Macro & Market | August 2021

Breakthrough Medical Treatments Brighten Outlook for Alzheimer's Patients

By Michael Li

In early June 2021, the U.S. Food and Drug Administration (FDA) granted Biogen and its Japanese partner Eisai accelerated approval for Aduhelm™ (aducanumab)—a novel treatment for Alzheimer’s disease. FDA’s approval of the drug makes available the first disease-modifying therapy for patients with this debilitating memory-loss condition.

The agency granted broad approval for Aduhelm based on mixed clinical data showing the drug’s ability to reduce accumulation of the amyloid beta plaques correlated with Alzheimer’s. After widespread public criticism of its decision, however, FDA on July 8 narrowed its approved use of the drug to patients with mild cognitive impairment or mild dementia only.

We believe FDA’s approval of the drug brings the possibility of significant benefits to millions of Alzheimer’s patients worldwide as well as massive positive social impact over time. Biogen has several other pipeline products for treating Alzheimer’s disease in development. So, as a result, we see a company with the potential of doing well financially over the long term and focusing on social good.

Alzheimer’s Disease Affects Millions

Alzheimer’s affects an estimated 50 million people (mostly ages 65-plus) around the world. With the global population aging rapidly, the World Health Organization expects the number of people with dementia to exceed 150 million by 2050.1

Most existing Alzheimer’s drugs treat cognitive and non-cognitive symptoms only, but Biogen’s new treatment targets disease progression by reducing or eliminating plaque buildup in the brain. What’s revolutionary about this treatment is its ability to curtail progress of the disease itself.

This means it may be possible to stop the disease for patients in early stages of Alzheimer’s or those who have mild symptoms only. The company estimates the immediate market for Aduhelm in the U.S. at approximately 1.5 million people in earlier stages of the disease.

Aduhelm and Medicare Reimbursement Costs

Biogen estimates a one-year course of Aduhelm administered intravenously in a physician’s office would cost $56,000. Medicare Part B would cover the cost of the drug and (typically) pay small premiums to care providers. So, if 1 million patients used Aduhelm, Medicare would incur costs of approximately $57 billion, an amount exceeding the combined costs of all other Medicare Part B medications.2

Critics argue this substantial expense would strain the Medicare program. But by simply asserting Aduhelm’s price is too high, we believe they are failing to consider that use of the drug could reduce or eliminate many other costs related to Alzheimer’s care.

Alzheimer’s Association data, for example, show one in five Medicare dollars goes toward Alzheimer’s and dementia patients.3 And ongoing annual costs for Alzheimer’s care is currently $300 billion and expected to hit $1 trillion by 2050 as the U.S. population ages.4

Most discussions focused on Aduhelm’s high price don’t address these replacement costs—expenses Medicare already pays to provide care for these patients. We think it’s too early to judge the drug’s cost-efficiency. In our view, any informed analysis should consider the fact that Medicare could be paying for Aduhelm instead of these other costs, not in addition to them.

Breakthrough Medical Treatments May Bring Social Impact Investing Opportunities

Critics also claim FDA’s approval of Aduhelm could halt research into alternative Alzheimer’s treatments. We disagree and believe the agency’s approval of the drug will serve to encourage other companies to invest in innovative treatments for neurodegenerative diseases.

Eli Lilly and Roche, for example, are currently conducting Phase III clinical trials for Alzheimer’s treatments. And FDA recently awarded breakthrough therapy designation to two other possible Alzheimer’s therapies that use similar methods of action as Aduhelm. Breakthrough therapy designation means FDA will likely approve these therapies in the next few years.

In our view, the FDA decision approving Aduhelm has created great hope and positive social impact potential for the large global population of Alzheimer’s patients. We believe innovations in treating neurogenerative disorders represent an area of significant scientific discovery potential and investment opportunities going forward. 


Stock Perspective: Breakthrough Medical Treatments Brighten Outlook for Alzheimer’s Patients

1 “Dementia Key Facts,” World Health Organization, September 21, 2020.

2 Juliette Cubanski and Tricia Newsman, “FDA’s Approval of Biogen’s New Alzheimer’s Drug Has Huge Implications for Medicare and Beneficiaries,” Kaiser Family Foundation, June 10, 2021.

3 Sandee LaMotte, “Alzheimer’s: The disease that could bankrupt Medicare,” CNN, March 7, 2017.

4 Winston Wong, PharmD, “Economic Burden of Alzheimer Disease and Managed Care Considerations,” American Journal of Managed Care 26, no. 8 (August 2020): S177-S183.

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