The decision by the FDA to allow the use of lap-band for the management of obesity in patients with a lower body mass index (BMI) than previously was the case now means that Allergan effectively gains 26 million new prospective customers. The previous requirement for patients to qualify for the lap-band procedure was that they had a BMI of 40 or higher, or if they had a BMI of 35 or higher with at least one weight-related condition like diabetes or blood pressure. The new requirement is that patients have a BMI of at least 30 with one weight-related condition (or just 40 or higher). See below for calculation of BMI.
Body Mass Index (BMI)
Formula: weight (lb) / [height (in)]2 x 703
Calculate BMI by dividing weight in pounds (lbs) by height in inches (in) squared and multiplying by a conversion factor of 703.
(See Report #S835 for discussion of an alternative measure, Body Volume Index, a potentially more accurate measure of obesity, which may ultimately replace BMI.) The result is that while previously only 15 million Americans qualified for the Lap-Band, now 41 million qualify. This is a rather significant jump in Allergan’s prospects, and its stock price, which was dinged in January by reported links between breast implants and a rare form of breast cancer, anaplastic large cell lymphoma.
