Of all the high-tech cash rich companies making the deep dive into diabetes Amazon is making the biggest splash. Unlike OnDuo, the Verily/Sanofi partnership, Amazon isn’t screwing around with payors and is going direct to the patient. The company took a big step in that direction when they announced they are now offering the OneDrop app as part of their diabetes dive.
Per a post on HealthCare IT News;
“Digital health company One Drop is partnering with Amazon to offer its digital therapeutics solutions for people with diabetes and related conditions.
Through the online retail giant’s Choice brand for healthcare devices, customers will have access to One Drop’s diabetes, blood pressure and weight management capabilities, including AI-powered automated decision support.”
It’s important to note that OneDrop only makes money if they can convince patients to pay for their services. So the question becomes will consumers pay for coaching.
This is also great news for Livongo who as has been reported is about to go public. Like OneDrop Livongo also offers coaching but targets employers rather than going direct to the patient.
This news also makes one wonder what Apple will do, if anything. Like Amazon and Google, Apple is making the deep dive into diabetes but other than partnering with Dexcom hasn’t been very public about what their broader plans are. Given how this space is developing you can bet your last dollar that Apple is not going to sit ideally by with Amazon and Google swimming in the same pool.
While this news will surly increase OneDrop’s already inflated valuation and help Livongo with their IPO we remain firm in our belief that both companies have a weak spot and that newer better cheaper technology threatens their long-term viability in diabetes management. That being said think about this possible scenario;
As we reported just the other day it’s no longer a question of if CGM replaces BGM as the standard for measuring glucose but when it happens. This is where both Livongo and OneDrop are vulnerable as their platforms are based on BGM technology. We don’t doubt that their coaching helps patients but without enough data the coach has little information from which to make recommendations.
Artificial Intelligence (AI) is a wonderful tool but it also needs data to analyze to be any good. AI without data is worthless. No matter how you look at this glucose data is the foundation from which every decision is made take away that data and this whole house of cards comes tumbling down.
Think however what would happen if getting the data was a snap, that a patient could just slap on a CGM sensor. All of a sudden coaches and AI have the data they need to perform all the whiz-bang cool stuff. Then imagine taking the coach out of the loop and replacing him with a sophisticated algorithm. While the current set of algorithms are for dosing insulin, newer algorithms are on the way for patients who don’t use insulin.
Here is where things get very interesting given that Dexcom not only has the best CGM on the planet they also own the TypeZero algorithm. Coming sometime in 2020 Dexcom will also have the G7 which as we have been noting will move CGM technology to the masses. What’s to prevent Apple, who is already partnered with Dexcom, from using the G7 as their entry point into diabetes management.
Although we thought Kramer was a little off his rocker for stating that Apple should buy both Dexcom and Tandem and then charge a low monthly fee for support/coaching services his idea does hold some merit. Armed with a patient friendly CGM like the G7 Apple could trump Amazon and Google going direct to consumer and/or employers and/or payors. It also goes without saying that Apple could throw in a connected insulin pen and have their version of Tyler.
Since we learned that all the big techies were making the deep dive into diabetes, we viewed this as a platform play, a method to tie as many consumers to their platform as possible. None of them, Apple, Google or Amazon needed to be in diabetes, yet they see diabetes binding consumers to their platform. As we have said many times, they don’t need diabetes to make money they need diabetes to prevent consumers from switching to a competing platform.
Given their huge scale and reach all of these companies could charge a low monthly fee and still make plenty of money. In a wired way the moves by these techies could bring about another change we have predicted as instead of selling individuals pieces of the puzzle they could sell complete diabetes management systems tied to their platform. Apple, Google and Amazon would not only provide the toys in the toy chest but the drugs in the medicine cabinet.
It’s been rumored for some time that Amazon will soon enter the pharmacy business therefore giving them the ability to deliver drugs. Apple and Google could easily acquire their way into the pharmacy business making this a very real possibility. It should be noted that Google is currently partnered with Walgreens which could be the platform they use to compete with Amazon.
Now at this point many might be asking where does Abbott and the Freestyle Libre fit into this. Perfectly until you consider that Abbott while successful with the Libre lone partner is Bigfoot a company that’s great at social media but so far nothing else. Dexcom on the other hand is partnered with Tandem, Insulet, Google, Apple, Lilly, Novo Nordisk and Sanofi. This is not say that Abbott cannot add more partners but who? We suppose it’s possible given how this landscape is changing the company could acquire OneDrop or Livongo not for their technology per se but for their coaching services.
We hate to repeat ourselves, but this isn’t and never has been about the data, this is all about what to do with the damn data once you have it and then getting the patient to act on it. The value OneDrop and Livongo provide isn’t the toy they have but turning that toy into a tool using data analytics and coaching. The problem they have as we noted earlier is patients don’t like playing with their toy which gathers the data. The reality is and the Libre/G6 has proved patients prefer systems that don’t require fingersticks. It’s not just less “painful” it’s easier as they no longer have to carry around testing supplies.
The biggest problem we see for all the techies is the same problem we see with everyone else in this space, getting beyond their fascination with the toys in the toy chest and understanding that without the patient’s cooperation nothing will change in terms of outcomes. This is particularly true with patients who do not use insulin. All the data combined with analytics and coaching provides the patient with how to manage their diabetes it does not however provide them with the want to the motivation to manage their diabetes each and every day.
Everyone looks at all this way cool whiz-bang interconnected stuff and just assumes the patient will do their part. They look at the data provided by OneDrop or Livongo and see improvements over the short term and falsely believe these short-term results will continue over the long term when there is no evidence to support this view. Again as we have said before getting the patient to better control is great but it keeping them there is when the real savings comes in.
Since we are about to do our eighth triathlon (and don’t forget to donate to TCOYD) this would be like us doing the swim and bike portion of the race but not the run. Yea it’s great we started the race, but the goal isn’t to start the goal is to finish. The problem we have seen with all these programs is they don’t produce sustained improvements over sustained periods of time, that far too often patients fall back to old habits and the cycle starts all over again.
Still we view this deep dive being made by the techies as a net positive. They have the scale and capital to make a real difference. They have yet to find their swimming stroke and for the moment are doing the dog paddle. But this won’t be the case for long as there just is too much at stake here.
So stay tuned my friends as this wacky world of ours is about to get very wacky.