The big intuitive idea behind "Moral Hazard" is that when we know we have ex-post insurance then we take more risks ex-ante. So, we are more likely to smoke in bed if we own home insurance. Does this same idea help to explain why we are getting fatter and why the U.S has not been eager to sign an international greenhouse gas treaty such as Kyoto Protocols?
This Times article reported below highlights that new weight loss drugs are almost ready for consumers. Abstracting from costs of side effect (the article below says that these drugs give you bad gas), these drugs are a type of "insurance". After we get fat, we can take these and lose weight. A "Technological optimist" would smugly smile and say "I told you so". Our smart profit driven scientists have come up with a fix for the problem.
Perhaps, the same logic also applies for climate change. A technological optimist will say that we will figure out how to handle it when we get there. New Levees, better air conditioning etc.
January 17, 2006
2 Approaches to the Nation's Obesity Epidemic Coming Up for Review
By STEPHANIE SAUL
Two new approaches to weight loss are up for review by federal regulators. And they represent vastly different solutions to the nation's obesity epidemic - for consumers and for the companies behind the drugs.
One, called Acomplia, would be a prescription pill to control appetite by blocking the same brain receptors that stimulate the "munchies" in marijuana smokers. Some financial analysts see Acomplia as the most promising new drug of the year, and they predict multibillion-dollar sales eventually for its maker, the French company Sanofi-Aventis.
The other, with the proposed name Alli, is a weight-loss drug that works by blocking the body's absorption of fat. Since 1999 it has been sold in the United States as the prescription medication Xenical. GlaxoSmithKline is proposing an over-the-counter version, a prescription-quality alternative to the diet remedies available in drugstore aisles and over the Internet.
Glaxo plans to draw on some of the same marketing techniques it used in 1996, when it successfully commercialized Nicorette chewing gum and Nicoderm skin patches, which had formerly been sold only by prescription. But the history of Xenical, which was introduced by Roche in the United States seven years ago to rosy Wall Street forecasts that never fully materialized, may be a cautionary tale for Sanofi and its Acomplia cheerleaders.
If approved, Acomplia and Alli would be the first new developments in weight-loss medicine since the late 1990's. An estimated 200 other possibilities are in the research pipeline as companies seek an elusive cure for obesity. None of the others, however, is close to regulatory review.
Advocates for the obese and overweight, a group that now includes two-thirds of the American population, hope that the over-the-counter availability of Alli and the approval of Acomplia will provide new options, and suggest that the drugs might even be used together by patients who want help losing weight.
"I think if we could get obesity treatments to a situation like cholesterol where there are several different products, where one or two in combination might be successful, at least that would arm physicians with more than they have now," said Morgan Downey, executive director of the American Obesity Association, a patients' advocacy group in Washington.
The Food and Drug Administration has scheduled an advisory panel hearing for Jan. 23 to review Alli. And the F.D.A. could make its decision on Acomplia as soon as next month.
Both drug companies are seeking approval in a difficult regulatory environment, as the F.D.A. is moving cautiously in the wake of the Vioxx debacle. Any diet drug is up against a backdrop of safety issues from the past - most notably problems with the diet drug combination fen-phen. Fenfluramine, the "fen" half of the combination, was withdrawn from the market in 1997 after it was found to cause heart damage.
Xenical has shown itself to be moderately effective and has a long safety record. But Alli - a name the company has proposed because the drug must be allied with a weight-loss program - faces the higher hurdle required when prescription drugs are proposed for sale without a doctor's oversight. "You have to not only provide data that shows it's safe, you have to show that it's safe when it's misused," said Gerald Meyer, a former F.D.A. associate commissioner.
As the F.D.A. weighs Glaxo's proposal, the company is proposing that its sales be restricted to adults 18 and over to prevent misuse by teenagers. And yet, a factor that limits Alli's potential for overuse is its tendency to cause flatulence, diarrhea or even sudden loss of bowel control.
Those side effects are among the reasons Xenical has never lived up to analysts' original forecasts.
Worldwide sales quickly rose to nearly $750 million in 1999, the first year Xenical was available in the United States. As patients realized it was not an obesity cure-all, though, sales fell off and now hover at about $500 million a year worldwide, mainly outside the United States.
