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When the US FDA granted full approval to Biogen (NASDAQ: BIIB) and Eisai’s ( OTCPK:ESAIY ) Alzheimer’s treatment Leqembi (lecanemab), it was a boon for the two companies. It meant that the Centers for Medicare and Medicaid Services (CMS) would cover the drug.
Patients also benefited because Medicare would foot the bulk of the bill for the cost of the drug, which has a list price of $16.5K. And because of the requirements for taking the drug, this also meant that other companies – particularly in the areas of diagnostics and imaging – could make money from taking Leqembi.
While full approval could help restore some of the damaged reputations of Biogen (BIIB) and Eisai (OTCPK:ESALF) after the other approved Alzheimer’s drug, Aduhelm (aducanumab), failed to gain traction, it is a process to get people to use the drug. .
A patient must first have a confirmed diagnosis of mild cognitive impairment related to Alzheimer’s disease or mild dementia. Those with more severe forms of the disease are not eligible for treatment.
Next, a patient will need to undergo an amyloid PET scan or a spinal tap to confirm the presence of amyloid, a sticky protein in the brain that is believed to be linked to Alzheimer’s disease. Here’s the problem. Medicare only covers one of these PET scans per lifetime and only as part of a trial. According to the Alzheimer’s Association, out-of-pocket costs for a PET scan can average $3,000 or more.
The problem with imaging costs may soon disappear if a CMS proposal to lift the restriction on PET scans is eliminated. But even if it does, a Leqembi user will still need to undergo regular MRI scans due to the brain hemorrhages and hemorrhages seen in some patients in clinical trials.
While these hurdles may be a turn-off for some, other companies may also benefit in the process, such as those that provide diagnostic and imaging systems needed for PET and MRI scans, and radiology centers where these will be performed.
Here’s a look at some of the companies that could reap their own dividends thanks to Leqembi.
GE Healthcare Technologies (NASDAQ:GEHC) is a powerhouse in healthcare equipment, and one of its largest segments is diagnostic machines and supplies. The company’s line of Omni Legend and Discovery CT/PET machines are already in many radiology suites. Should demand for Leqembi increase, there will almost certainly be more orders for these machines.
GE Healthcare also provides chemical solutions and cyclotrons to support tracer production used in scan evaluation.
Siemens Healthineers (OTCPK:SEMHF)(OTCPK:SMMNY) is another diagnostic and imaging monster. The Biograph family of CT/PET scanners is a direct competitor to GE HealthCare (GEHC).
Because a spinal tap to collect cerebrospinal fluid can also be used to detect the presence of amyloid in the brain, Roche’s (OTCQX:RHHBY) diagnostics segment is commercializing a test that can detect the presence of amyloid from cerebrospinal fluid.
RadNet (NASDAQ:RDNT) is one of the largest providers of diagnostic imaging service centers in the country, with 357 centers in seven states. Here a patient will receive an amyloid pet scan or one of the regular MRI scans required for the Leqembi treatment.
Diagnostic providers Quest Diagnostics (DGX) and Laboratory Corporation of America (LH) could also see more testing as a result of Leqembi. The labeling recommends that doctors test potential patients for the presence of the APOE4 gene, which is associated with a higher risk of strokes and hemorrhages when using the drug.