July 2013

   

 

TopBioMarketing    Insight 

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Pharma, Biotech & Medical Device  

Greetings!

 

Welcome to BioMarketing Insight's monthly newsletter.

 

The American Medical Association recently classified obesity as a disease. I will be covering this topic in more depth and the impact it has on all stakeholders in the healthcare, medical and consumer industries.

 

Read on to learn more about this topic and other current news. On the right are quick links to the topics covered in this month's newsletter. The next newsletter will be published on August 15th.


We encourage you to share this newsletter with your colleagues by using the social media icons at the top left, or by simply forwarding the newsletter via email.

 

Please email me, Regina Au, if you have any questions, comments, or suggestions.

 

 

Sincerely,

Regina Au

Principal, Strategic Marketing Consultant

BioMarketing Insight 

 

 

In This Issue
American Medical Association Classifies Obesity as a Disease
What is the Impact to each Stakeholder?
Closing Thoughts
New Technology - Creating Breast Tissue with 3D Bioprinting
Twenty-one Medical Device and Nine Pharma/Biotech Funding Deals
Fifteen Mergers & Acquisitions
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American Medical Association Classifies Obesity as a Disease
Source: oneforcefitness.com.

 

On June 19th, 2013 the American Medical Association classified obesity as a disease "requiring a range of medical interventions to advance obesity treatment and prevention." 

  

"Recognizing obesity as a disease will help change the way the medical community tackles this complex issue that affects approximately one in three Americans," AMA board member Patrice Harris, M.D., said in a statement. "The AMA is committed to improving health outcomes and is working to reduce the incidence of cardiovascular disease and type 2 diabetes, which are often linked to obesity."  

 

The decision to classify obesity as a disease has been debated for many years but research now supports its classification as a disease.

 

"Obesity is a considerable problem, it's a pervasive problem. It affects all of medicine in one way or another," Dr. Jeffrey I. Mechanick, clinical professor of medicine at Mount Sinai's Icahn School of Medicine and president of the American Association of Clinical Endocrinologist, and part of the group that presented evidence that supported the AMA's decision said to the Daily News. "All the things we have been doing [to combat it], even though they're well thought out based on science, haven't been working so well."  

" Once a person is obese, their fat cells function differently, which has an effect on the entire body, influencing hormonal function as well as signaling pathways in the brain," said Mechanick. "There are molecules that are made by fat that interact directly on the brain," he said. "The brain then interacts with other organs in the body, such as the bones, GI tract, and pancreas."

"The decision to classify obesity as a disease will have far-reaching effects such as the approval of more and better obesity drugs, continued advancements in bariatric surgery, funding for anti-obesity initiatives and a greater chance that doctors will intervene early to help their patients," Mechanick said.

"Number one, there'll be more of an awareness on the part of the doctor and more of an imperative to treat," he said. "The other important facet is prevention. For people who are just overweight, or even people who aren't but are living in an environment that has potential for an unhealthy lifestyle, intervention should be introduced at that stage as well."

 

This decision is expected to change how insurance companies cover obesity, by encouraging insurers to offer more medical options to those who are obese, show early signs of obesity and suffer from related diseases, such as (type 2) diabetes, hypertension, cardiovascular disease and some cancers.

 

In April 2002, the IRS, under pressure from the American Obesity Association, declared obesity a disease. Taxpayers were allowed to deduct the cost of weight-loss treatments, e.g. Weight Watchers, if the treatment was prescribed by a doctor to treat a related condition, e.g. hypertension. Weight-loss treatments were not covered by health insurance plans.  


Most health insurance programs as reported in 2003, including the federal Medicaid and Medicare programs, do not cover such costs. As a result, many people cannot afford these programs to lose weight. Similarly, many parents of overweight or obese children can't get the treatment that could prevent them from developing health problems later in life.

 

This announcement will have a huge impact on the medical/healthcare industry and related industries, so I will review the likely pros and cons of leading stakeholders: 1) physicians, 2) patients, 3) FDA, 4) insurance providers, 5) pharma/biotech/medical device industry, 6) Federal and state, and 7) fast food industry, and other related industries.

 

Recognizing obesity as a disease allows physicians to participate in the control of escalating healthcare costs by taking a formal approach to the prevention and management of the disease and its life threatening sequelae. Recognizable templates would be smoking and lung cancer or high cholesterol levels and atherosclerosis.  

