Chutzpah or Hubris – Take your pick.

Chutzpah or Hubris – Take your pick.

This morning Medtronic (NYSE: MDT) issued a press release with the title;

NICE Recommends Medtronic Integrated Sensor-Augmented Insulin Pump As the Only Therapy System to Manage Glucose Levels in Type 1 Diabetes

The release states:

“Today, the United Kingdom’s National Institute for Health and Care Excellence(NICE) has issued positive guidance for the use of Medtronic insulin pump systems integrated with glucose sensors, for managing Type 1 diabetes and the avoidance of potentially life-threatening hypoglycemic episodes.1, 2

The guidance reviewed two sensor-augmented insulin pump therapy systems and recommends the MiniMed Paradigm Veo system for managing glucose levels in people with Type 1 diabetes who experience ‘disabling hypoglycemia’ – defined as repeated and unpredictable occurrence of low-blood sugar attacks that result in persistent anxiety about recurrence, and is associated with a significant adverse impact on quality of life.”

Now we hate to dump on our good friends at Medtronic but bragging about winning a race that consisted of two – yes just two – participants is hardly something to be proud of.  The reality is there are just two and for the moment only two sensor augmented insulin pumps; the Veo from Medtronic and the Vibe from Animas, a unit of Johnson and Johnson (NYSE: JNJ). At some point these two systems will be joined by one from Tandem (NASADQ: TNDM), another from Insulet (NASDAQ: PODD) and yet another from Bigfoot.  Put simply sensor augmented pumps will become … wait for it … a commodity.

The fact is the decision made by NICE was not an endorsement of the Veo as the Medtronic press release implies. Nowhere does NICE come out and state that the Veo is better than the Vibe. No matter how much Medtronic wants to brag the fact is NICE looked at several factors and performance was just one of those factors. (Anyone interested in reading the entire decision made by NICE it can read athttp://www.nice.org.uk/guidance/dg21)

Speaking of performance when it comes to sensor augmented systems the pump itself is actually secondary to the quality of glucose sensor. No matter what Medtronic, JNJ, Tandem or Insulet want to believe all insulin pumps do basically the same thing the same way. However, the same cannot be said for glucose sensors as most agree that the Dexcom (NASDAQ: DXCM) sensor is superior to the Medtronic sensor. This is not to say that the Medtronic is bad rather Dexcom is better, both sensors work, both deliver data – the Dexcom system just delivers better data.

It should not go unnoticed that cost was one of the factors NICE looked at when making their decision. Reading through the detailed and lengthy cost effectiveness section of the decision cost was a very important factor considered by NICE. A factor which we believe tipped the scales in favor of the Veo. The facts are there isn’t much hard data on this subject and what limited data there is seems to favor the Veo.

Now we don’t want to discount this decision made by NICE, we believe a better judge of which system is superior should be made by insulin pump patients, their physicians and CDE’s. Here in the USA where the government isn’t telling patients which system they will or won’t pay for – at least not yet- the free market determines winners and losers. The biggest losers here are Tandem and Insulet who continue to drag their feet getting their sensor augmented systems to market. The biggest winner has clearly been Animas, as the success of the Vibe has saved what was a floundering franchise. This is not to say the Medtronic systems are bad they aren’t; the fact is Medtronic is closing the sensor gap with Dexcom. Yet, Medtronic unlike Animas didn’t need their system to be a major hit to remain successful, Animas desperately needed the Vibe to be hit. As we have stated many times Medtronic remains the insulin pump market leader by a wide margin and no one has been able to seriously eat away at their dominate market share, at least not yet anyway.

Listen we know companies in a commodity market just love to hype any victory even when that victory is meaningless in the overall scope of things. This is like Donald Trump hyping when he won the New Hampshire primary, not exactly a state the represents the nation overall. Yet the bombastic Donald certainly understands the power of chutzpah and hubris, nothing like making outrageous statements to get some free media exposure. Never mind the no one seems to care about those pesky little facts or cares that when it comes to specifics there are none. Any billionaire idiot can scream he’s going to make America great again, but it would nice to know HOW he’s going to do this.  Anyway we digress.

The fact is the Veo is NOT the only therapy option for type 1 patients as the press release implies. It’s one of two systems both of which have pluses and minuses. Both of which when used as intended do the job very nicely. The fact is sensor augmented pumps will commoditize just as regular insulin pumps have, and when that happens it really matter much what anyone says.

As Momma Kliff used to say better to let actions speak for you rather than words.