A billboard along Interstate 5 in the City of Commerce advertises the Lap-Band,… (Glenn Koenig, Los Angeles…)
Allergan Inc.'s ideal customer is visibly aging and overweight — and has the money to do something about it.
The Irvine company has become a darling of Wall Street by playing to Americans' obsession with health, and their vanity, by marketing products such as wrinkle-erasing Botox, Natrelle breast implants, Latisse eyelash lengthener and the Lap-Band weight-loss device. Its stock has soared 186% over the last decade.
But with the market for the Lap-Band leveling off in a sluggish economy, the company has turned to the Food and Drug Administration for help: It wants to increase the pool of potential customers by making the stomach-banding surgery available to less-obese people.
More than 600,000 people worldwide have had Lap-Band surgeries since 1993 — a number that could rise dramatically if Allergan gets FDA approval to expand its use.
Loosening the rules would allow millions who are now ineligible for the surgery to lose weight and reduce their risk for life-threatening conditions such as high blood pressure, heart disease and diabetes, Allergan Chief Executive David E.I. Pyott said. The company estimates that lowering the weight requirement would expand its Lap-Band customer base to 42 million people, up from 15 million now.
"In the U.S., we have an obesity epidemic.… One-third of people are obese, even severely obese," Pyott said.
Critics, including the top public health official in Los Angeles County, say Lap-Band surgery is an extreme, risky measure that should be considered only after diet, exercise and other less-invasive strategies have failed. Dr. Jonathan Fielding, director of the L.A. County Department of Public Health, said the proposed new rules would make 2 million additional people eligible for the Lap-Band in the county.
Many Lap-Band patients in Europe had severe complications over time, including band erosion, slippage or leakage, according to a study published in the medical journal Obesity Surgery. The procedure has been performed overseas for 17 years for medical purposes. It received FDA approval in 2001.
"With a nearly 40% five-year failure rate … [banding] should no longer be considered as the procedure of choice for obesity," said the report.
Allergan, a 60-year-old company founded by a Los Angeles drugstore owner, has grown from a firm that produced allergy medicine — hence the name — to one of the largest pharmaceutical companies in the world. It moved from allergy medication to developing drugs to treat eye diseases, such as glaucoma, an area that generates the majority of its revenue.
Still, much of its recent growth can be attributed to Botox, a toxin that temporarily paralyzes facial muscles. Marketed for years as a way to fix crossed eyes and twitching eyelids, the product was launched as a cosmetic treatment in 2002 to ease the appearance of wrinkles. Sales exploded. Allergan forecast that 2010 Botox cosmetic sales will come in at a record $1.4 billion.
While Botox sales grew even during the recent recession and unemployment epidemic, Lap-Band revenue has been sluggish. Sales of Allergan's obesity intervention products — mostly Lap-Band — fell more than 4% for the first nine months of last year to $182.4 million. That's just a fraction of Allergan's projected 2010 revenue of about $4.8 billion.
Allergan blamed the recent downturn in Lap-Band sales on the economy in its most recent earnings report, noting that "substantial patient co-pays associated with these products and government spending restrictions" had scared away potential customers. The surgeries typically cost about $20,000, depending on the surgeons and hospitals involved, according to several websites promoting the procedures. Most insurance companies cover a portion of the cost.
The Lap-Band is a silicone band that is surgically implanted around the upper portion of the stomach, creating a small pouch that holds a limited amount of food so that patients feel full despite eating less. It is allowed only for people who are severely obese and meet strict body-weight requirements. It is not intended for cosmetic purposes.
Allergan received some encouraging news in December when an FDA advisory panel voted 8 to 2 to recommend that the weight requirement be lowered. Under the current guidelines, a person who is 5 feet 10 inches without a serious health issue would need to weigh 278 pounds or more to qualify. That requirement would drop to 243 pounds under the relaxed rules that Allergan is seeking. For people with conditions including diabetes and high blood pressure, the new threshold would be 209 pounds, down from 243 pounds.
Although the recommendation is not binding, the FDA typically follows the advice of its advisory panels.