 

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What is the Impact to each Stakeholder?

 

1) Physician - can take a more aggressive "range of medical intervention" in treating obesity and hope that insurance will cover the cost, so patients are will be able to elect these options.

 

Cons - physicians will have the burden of treating more patients for obesity, taking on the responsibility of educating them about the importance of preventing obesity and encouraging them to treat existing disease. As a result, physicians will have to incur the costs of adding staff.

 

2) Patients - will now be eligible to receive medical intervention for a condition that had previously been classified as behavioral. Hopefully, insurers will step up and cover medical interventions.

 

This past April, "Johns Hopkins Medicine researchers conducted a small study of primary care doctors, and found they were less likely to build an emotional rapport with overweight and obese patients than they were with normal weight ones." 

 

The researchers pointed out that empathy is essential when caring for the obese patients, and patients are more likely to comply with the medical intervention now that obesity has (finally) been classified as a disease and is no longer considered the unfortunate outcome of unhealthy lifestyle choices.

 

Cons - Certain medical interventions, such as bariatric surgery, pose a higher risk to the patients than diet and exercise.

 

3) FDA - It was reported back in 2003 that "FDA officials met with drug companies and the American Obesity Association in April ...to discuss whether obesity drugs should continue to be held to tougher safety and efficacy standards than those for diseases such as diabetes."  Now the FDA will need to revise their guidelines for approving obesity drugs to reflect its classification as a disease.

 

Cons - FDA will probably be pressed into a less stringent approval process from the medical professionals, pharma/biotech/medical device industry, and patient advocacy groups.

 

Some have argued that "FDA should reframe their approval process to focus on the ability of pharmaceuticals to decrease adipose tissue rather than to improve other markers of metabolic health, such as blood pressure and lipid levels. There is current interest in developing a 'limited use' approval pathway that could facilitate the clinical review and FDA approval of prescription drugs. Antibiotics and drugs to treat obesity have been identified as appealing candidates for such a pathway. More effective medications on the market would likely spur physicians to prescribe, and patients to expect, pharmaceutical interventions for obesity. In turn, third party payers would be harder pressed to deny coverage."

 

4) Insurance providers - Medicare and Medicaid recognized that obesity is an issue and for years debated whether the condition should be classified as a disease. For private insurers, the new classification means long term reduction of healthcare treatment cost for disease linked to obesity through prevention.

 

Employers may be inclined to collaborate more with insurance providers to offer more wellness/prevention programs that will result in a gain for both parties: employers will pay for fewer sick days and workman's comp claims and insurers will enjoy reduced cost of healthcare.

 

Cons - the insurance company will pay more money upfront for medical intervention for obesity with expectation of long term reduction in treatment cost. The question will become, which types of treatment should be reimbursed?

   

"If obesity is classified as a disease, then the question will become precisely what types of treatment should be covered, said Steve Phurrough, director of the coverage and analysis group at the Centers for Medicare and Medicaid, which will make the decision.

"For example, if it's demonstrated that exercise is beneficial for obesity, there could be an argument that Medicare ought to buy a Gold's Gym membership," Phurrough said. "Another issue is diet counseling. One of the difficulties is that I'm not sure there's a lot of medical evidence that going to see a dietician actually helps people lose weight."  

   

5) Pharma/biotech/device industry - if the FDA's approval process and criteria are less stringent, as noted above, this will provide an incentive for pharma/device companies to develop more drugs or devices to treat obesity. Currently, few companies are focusing on obesity, because so many have failed to receive FDA approval until recently with two new drugs.

 

If insurance companies start covering weight loss drugs, then devices and procedures, this will eliminate obstacles to marketing anti-obesity products and give companies incentive to develop drugs and devices to treat obesity.

 

Cons - it is difficult to develop a drug or device for obesity that is safe and effective over the long-term.

 

6) Federal and state - to curb the healthcare cost of the people today and the children of tomorrow, the federal and state agencies must step in to provide education that demonstrates how obesity impacts those who are afflicted and how it impacts everyone. More programs, incentives and mandates if necessary need to be put in place to change the mindset of the nation.

  

7) Fast food/soft drink industry - this industry must be persuaded to offer healthy options to customers since fast foods and soft drink maybe be either eliminated or significantly reduced to accommodate a healthy diet. There will be major push back from this industry, due to loss of revenue and revamping of their business to offer healthier options.

