Medicare has decided once and for all not to pay for Biogen’s new Alzheimer’s drug Aduhelm unless patients are enrolled in a clinical study.

The agency’s final call was unsurprising, but blessedly rational. It corrects the Food and Drug Administration’s mistake in letting Aduhelm onto the market. At the same time, it leaves room for future Alzheimer’s drugs to be covered – as long as studies show they are safe and effective.

This will encourage beneficial innovation in Alzheimer’s drug development, and ensure that patients get medicines that can truly help them.

The decision by the Centers for Medicare & Medicaid Services marks a turning point in Aduhelm’s long and contentious journey. In 2014, the drug raised hopes among Alzheimer’s doctors and patients when, in a small phase 2 trial, it appeared to clear amyloid plaques in patients’ brains and – in a first for the field – ease their cognitive decline. Biogen promptly began a large, expensive phase 3 study to confirm those results and, to prepare for the drug’s eventual approval, invested $2.5 billion in manufacturing capacity.

In larger trials, however, the stunning early results couldn’t be replicated. And that seemed to end all hope for the drug – until Biogen said it found buried in the data a signal that the drug could still be effective. Then, according to an investigation by Stat News reporters, the company secretly lobbied the FDA for Aduhelm’s approval.

In 2020, the FDA’s scientific advisory committee harshly criticized the company’s data mining and overwhelmingly recommended against approving Aduhelm. Then the agency stunned everyone by approving the drug anyway, based on its ability to clear amyloid plaques, with the proviso that Biogen would run another trial to prove that the plaque-clearing would slow cognitive decline.

Biogen audaciously priced the drug at $56,000 per year. And Medicare, faced with the possibility of paying for treatment for millions of qualified Americans, had to schedule a big rise in monthly premiums for Part B coverage. (After an outcry, Biogen eventually halved the price.)

Now that CMS has settled on a way to limit spending on the drug until its benefit is proved, Medicare will be able to dial back that premium increase. The decision also likely spells the end of Aduhelm, which doctors were already shunning. In 2021, it brought in only $3 million in sales.

Biogen, patient advocacy groups and even some members of Congress have suggested that CMS’ refusal to cover Aduhelm could have a chilling effect on innovation in Alzheimer’s. They have argued that drug companies will have no incentive to develop new medicines if insurers won’t cover them.

But in a clear and sober explanation of its thinking on Aduhelm, CMS pointed out that the opposite is true: “The CMS final decision provides clarity on the criteria to receive coverage for any drug in this class (and thus what evidence is necessary to meet the standard for ‘reasonable and necessary’ for this particular treatment).”

A drug can be considered innovative only if it actually improves patients’ lives. In a disease as devastating as Alzheimer’s, even marginal improvements matter. But evidence from several large clinical studies indicates that Aduhelm fails to offer that.

Medicare has laid a path for other companies to understand where the bar for coverage is set: A drug must be safe and offer a meaningful benefit to patients, and it must do so over time. This is good news for Eli Lilly & Co. and Roche, both of which have Alzheimer’s therapies that will soon be up for approval.

CMS, which is expected to foot the bill for Medicare patients’ drugs, perhaps had greater incentive than the FDA to make sure the drug works. But the FDA is the agency that should have set the bar. FDA’s mandate is to follow the science. As it weighs other loaded decisions, particularly for neurodegenerative diseases, it should make sure that Medicare never again has to correct its mistakes.