CMS Aduhelm Decision: Precedent for Future Coverage or a One-Off?

Health Highlights

On April 7, the Centers for Medicare & Medicaid Services (CMS) released its highly anticipated final National Coverage Determination (NCD) for Aduhelm and other similar therapies in the pipeline for Alzheimer’s disease. The NCD retains the basic structure of the proposed NCD put forward by CMS in January. The NCD limits coverage of the drugs to clinical trials for purposes of evidence development, reflecting CMS’ skepticism of the drugs’ effectiveness even after Food and Drug Administration (FDA) approval. In a concession to interagency prerogatives, CMS will not require (as it had originally proposed) that manufacturers seek its approval of the clinical trial in question when (like Aduhelm) the drug was approved through an accelerated approval process and is undergoing a randomized controlled trial already approved by the FDA or sponsored by the National Institutes of Health (NIH).

In the final NCD, CMS also discusses the coverage pathway for monoclonal antibodies directed against amyloid for the treatment of Alzheimer’s disease that are in the development pipeline. It states that even should such drugs receive traditional approval, CMS will permit coverage through its Coverage with Evidence Development (CED) process that would allow coverage only in CMS-approved prospective studies. The draft NCD had suggested that even drugs that received traditional approval would need to conduct randomized controlled clinical trials, while the final NCD made clear that registry-based studies could suffice.

CMS also addressed a concern from state officials that state Medicaid programs would have to pay for Aduhelm for those dually eligible for Medicare and Medicaid if the NCD were finalized. CMS determined that for uses of Aduhelm that are not covered (i.e., most uses), Aduhelm would become a Part D drug. As Medicaid does not cover Part D drugs, states would not have to assume its costs. In addition, CMS made clear that Part D plans do not need to include on their formularies drugs that are not “reasonable and necessary.” Therefore, Part D plans will also not pay for Aduhelm.

While this decision only applies to the coverage of monoclonal antibodies directed against amyloid for the treatment of Alzheimer’s disease in Medicare, it is widely expected to influence coverage policies in private sector plans that had already indicated reluctance to cover Aduhelm.

Background on Aduhelm

Aduhelm was approved by the FDA in a highly watched and unusual manner. Following a negative review by an FDA Advisory Committee based on the committee’s view that the evidence of benefit, based on one trial, was insufficient to warrant traditional approval, the FDA decided to approve the drug under its accelerated approval (AA) pathway. This pathway allows the FDA to approve a drug based on its impact on a surrogate marker of clinical benefit (in this case, the drug’s impact on amyloid plaque buildup in the brain) and requires manufacturers to conduct follow-up studies once the drug is on the market. The FDA also initially granted the drug approval for any person with Alzheimer’s disease, a much broader group of potential users than was studied in the clinical trials. Just one month later and without any new data, the FDA narrowed the label to limit the use only by patients with “mild cognitive impairment or mild dementia stage of disease.” Finally, Biogen, Inc. and its partner, Eisai Co. set an initial price that some viewed as excessive. Based on its wide potential use, the Medicare actuaries determined that the drug’s approval could lead to very high Medicare expenditures, and this estimate was cited as a major factor in a large Medicare Part B premium increase for 2022.

CMS Rationale

In the NCD, CMS determined that Aduhelm did not meet the statutory test of being “reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.” While CMS has no generally applicable guidance on the definition of “reasonable and necessary,” in this case CMS states that “an intervention is not reasonable and necessary if its risks outweigh its benefits.” Thus, apparently in direct contradiction of the FDA’s determination that the drug merited approval because its benefits outweighed its risks, CMS has determined that, for coverage purposes, the benefits to the Medicare population did not justify the risks.

Further, in the NCD, CMS comments on how it would view this drug and others with the same mechanism of action that receive traditional approval after having demonstrated clinical benefit. CMS states that it “believes an FDA determination of a drug/biologic that demonstrates efficacy from a direct measure of clinical benefit is promising but does not meet the 1862(a)(1)(A) reasonable and necessary statute” (emphasis added). CMS states that, for any such drug, it would require “[a] prospective comparative study, which could range from a registry with a comparator to a pragmatic clinical study is appropriate coverage until CMS knows that the drug/biologic will demonstrate the same health outcomes, with reasonable risk of harm in broad community practice.”

Thus, CMS’ interpretation of its statutory obligation to limit coverage to items and services that are reasonable and necessary and that FDA approval, through either the AA process or the regular process, does not necessarily satisfy that standard, potentially creating uncertainty for pharmaceutical product sponsors as to the availability of Medicare coverage.

What This Means

For at least this one drug and class of drugs, CMS has asserted that it, not the FDA, can be the final arbiter of the benefit-risk decision for Medicare beneficiaries. The big question is whether this is a unique situation or a precedent that will lead to future, similar coverage determinations.

Since the release of the final NCD for Aduhelm, CMS officials have appeared eager to avoid creating the expectation that coverage determinations will become common. There are good reasons to believe that this is a one-off situation. It is highly unlikely that there will soon be another drug that has the same combination of factors—controversial FDA approval, widespread potential patient use in Medicare, high price, and significant impact on the Medicare premium—presented by Aduhelm. Nevertheless, CMS has brandished a new tool that will need to be on the minds of biopharmaceutical companies considering the development of new drugs, especially those that they anticipate will follow the FDA’s AA pathway.

CMS is not the only payer, however, that has raised questions about the AA pathway. Last year, the National Association of Medicaid Directors endorsed a recommendation by the Medicaid and CHIP Payment Access Commission (MACPAC) that all AA drugs should be subject to increased mandatory and inflationary rebates under the Medicaid Drug Rebate Program. Those supporting such ideas articulate concerns about lengthy postmarket studies—or studies that are never initiated or completed—as well as the FDA’s difficulty removing drugs from the market when follow-up studies fail to confirm clinical benefit. Congress is currently considering proposals to address these and other perceived shortcomings of the AA pathway in the context of the FDA user fee reauthorization process. This debate will be closely watched by payers seeking assurance that the FDA has the tools and mandate it needs in order to oversee AA drugs.

Note: More detailed information is available through Manatt on Health, Manatt’s premium information service. Manatt on Health provides in-depth insights and analyses focused on the legal, policy, and market developments that matter to you, keeping you ahead of the trends shaping our evolving health ecosystem. Available by subscription, Manatt on Health delivers a personalized, user-friendly experience that gives you easy access to Manatt Health’s industry-leading thought leadership, including:

  • Insights This Week: Weekly big-picture and targeted in-depth analysis of federal and state health reform activity delivered to your inbox
  • Deep-Dive Analyses: Deep analyses of key federal legislation, regulatory and guidance summaries, and industry-leading white papers and webinars on today’s hottest health care topics
  • 50-State Surveys: Robust reports tracking key information on the emerging state actions reshaping our health care landscape 

To learn more or schedule a demo, contact Barret Jefferds at



pursuant to New York DR 2-101(f)

© 2024 Manatt, Phelps & Phillips, LLP.

All rights reserved