The prevalence and costs associated with diabetes, the most expensive chronic disease in the world, are simply staggering and are coming under heavy scrutiny to adopt changes to better curtail spending and slow the disease’s growth rate.  It doesn’t take an economics or finance degree to realize that savings related to taming the prevalence and containing costs could be into the tens of billions of dollars each year.

In a report late in 2011, the International Diabetes Federation predicted that at least one in 10 adults, or 552 million people, could have diabetes by 2030.  In the United States, nearly 26 million people are affected by diabetes (18.8 million diagnosed, 7 million undiagnosed), according to the 2011 National Diabetes Fact Sheet.

A Lot of Money Wasted

A recent article by Woody Johnson in the Wall Street Journal noted that “Directly and indirectly, the U.S. spent $174 billion on diabetes in 2007, a figure that could triple in the next 25 years. One of every $10 spent on health care in this country goes to treat diabetes and its complications. More than a quarter of Medicare recipients have diabetes, and these 11 million Americans account for almost one-third of Medicare spending.”

New York governor Andrew Cuomo is in a mission to try and slash costs and provide better care by transitioning the state’s Medicare’s current fee-for-service (FFS) platform to a comprehensive and integrated care management system.  Investigating the potential shift, the Pharmaceutical Care Management Association (PCMA) hired Special Needs Consulting Services (SNCS) to perform an evaluation.  SNCS determined “that New York’s Medicaid program and taxpayers will save an estimated $425 million in 2012 by transitioning to a more efficient PBM [pharmacy benefits managers] approach.”

The agency cited, in part, that the new paradigm would help contain costs as the current program “serves population subgroups that are particularly vulnerable to fraud, waste, and abuse in a FFS delivery model.”

When Dr. Donald M. Berwick, the former administrator of the Centers for Medicare and Medicaid Services (CMS), left his position in 2011, he said that, “Twenty percent to thirty percent of health spending is ‘waste’ that yields no benefit to patients, and that some of the needless spending is a result of onerous, archaic regulations enforced by his agency.”  The doctor’s estimate of this “waste” amounts to between $150 billion and $250 billion per year in the U.S.

If Berwick is correct in his upper-end estimate, then the U.S. wastes more money in healthcare annually than the individual gross domestic product for all but 48 countries in the world in 2011.

A Look at Global Diabetes

In Europe, about 60 million people in the World Health Organization European Region have diabetes, broken-down into about 10.3% of men and 9.6% of women aged 25 years and over.

In China, 8.3 percent of Americans have diabetes, according to the National Institute of Diabetes and Digestive and Kidney Diseases.   In sheer volume terms, there are more people in China with diabetes than any other country, totaling 92 million patients in 2010.

According to the Public Health Agency of Canada, in 2008/09, almost 2.4 million Canadians (6.8%) were living with diabetes with an estimated 20 percent more citizens living undiagnosed with the disease, based upon data from blood samples.

In Australia, the 5.2 percent of the population has diabetes.  Worse yet, about 500,000 new cases are diagnosed annually. As part of campaign called “Sock it to Diabetes,” Australia’s podiatrists say that diabetes leads to 4,300 amputations annually, a 30 percent rise in the last ten years.   More shocking, that equates to an Australian losing a toe, part of a foot or even a leg every two hours because of diabetes complications.

The list of countries can go on and on demonstrating already high and ever-increasing rates of diabetes across our planet.

Majors Looking to Establish Leadership Roles

Big pharma has its sights set on diabetes as in can be a massive revenue-generator.  French drug maker Sanofi (NYSE: SNY) posted double-digit percentage growth in its diabetes treatment Lantus in the latest quarter.

Eli Lilly & Co. (NYSE: LLY) and Novo Nordisk AS (NYSE: NVO) are two heavy-hitters in the diabetes space, especially when it comes to insulin.  Lilly is feeling the pain of the patent cliff with its insulin products Humalog and Humulin, which saw sales slip 2 and 7 percent, respectively, in the third quarter.  Lilly is seeing success with its diabetes drug dulaglutide, which recently met its primary endpoints in three Phase III studies.

Bristol-Myers Squibb Co. (NYSE: BMY) has diabetes drug Onglyza in its portfolio as well as other diabetes-related assets snagged in its $5 billion acquisition of Amylin in August.  Merck (NYSE: MRK) is looking to advance its experimental diabetes medicine, MK-3102, which was recently shown to significantly lower blood sugar without exaggerated risk of hypoglycemia.  Johnson&Johnson (NYSE: JNJ) recently announced that its drug, canagliflozin, has shown the potential for efficacy in reducing blood sugar in insulin-dependent patients with a high risk for heart problems, according to data compiled from a much larger Phase III trial.

Juniors with Strong Positions

While the major pharmas litter the market racing to develop a diabetes drug, the junior space for new therapeutics in diabetes is pretty thin, but present unique growth opportunities because of small market capitalizations.

Boston Therapeutics (OTCBB: BTHE), a developer of complex carbohydrate therapeutics to treat diabetes and inflammatory diseases, recently said that the FDA approved its petition to file an Abbreviated New Drug Application for PAZAMET, its new, chewable tablet formulation of the diabetes drug metformin hydrochloride.  Metformin has been used for decades to regulate sugar levels in diabetes patients, with about 50 million prescriptions filled in the U.S. last year.  Boston Therapeutics claims that their new formulation is more palatable, which could offer a substantial upside for the small drug maker, especially now that the FDA has cleared the regulatory pathway.

Developmental regenerative medicine company Orgenesis Inc. (OTCBB: ORGS) is focused on converting a patient’s own liver cells into functioning insulin-producing cells as a treatment for diabetes.  Spotlighted in August’s edition of Drug Discovery News, the company is working on transforming autologous liver cells into insulin-producing cells that overcome missing pancreatic function.

Outside of the Lab, Opportunities for Fast ROI

Companies such as Alere Inc. (NYSE: ALR) and much-smaller ALR Technologies, Inc. (OTCBB: ALRT) are pacing the inevitable transition to remote monitoring of diabetes patients.  Remote disease management is moving to the forefront in healthcare because it more closely links the patient, physician and provider which increases positive outcomes.  In turn, that saves insurance plans substantial money because diseases are better controlled.   In diabetes, prevention and control are critical to reducing complications and Internet-Based Glucose Monitoring Systems (IBGMS), such as that of Alere and ALR Technologies, will soon become a standard of care to better facilitate disease management.

In reality, the junior of the two seems better positioned because its infrastructure is 100-percent in place with a universal cable, lower upfront costs to clients than Alere, FDA regulatory clearance, HIPAA compliance and clinical trial data to support its marketing.

According to the Center for Disease Control, for every one-point drop in hemoglobin A1c, the gold standard measure of severity of diabetes, (from 8.0% to 7.0%, for example) a patient’s risk of developing microvascular complications of diabetes, including damage to the eyes, kidneys or nervous system, declines by 40 percent.  In ALR Technologies’ clinical trials, patients using the system in conjunction with a physician’s care plan saw a 1.2 percent drop in hemoglobin A1c from 8.8% to 7.6% after only six months.  Reducing complications by 40 percent translates to a healthier population and a massive, near-term healthcare savings for public and private insurers.

The economic challenges that the world is facing are putting governments and corporations in the position to be more conscious about spending.  Citizens are strident about not wanting to see healthcare suffer because of cut-backs and governments are searching for ways to modify the systems for the betterment of all.  Diabetes rates have mushroomed out of control and will remain a focal point because of the exorbitant costs of the disease and co-morbidities for which many of these companies can offer solutions now and in the future.

Article submitted by Baystreet.ca.

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