As regulators assess Acomplia from Sanofi, analysts see a positive sign in the fact that, as the February date for F.D.A. action on the drug approaches, the agency has not yet announced a hearing by an advisory panel of experts. That could mean regulators have no serious reservations about the drug. In medical conferences, Sanofi has presented data that shows that Acomplia is not just a weight-loss drug but also a way to control a constellation of disorders - high cholesterol, high blood pressure and elevated blood sugar - that frequently accompany obesity.
The only other weight-loss drug approved for long-tem use is Meridia, introduced by Abbott Laboratories in 1997. Some doctors have avoided using it because of its link to increased blood pressure, one of the reasons for its tepid sales. According to IMS Health, Meridia had total United States sales in 2004 of $72 million. Xenical's United States sales in the same year were $102 million, IMS said. Worldwide sales of Xenical were about $500 million, according to Roche, which licensed the drug to Glaxo for over-the-counter marketing.
Glaxo means to promote Alli as not just a pill, but a plan. Consumers who purchase the drug will also get a guide offering weight-loss and exercise tips - including a fat and calories gram counter and a healthy eating guide with menus and shopping lists. They will also be able to log into a free online behavioral support program.
Studies have shown that in combination with a weight-loss program, prescription Xenical led to an average of 12.4 pounds of weight loss in six months, about double the amount lost by patients on the same weight-loss program who were taking a placebo. Those patients took 120 milligrams six times a day.
Steven L. Burton, vice president of weight control products for Glaxo's consumer health division, said studies showed that the over-the-counter dose of 60 milligrams, three times a day, achieves about 80 to 85 percent of the weight lost by those taking the 120-milligram dose.
The prescription version costs about $100 a month, and is generally not reimbursed by health plans. Alli would cost significantly less, although Mr. Burton would not reveal the exact price.
One obesity expert, Dr. Louis J. Aronne of Weill-Cornell Medical Center in New York, said that an over-the-counter version of Xenical would be a welcome substitute for the unproven and, in some cases, dangerous weight-loss remedies currently sold without prescription. Many of those are classified as nutritionals and do not require F.D.A. approval.
"If you look at the products out there right now, it's really a sad state of affairs," Dr. Aronne said. "The way the rules are, there's very little oversight of these products. So given that, I think the entry of something like Xenical would clearly make it the first safe, proven and effective therapy."
Xenical blocks the body's absorption of fat by preventing the gastrointestinal tract from breaking down fats into smaller molecules. The fat that is not absorbed gets flushed down the toilet, the reason for the drug's gastrointestinal side effects. People who eat too much fat risk extreme cases of those effects, one way the drug can alter behavior.
Aside from potential embarrassment, the drug's only known potentially serious side effect is that it also reduces the absorption of some vitamins. But problems can be prevented by taking a multivitamin.
Dr. Sidney Wolfe, who leads the Public Citizen Health Research Group, warns generally against using weight-loss medications. Dr. Wolfe, who is among those expected to testify at the Alli hearing, says that diet and exercise remain the preferable way to lose weight.
But Mr. Downey, of the American Obesity Association, said his group would speak in support of the over-the-counter version.
"I think our point is going to be it's had this track record for some time," Mr. Downey said. "There's been no major safety problems or abuse of it. Converting it to O.T.C. is a different market and it's going to bring a product that's more affordable to more people."
Gbola Amusa, a medical doctor and financial analyst for Sanford C. Bernstein & Company, said his company was not forecasting sales of Alli because of uncertainties and the fact that the revenue would be split by Glaxo and Roche.
Mr. Amusa said he viewed Acomplia as a far more exciting product, and he has predicted that sales could exceed $5 billion by the end of the decade. A number of other analysts have similarly optimistic projections of $2 billion to $5 billion.
Acomplia is a selective cannabinoid blocker, a new class of drug that several companies are researching in the race to manage obesity. Studies have shown that Acomplia, when combined with a weight-loss regimen, resulted in average losses of 19 pounds and 3.5 inches around the waist in patients who took it for one year. Those taking a placebo lost an average of five pounds. A study also found that risk factors for heart disease and diabetes improved, and that Acomplia had fewer serious side effects than Xenical or Meridia, with mild gastrointestinal upset and dizziness in some patients.
Sanofi has not yet indicated its pricing plan for Acomplia. But as a prescription drug, it would presumably cost more than over-the-counter Alli. If Acomplia proves significantly more effective than Alli, price may not be an issue for many of the dieting masses. But researchers have cautioned that Acomplia falls far short of being a magic bullet for losing weight.
"I think over all," Mr. Downey said, "the kind of modest weight loss with Acomplia is less than people thought they might see."