Disease Management Part Deux

Disease Management Part Deux

Believe it or not there are certain benefits that come from getting older. As Vernon Law once said; “Experience is a hard teacher because she gives the test first, the lesson afterward.” This is very true when it comes to our wacky world. See unlike many of the newbies who have entered the world recently we’ve been around the block a few times and have the gray hairs to prove it. We mention this as we were somewhat dumbfounded to learn that Livongo has raised another $105 million.

Please note that we are dumbfounded by this but in no way surprised by this and yes there is a huge difference. Dumbfounded per the dictionary means greatly astonished or amazed, while surprised means we didn’t expect this to happen. Having watched Livongo for some time we knew that if nothing else this company was very good at signing deals and raising money. And conceptually the company has a good idea only problem being you can’t swing that dead cat without hitting another company that has the exact same good idea.

On the plus side Livongo is not out making outrageous claims using fuzzy math ala OneDrop, a company that noted as much for chutzpah as having anything real. Nor are they using the leverage of a big-name partner to sign deals ala OnDuo. Livongo has steadily gone about their business signing deals and raising money.

Yet from our perspective we just can’t figure out if there is any there there. Anyone who’s been around this wacky world as long as we have will remember when disease management was all the rage. Today disease management has been repackaged with new technology and is now called interconnected diabetes management. Instead of patients getting phone calls on a land line, they now get text messages on their smartphones.

Still perhaps Livongo has found the secret sauce, perhaps they know something that no one else knows. That is certainly possible but since we know a thing or two about managing diabetes we can’t figure out what that might be. We do know that the company is not making money nor is it profitable. We do know that they have no intellectual property advantage to speak of. Which of course qualifies them for this crazy valuation.

To fully appreciate how crazy our world has become look a program launched by Express Scripts. Per a press release;

“Guided by the principles of simplification, choice, and competition, Express Scripts (ESRX) today announced the launch of a new, innovative 12-month pilot for a performance-based retail pharmacy network for commercial plans designed to optimize medication therapy, improve medication adherence, and promote better outcomes. The pilot will examine the impact of rewarding pharmacies that fill prescriptions for Express Scripts members and demonstrate a positive improvement on individual members’ medication adherence for conditions such as diabetes, hypertension, and asthma.”

Gee imagine that this pilot program will target diabetes and hypertension. Well according to a story on the Drug Delivery web site on the Livongo news;

“Livongo plans to use its newly-acquired funds to support market growth and its consumer platform. The company is also launching a disease management offering for people with hypertension.”

Now we don’t want to burst anyone’s bubble but Livongo, Express Scripts and all the others are basically searching for the same thing disease management searched for when it was all the rage – getting patients to take their medications. Listen for all the talk, fancy PowerPoint presentations and pontificating by “experts” managing diabetes for most patients is not rocket science. The problem has never been the drugs available to treat diabetes, the problem has been and still is getting patients to take their damn medications.

Basically, what everyone is trying to do is find and new and creative ways to entice patients into doing what they are supposed to be doing. To put it in terms most everyone can understand anyone who’s had a dog likely has given their pet a pill by wrapping it in cheese or mixing it in with their food. The cheese or food entices the dog to take the medication. Well this is what Livongo, Express Scripts and everyone else is searching for the cheese which entices patients with diabetes to take their meds. And yes, it is that simple.

However, like so many other things in our wacky world most of these companies are screwing up a simple peanut butter and jelly sandwich. They know investors are impressed by way cool whiz bang. They know these investors think that smartphone apps rule the world. They falsely believe that patients care about outcomes when truth be told most patients can’t even define what good outcomes are.

These investors sit in conference rooms looking are at some very well-done PowerPoint presentations which now include way cool videos of patients saying how this way cool whiz bang technology has forever changed their life. They look at the power slide which shows how diabetes is growing at epidemic rates. Which of course is followed by the money slide which shows how much poorly controlled diabetes is costing everyone. Then comes the closing slide or what we like to call the money ball – the slide which basically states we have the coolest toy in the toy chest which will make these investors rich beyond their wildest dreams.

The investors think for a moment and reason hey this a huge market, this is way cool technology and these guys/ladies have made money before so what the heck let’s throw a few million at it and see what happens. Worse case scenario, the investors reason, is this really isn’t the greatest thing since sliced bread and soft soap but no matter someone else will come along buy the company and we still make our 5 or 10x on the investment. And quite frankly we cannot blame them one bit for thinking this way as history is one their side.

Folks we have nothing against Livongo or any other company and there are many in IDM space. And just as disease management had its success stories so will IDM. But to believe that any of these companies has something new or have found the magic potion is just plan foolish. They will package it in a fancy shinny box but in the end its just an old idea in a new package. And old idea that didn’t solve the problem either.

Medication adherence is the true Holy Grail when it comes to diabetes management and it will take more than way cool whiz bang to find it. It will take deeper understanding of the patient with diabetes and not just patients who take insulin. But why bother when it so easy to raise millions and then get paid off when a greater fool comes along.

Yep millions are being invested in this space and still most patients are not under good control. This will not change until the results are not only measured by how much money these companies raise or make. Listen we have no problem with any company making gobs of money we just wish patients were getting better and there not and to us this is a lousy return on investment.