In a surprise move, the Food and Drug Administration approved the new Alzheimer's drug from Biogen (BIIB 0.23%), even though the drug failed to beat placebo in its clinical trials. The company has also come under sharp attacks for trying to get Medicare and health insurers to pay $56,000 for each patient on the drug. There are over 6 million Alzheimer's patients, just in the U.S. Already the Department of Veterans Affairs has declined to pay for Biogen's drug, citing both its lack of efficacy and safety concerns.  

Olivia Zitkus, an analyst and editor at the Motley Fool, and Fool contributor Taylor Carmichael spoke on the issue during this episode of Motley Fool Live, recorded on July 30.


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Olivia Zitkus: Taylor, if it's cool with you, I think I want to kick off our discussion with the stock that everyone loves to hate lately, Biogen. There's been a lot of news around its drug Aduhelm, which was approved by the FDA as a treatment for Alzheimer's disease on June 7. It's since had a label update and controversy has whirled so much so that the R&D chief of Biogen released a letter directly to the Alzheimer's community on the day of the Q2 earnings release, July 22. I will read a portion of that just to color what we're going to talk about. Here we go from the R&D chief:

Unfortunately, Aduhelm's approval has been the subject of extensive misinformation and misunderstanding. It is normal for scientists and clinicians to discuss data from experiments in clinical trials, to debate and to disagree on the interpretation of data. That is how science advances and we welcome these discussions. Recently, however, there has been a turn outside the boundaries of legitimate scientific deliberation.

Taylor, I'd love to get your reaction to the R&D chief's response. Then I'll ask your thoughts on Aduhelm and FDA decision itself. But what are your thoughts on this?

Taylor Carmichael: I thought it was really interesting that they had the R&D chief write this letter -- that's my dog -- instead of the CEO. [laughs]

Zitkus: He's not a fan. [laughs]

Carmichael: She doesn't like it. A couple of interesting things. One, the most controversial thing about Biogen, I think, is the price points they are doing, not so much -- I mean, there are two levels of controversy. There's controversy about the drug being approved. It was very controversial among scientists in particular. But it's also controversial because they're charging $56,000. There's 6 million patients with Alzheimer's just in the U.S. In the world, it's a great deal higher. If everybody were to be prescribed a $56,000 drug, it would be hundreds of billions of dollars. Kind of an insane price point, kind of a niche price point and it just raises more questions about this drug. What the FDA did, they approved this drug based on biomarkers, in that, Alzheimer's patients have plaques in the brain. What this drug does is reduce those plaques. The theory is, if you reduce those plaques, and they're amyloid, I think is the name, amyloid plaques.

Zitkus: Yes, amyloid plaques.

Carmichael: If you reduce those plaques, the theory is that Alzheimer's patients will stop getting worse. Hasn't borne out. I'm not a medical doctor, but my own opinion, this is a bad theory. This is a culmination of decades of failure trying to go along this route of getting rid of these plaques. But what the FDA did, they approved it because it is reducing the plaques in the brain, even though they are seeing no improvement or significant efficacy in the drug in terms of patients welfare or getting better. That was highly controversial. Every doctor on their advisory panel said, "You should not approve this drug," and the FDA approved it. That was controversial. The head of the FDA who was not involved in that decision has called for an investigation into why it was approved. It's been highly controversial even in the FDA. The FDA has been attacked for approving this drug. People have been waiting for a new Alzheimer's treatment for a long time, so to have a $56,000 price point in a drug where all the doctors on the advisory committee said, "Don't approve it," the whole thing seems incredibly sketchy --

Zitkus: Right.

Carmichael -- and bewildering.