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This article is adapted from the latest STAT Report: Decoding Medicare: 10 key coverage decisions and how they’re made.

Medicare’s decision to withhold coverage for Biogen’s Aduhelm despite the Food and Drug Administration’s approval of the Alzheimer’s drug has revived longstanding questions about how the federal program determines whether it will pay for new drugs and devices.


In its decision, the Centers for Medicare and Medicaid Services cited a lack of sufficient evidence for Aduhelm’s effectiveness, and limited payment for the drug to patients enrolled in research studies. The agency said it would apply the same limits to other new Alzheimer’s drugs that, like Aduhelm, target amyloid plaques in the brain.

The move has drawn strong praise from some. But critics of the decision, including some doctors, drugmakers, and members of Congress, have argued that it is at odds with Medicare’s mandate — set by Congress when it created the program in 1965 — to cover products that are “reasonable and necessary” for the diagnosis or treatment of an illness or injury, and would unjustly limit access to a promising new class of drugs.

Rep. Brett Guthrie (R-Ky.), the chairman of the House Energy and Commerce Committee’s health subcommittee, went so far as to ask if perhaps Medicare’s chief mandate should be revisited.


“Do you believe that CMS would benefit from Congress providing greater clarity into the phrase ‘reasonable and necessary’ in the Medicare program?” Guthrie asked CMS Administrator Chiquita Brooks-LaSure, at a hearing in April.

It’s far from the first time that question has been asked.

Medicare is increasingly demanding more evidence for the safety and effectiveness of new drugs and devices, a trend noted in a new STAT report, “Decoding Medicare: 10 key coverage decisions and how they were made.”

But CMS officials have wrestled for decades with how the “reasonable and necessary” standard should be defined, and what products it should apply to.

In 1989, federal officials overseeing Medicare published a draft rule intended to provide more clarity on this subject. The draft rule included a cost-effectiveness section with a specific exemption for “breakthrough or lifesaving technology,” for which there were no comparable alternatives. But the cost-effectiveness provision drew substantial protest from industry groups, leading federal officials to drop the proposed rule.

CMS made another attempt to define “reasonable and necessary” in a rule that the agency finalized in 2021 during the final days of the Trump administration. In January 2021, hoping to give more regulatory heft to the definition, the agency included the definition already in its Medicare Program Integrity Manual. Section 13.5.4 of the manual directed Medicare administrative contractors to consider three criteria:

  • Whether a product is provided in accordance with accepted standards of medical practice for the diagnosis or treatment of the patient’s condition
  • Whether a product is provided in a setting appropriate to the patient’s medical needs and condition
  • And whether a product meets, but does not exceed, a patient’s medical need

However, the Biden administration withdrew the rule later that year.

Decisions made by CMS this year on new amyloid-targeting Alzheimer’s drugs likely will determine whether members of Congress like Guthrie will pursue revisions to the law defining Medicare’s “reasonable and necessary” standard.

‘An opportunity to fix it’

The FDA approved Aduhelm under its accelerated pathway aimed at speeding the approval of drugs for serious illnesses. The agency is expected to decide by July 6 whether to grant traditional approval for another amyloid-targeting drug, Eisai’s Leqembi, based on Phase 3 data (accelerated approval was granted in January.  Eli Lilly & Co. earlier this month  released some topline results for its Alzheimer’s drug, donanemab, also designed to treat the disease by clearing amyloid plaques. The company said that 47% of participants on donanemab showed no decline in functioning, as measured by the Clinical Dementia Rating-Sum of Boxes scale, compared to 29% of participants given placebo.

In a virtual appearance at STAT’s Breakthrough Summit in San Francisco at the beginning of May, Daniel Skovronsky, Lilly’s chief scientific and medical officer, sought to draw a distinction between his company’s drug and Aduhelm.

“Looking at the aducanumab data, it’s hard to fault reasonable people for disagreeing about whether there’s enough evidence there to use this drug,” Skovronsky said, referring to Aduhelm by its scientific name.

But Lilly expects to be able to make a stronger case for its medicine, he said, and that should obviate the need for requiring people to participate in research to get access to amyloid-targeting drugs. Skovronsky said he expects CMS to change its position and provide reimbursement for the drugs, based on more robust evidence from studies.

“I understand how CMS got here on the facts of the aducanumab data but they have an opportunity to fix it now,” he said.

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