philanthropy,” the person said.

But Shaub said if Schmidt were to give the First Spark net profits to charity that it wouldn’t go far enough to address the problem. “Saying he’ll donate any profits changes nothing,” he said. “You either have a financial interest in the government work you’re doing or you don’t.”

The Pentagon is already deeply invested in the biotechnology sector. In September, for example, the White House announced that the Department of Defense will invest $1 billion in bioindustrial domestic manufacturing infrastructure over five years to spur development of the U.S. manufacturing base. The new federal commission will likely have a say in steering such investments over the two years of its lifetime.  

This is not the first time Schmidt has participated in an influential Washington commission. In October, CNBC reported that Schmidt and entities connected to him made more than 50 investments in artificial intelligence companies while he was chair of a federal commission on AI from 2018 to 2021. There was no indication that Schmidt broke any ethics rules or did anything unlawful while chairing the commission. And CNBC is unaware of any instance in which Schmidt abused his position on the earlier commission for personal financial gain.

Still, at the time, Shaub called Schmidt’s AI arrangement “absolutely a conflict of interest,” and said that it was “not the right thing to do.”

Schmidt’s biotech investments are relatively recent. Schmidt, who serves as a strategic advisor and nonmanaging partner, was a co-founder of First Spark in 2021. The firm’s investments are heavily concentrated in the biotech sector: in cutting-edge companies like Walking Fish Technologies, which focuses on cell engineering; Vitara Biomedical, a neonatal-care enterprise; and Valitor, which specializes in protein-based drug therapies. Representatives of the three companies did not respond to requests for comment.

CNBC attempted to reach First Spark officials through LinkedIn for comment, but did not receive a response. The firm’s website does not offer a telephone number or email address.  

CNBC attempted to reach the other members of the commission to determine how they would handle potential conflict of interest issues. A spokesman for Rep. Ro Khanna, who was named to the commission, said the congressman does not own any individual stocks, and his wife’s assets are in a diversified trust managed by an outside financial advisor. “Qualified diversified trusts eliminate conflicts and are therefore an appropriate vehicle to safeguard against any potential conflicts,” Khanna’s spokesperson said.

Dawn Meyerriecks, the former deputy director of the CIA for Science and Technology who will serve on the commission, told CNBC she does not have any personal investments in the biotech space.

“As you know, the Commission is not yet fully set up,” she said in a message via LinkedIn. “All the commissioners will file all disclosure forms that are required for service on the commission and work with government ethics counsel to consider any potential conflicts based on the expected work of the Commission. “

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