The opioid epidemic ravages small and large towns across America.
And it has largely been intractable both to law enforcement and to the medical community. Until now.
This week, the Food and Drug Administration approved the first electronic device for the treatment of opioid withdrawal. For the government, it is an all-hands-on-deck moment.
For investors, it means new solutions and new opportunities.
The actual device, the Neuro-Stim System-2 Bridge , looks like a large hearing aid with four wires. Doctors can affix the device behind a patient’s ear. Then they attach its stimulation electrodes to nerve centers near and in the ear.
When the patient feels pain, the device intercedes. It sends low-frequency electric impulses to the part of the brain that receives and processes pain signals.
Within moments, patients feel pain free.
The idea behind NSS-2 is not new. Neuromodulators have been around since the mid-1960s.
Researchers found they could block pain by stimulating parts of the nervous system with electric impulses. Think of the process as a form of electronic acupuncture.
The NSS-2 innovation is delivery. A trained professional can adhere the device in minutes. It requires no surgery or narcotics. Symptoms are relieved almost immediately, allowing the patient to resume normal activities without restrictions.
And at an average cost of $600 per unit, it is cost-effective.
That is a small price to pay to move people from addiction. According to a 2016 report from the American Society of Addiction Medicine, 2 million Americans were addicted to opioid painkillers, and 591,000 were addicted to heroin. During 2015, drug overdose was the leading cause of accidental death in the United States.
Newsweek recently reported researchers at the University of Illinois estimate heroin use costs U.S. taxpayers $51 billion annually. Spiraling costs for incarceration, healthcare and lost productivity are widespread in afflicted communities. In Small Town, U.S.A., these problems are catastrophic.
Ross County is a rural community of 77,000, one hour south of Columbus, Ohio. The county placed 200 children into state care in 2016. A shocking 75% of those children came from families with parents who were wrestling with opioid addiction. And caring for these children is more expensive because they require special counseling and therapy as well as longer stays.
For a tiny community, the $2.4 million price tag is a budget buster.
While NSS-2 will not wipe out the crisis, it will help. Opioid withdrawal is painful. Common symptoms include muscle aches and pains, vomiting, diarrhea and uncontrollable shaking. Many addicts continue to use the drug because they deem it impossible to get through the withdrawal process.
The FDA has approved NSS-2 for opioid addiction treatment. And the Trump Administration has declared a national opioid crisis.
All this means move taxpayer money is coming into the system. It means more treatment, better quality of life for addicts, and healthier finances for ravaged communities.
The opportunity for investors may not be immediately obvious. Innovative Health Solutions, the company behind NSS-2, is a private company based in Versailles, Ind.
However, several of the businesses likely to administer the devices and care for the patients are public companies. These are relatively small enterprises. The opportunity at hand will have a material impact on cash flow and profitability. It should also favorably impact shareholder value.
Down the value chain, expect insurers like Cigna (CI) and Aetna (AET) to be favorably impacted as well. It is not too early to begin taking new positions in the correct stocks.
The opioid crisis is a blight on our culture. Thankfully, some help is on the way.
Best wishes,
Jon Markman
[RH1]The last website he provides updates the name to NSS-2 Bridge.
