Biogen slumps after Medicare's restrictive decision on Alzheimer's drug

© Reuters. FILE PHOTO: A sign marks a Biogen facility in Cambridge, Massachusetts, U.S. January 26, 2017. REUTERS/Brian Snyder

(Reuters) - Shares of Biogen Inc (NASDAQ:BIIB) fell nearly 10% on Wednesday after the U.S. government announced limited coverage of Alzheimer's treatments including the drugmaker's Aduhelm, dealing a blow to the controversial treatment that was approved last year.

Biogen had been banking on the government's coverage decision to help drive up sales of Aduhelm, which it hoped would help counter the hit to revenue from some of its main drugs from rising competition.

If the draft decision by the U.S. Centers for Medicare and Medicaid Services (CMS) goes through, it could result in negligible Aduhelm sales in 2022 and 2023, analysts said.

The clinical trial enrollment requirement is another setback and creates more roadblocks for getting access to Aduhelm, said Jefferies analyst Michael Yee.

Aduhelm became the first new treatment for the memory-robbing disease in nearly twenty years after it won approval from the U.S. Food and Drug Administration in June, despite the view of the agency's outside advisors that Biogen had not proven the treatment's clinical benefit.

Last month, the drugmaker cut the price of Aduhelm to $28,200 for an average weight person after facing slower-than-expected U.S. sales on complaints from hospitals that its high cost was not worth its benefits.

A final coverage decision from the CMS, the health agency that runs Medicare, is due in April and could change as it seeks comment from companies and patients.

The final coverage terms are expected to apply to all drugs in the class, including experimental medications in development by Eli Lilly & Co (NYSE:LLY), Roche Holding AG (OTC:RHHVF) and Biogen's Japanese partner Eisai Co (OTC:ESALY) Ltd.