According to documents available at the public inspections desk of the Office of the Federal Register, Arena Pharmaceuticals' (NASDAQ:ARNA) recently approved obesity medication BELVIQ (lorcaserin) will take a step closer to being on the market tomorrow when the US Drug Enforcement Agency (DEA) publishes it's Notice of Proposed Rule Making for placing lorcaserin on Schedule IV of the Schedule of Controlled Substances. Following the publication, there will be a 30 day comment period after which DEA must summarize the comments and issue a final rule. The final rule will become effective 30 days after it is published in the Federal Register. Based on these timelines, it is likely that BELVIQ will come to market sometime in March.
ARNA has been largely range-bound between $7.50 and $10 since shortly after BELVIQ's approval. While DEA scheduling moves BELVIQ one step closer to market, investors should keep in mind that there is still a significant delay between the publication of the proposed rule and BELVIQ being commercially available. Look to the news of expanding insurance coverage as drivers of the stock price in the interim. Eisai now has approximately 3 months to shore up insurance coverage for BELVIQ prior to launch. As seen from the launch of Vivus Pharmaceuticals' (NASDAQ:VVUS) drug Qsymia, uptake of obesity medication without major insurance coverage will be low with high abandonment rates even after prescriptions are written. In their last quarterly conference call, Arena management indicated that Eisai has been working with insurers to gain coverage. Indeed, when Aetna (NYSE:AET), the nation's third largest health insurance provider, recently announced coverage for Qsymia, the insurer also determined that it would cover BELVIQ. If United Health Group (NYSE:UNH) and Well Point (NYSE:WLP) follow Aetna's lead and offer coverage for obesity drugs between now and March 2013, BELVIQ may experience a much better initial launch trajectory than Qsymia.
