This bus is getting crowded

This bus is getting crowded

Yesterday Companion Medical announced the commercial launch of their smart pen the InPen®. Per a company issued press release;

“Companion Medical, a leader in the development of advanced technology to improve diabetes care, announced today that it has begun commercial sales of the InPen® system in the United States. InPen is available by prescription only and is a covered benefit under many insurance plans. The InPen is for use with U-100 Lilly Humalog® and Novo Nordisk Novolog® rapid-acting insulin and indicated for persons aged 12 years and older.”

Also, yesterday Lilly (NYSE: LLY) announced a deal with Rimidi which per a press release;

“Rimidi, a digital health company that provides software and clinical analytics for chronic disease management, and Eli Lilly and Company (NYSE: LLY), a leader in diabetes care for more than 90 years, are coming together to develop provider-focused tools that will integrate personalized solutions for people who use insulin to manage their diabetes, the companies announced today. Rimidi will integrate its diabetes management software platform with Lilly’s integrated insulin management system in development.”

Now there is a bit of irony here as Lilly at one time was a big backer of Companion, but this relationship has become somewhat strained. Perhaps this can be fixed so that Lilly whose developing their own insulin pump can move more quickly into the “smart” pen/CGM/app market. A market Sanofi (NYSE: SNY) is pursuing as well as Novo Nordisk (NYSE: NVO). As we keep stating a “smart” pen/CGM/App system (which from now on we’re going to call the Tyler) can produce pump like outcomes at a much lower cost than a true insulin pump.

Let’s also not forget the potential impact this move towards Tyler will have on Dexcom (NASDAQ: DXCM) and Abbott (NYSE: ABT). Again, as we keep stating CGM is the cornerstone of Tyler and is quickly becoming the standard for glucose measurement. We should also repeat that Medtronic (NYSE: MDT) is getting on the Tyler bus as well. Oh, and before we forget Bigfoot has a deal with Abbott and they too will have a Tyler.

With Tyler coming it’s only a matter of time before this market does what every other diabetes device/system/drug market has done, commoditize. Everyone will do their best to say they have the best Tyler, but Tyler’s will become like insulin pumps all doing basically the same thing the same way with minor differences in things like user interface. Which in turn means that just as anyone can build an insulin pump, but it takes real talent to run an insulin pump company, the same will apply for Tyler.

This also means payors can pit one Tyler against the other driving costs lower. The Tyler makers will then respond with “outcomes” based deals. The real question is when will any of these Tyler’s go all in and 100% at risk? When will outcomes/driving costs out of the system really matter? Truth be told payors really don’t care about outcomes, but they do care about costs. While outcomes are subjective, money isn’t.

You can be damn sure payors know exactly how much they have spent for a hospital emergency visit but are clueless which patients have an A1C of 7 or below. Payors care about costs and driving cost out of the system. Frankly there are just too many variables that impact outcomes which combined with the fact of high patient turnover makes any outcomes deal a joke. This is one reason CGM has become so important to everyone as armed with this data the toy makers can prove the patient is staying in range and not making unscheduled trips to the emergency room.

This move towards Tyler isn’t shocking or surprising and quite frankly its long overdue. The Tyler bus is getting crowded and there are more stops on the bus route.