And the hits just keep on coming

And the hits just keep on coming

Just when it seemed like things couldn’t get any wackier well they do. Here are just a few pieces of news that continue to prove that when it comes to this wacky world anything can happen. The first piece of news comes from our friends at Senseonics, one of the many companies developing an implantable continuous glucose monitoring system as the company has filed an S-1 to go public. According to the S-1 the company plans on raising $51.75 million. This amount comes on top of the $94 million the company has raised to date.

The S-1 contains many insights into the company’s strategy yet does not answer a critical question, is there an unmet need for their Eversense system. Will the Eversense have a distinct competitive advantage over either the Dexcom (NASDAQ: DXCM) or Medtronic (NYSE: MDT) systems which are already available. Nor does it answer another critical question assuming the system receives FDA approval, do they have the talent to run a successful CGM company, which as we all know is the difference between commercial success or failure.

Now we won’t comment on the relative merits of Eversense only to say that on the surface we see the merits of implantable sensors. The reason for this quite simple as it falls into our belief that less is more. Although we don’t see the fact that current sensors have to be inserted into the patient’s body and worn for 7 days or more as an impediment to greater adoption. We do see an implantable sensor which lasts for 6 or more months as being more patient friendly. The simple fact is the less a patient has to do the better whether that’s less frequent sensor insertions or drugs which only need to be administered once a week.

Diabetic Investor suspects given the highly competitive nature of the CGM market and the many companies seeking to enter this market Senseonics is not overly concerned with marketing and supporting the system. Like so many in the diabetes device space they believe that once they can get the Eversense system through the various regulatory authorities someone will come along and buy the company. This as we like to say is standard operating procedure. And to be fair there is ample evidence that such a path is not just plausible but likely. If we have learned anything from past acquisitions in the diabetes device space, there is always seems to be someone who believes they have a better mouse trap even when there are plenty of perfectly good mouse traps already available.

The second piece of news comes from across the pond as a device being developed by Applied Nanodetectors Ltd. In collaboration with the Centre for Process Innovation measures glucose with .. wait for it.. a breathalyzer. According to published reports, work has begun on a novel sensor which can be incorporated into a breathalyzer. The sensor measures the movement of volatile organic compounds (VOC’s).

Now to be honest we have no idea what VOC’s are so let’s give this company an A for creativity. Yet at the heart of this effort is the continued fallacy that patients want to measure their glucose levels … wait for it … non-invasively. Seriously we truly wish we were making this stuff up but as we noted this morning people are still holding onto the notion that a non-invasive glucose monitor is the Holy Grail of diabetes devices.  We can’t wait to see how long it takes before the company announces they have raised money and that they are ever so close to reaching the promised land.

Next comes a story about corporate health and wellness programs something we also wrote about this morning. According to this story published by Bloomberg, these programs which are typically voluntary aren’t voluntary anymore. The story states;

“Dale Arnold, who worked for Wisconsin plastics maker Flambeau, chose not to take his work-sponsored health assessment and biometric screening. The company responded by pulling his insurance coverage.

Like many employers, Flambeau uses a wellness program to cut insurance costs by encouraging healthy employee habits. In the past, submitting to on-site tests of blood pressure, body-mass, and cholesterol meant saving a few hundred dollars. Now companies such as Flambeau have gone a step farther, denying healthcare entirely to those who don’t participate. People like Arnold must instead pay for more expensive coverage through the government’s COBRA program.”

The story goes onto to state;

“Over the last few years, wellness programs have become a popular way for companies to try to curb rising health-care costs. Employers spent a record $693 per employee on such initiatives last year, up from $430 the previous year, according to data from Fidelity Investments. Wellness programs, an umbrella term for employer-supported initiatives to improve and promote employee health, were one of the most popular “benefits” last year, with three quarters of organizations surveyed by the Society for Human Resource Management offering some sort of program.

Successes have been claimed. Companies that require health care surcharges for smokers, for example, say employees subsequently cut tobacco use, a recent SHRM survey found. Yet, despite the popularity of wellness programs among employers, their efficacy is unclear. Participation rates hovered at 24 percent in 2014, according to Gallup research which concluded that, when employees don’t engage, the programs definitely don’t work. Moreover, such programs tend to see results only over the long term. Researchers in a seven-year study at PepsiCo found that participation was associated with lower health-care costs, but only after the third year.

To spur workers to buy into wellness and all its health benefits (and savings for the company), it’s common for employers to offer a reward of money toward health insurance premiums. In the Flambeau case, the company wasn’t seeing results, so it upped the ante from a $600 credit to threatening a health insurance cutoff.”

As we noted this morning and as this story reinforces these programs are not just popular but results, i.e.  better outcomes don’t happen overnight. This is particularly true for employees with diabetes where better outcomes typically won’t be seen for months, if at all. Think of it this way, let’s assume for a moment that the employer like everyone use improvements in HbA1c as their metric for measuring outcomes. The first step then is to discover which employees are not under good control. Once this is discovered the next step is to engage these employees in the program. However, one wants to define engagement the third step is obvious as well getting another A1C result to see if there has been any improvement.

Herein lies a major issue with diabetes as improvements in A1C not only take time but require patient engagement beyond the wellness program. The reality is it’s one thing to educate employees on what they should be doing, it’s quite another to get them to actually do it. Yes, incentivization helps but even with incentives this does not lesson the fact that better diabetes management is job, a full-time job with no days off. As we noted this morning the vast majority of patients just aren’t motivated, even when incentivized, to do the heavy lifting. On the flip side the employers who sponsor these efforts want measurable results, results that prove they are getting a return on their health and wellness investment. Given the short-term focus of corporate America it’s rare that these employers will have the patience to wait three or more years to see results, results which may never materialize.

While we strongly believe in these programs we’re just not sure forcing an employee into the program is the answer. This is particularly true for employees with diabetes as better diabetes management increases and does not decrease their workload. Having looked at many health and wellness programs from a diabetes perspective they tend to suffer from the same problem many payors have when managing their patients with diabetes, they view diabetes as a one size fits all disease and don’t understand the daily burden of diabetes management.

The reality is education has always been the key to better outcomes there are thousands of studies which prove this. The reality also is whether it’s a corporate health and wellness program which incentivizes the patient or a program sponsored by a payor the education must be given the time to work. The question is will patients be given the time or as so often happens will the rug be pulled out from under them just when they are beginning to get it. This unfortunately ladies and gentlemen is the conundrum facing payors and employers.