 

However, this industry has already started to move in this direction, by offering some healthy options. Companies will have the opportunity to build a better brand image as they become more responsive to the health of their customers.

 

Establishments of organic and health food will emerge as the big winners, along with fitness centers and weight-loss brands, who will fare particularly well if insurance companies authorize reimbursement for services to the clinically obese.

 

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Closing Thoughts

 

I am glad that the AMA classified obesity as a disease for all the pro reasons stated above. We know obesity is an epidemic that leads to an array of debilitating chronic diseases. As a nation, we need to take action in changing because as the old saying goes, it takes a nation to change the mindset of the people. Government needs to be involved and create a unified message to educate and promote a healthier lifestyle by having laws and monetary incentives in implementing these programs.

 

However, government support alone does not always bring the desired outcomes, as evidenced by the recommendation to ban soda in public schools. Studies showed that merely banning the availability of soda in schools neither reduces the consumption of soda nor sugar intake, because students resorted to other sweetened beverages, including so-called healthy drinks like Gatorade.  In 2011, Boston moved to prohibit the sale and promotion of sugar-sweetened beverages and sodas on all city property.

 

If parents also prohibit or limit sugar-sweetened beverages and sodas at home, this would reinforce the healthy lifestyle and benefit both the parents and children. One school district in Massachusetts implemented the "walking bus" where parents and children all walk to school together as part of their daily exercise.

 

Examples of other initiatives include Massachusetts Rep. Kay Khan trying to pass a House Bill 2643 entitled "An Act to Reduce Childhood Obesity" that includes the following:

 

1) Removes the sales tax exemption for soft drinks and candy.

2) Places tax revenue generated by the sales tax on soft drinks and candy in the Prevention and Wellness Trust Fund (PWTF).

3) Fund physical activity programs in school through PWTF.

4) Include Body Mass Indexing in student's physical examinations

5) Provide at least 30 minutes of physical activity for all students if physical education classes are not offered. 

 

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New Technology - Creating Breast Tissue with 3D Bioprinting

 

 

TeVido BioDevices, a start-up in Austin, Texas is using 3-D printing technology to develop a process to fabricate women's breast tissue using the patient's fat cells for women undergoing lumpectomy.

 

According to TeVido's 2013 executive summary, a modified HP Deskjet 340 inkjet printer is used to "shoots out proteins instead of ink and captures tissue on specialized gel instead of paper." Bioprinting is a process where live cells are taken from a patient's biopsy and distributed directly onto collagen or hydrogen gels in 3-D formations as in living breast tissue.

 

Thomas Boland, chief science officer and co-founder of TeVido, and director of biomedical engineering at University of Texas at El Paso invented this patent- pending technology.

 

To read the full article in The Austin Business Journal, click here.  

 

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Twenty-one Medical Device and Nine Pharma/Biotech Funding Deals

 

To determine whether funding is picking up, I will be focusing on all types of funding that are $1 million or greater in seed investments and series A or B (or the valley of death) that are pre-IPO. Even though VCs are investing, they continue to invest in their existing portfolio companies and less in start-ups. Incubators, state funding, and business competitions are great for initial seed money but not enough to keep the company going long-term.  These are worldwide funding deals. 

 

Partnerships and licensing deals with upfront payments and milestones will not be included.

 

Medical device funding includes IT companies because they are the current focus of investors for faster return on investments.

 

 

Funding deals are in chronological order by date.
 

$0 = No financial terms disclosed. For more information, read more ....

 

 

Funding deals are in chronological order by date.

$0 = No financial terms disclosed. For more information, read more...     

 

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Fifteen Mergers & Acquisitions

 

Mergers & Acquisitions continue to be made for both medical device (9) and pharma/biotech (6).  

 

There were three billion dollar acquisitions this month:  1) AstraZeneca acquired Pearl Therapeutics, 2) J&J acquired Aragon Pharmaceuticals and 3) The Aspen Group acquired Merck's API business and a portfolio of 11 finished dose molecules that target a range of conditions.   

 

 

Acquisitions are in chronological order by date with Medical Device/Diagnostics followed by Pharma/Biotech.

$0 = No financial terms disclosed. For more information, read  more ....

 

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