Enjoy it while it lasts

Enjoy it while it lasts

This morning Medtronic and UnitedHealthCare announced first year results from their value-based relationship. Per a joint press release;

“Results from an analysis of over 6,000 members with diabetes on Medtronic MiniMed(TM) 630G and previous generation insulin pumps demonstrated 27 percent fewer preventable hospital admissions compared to plan participants who are on multiple daily injections of insulin (MDI). The analysis included a mix of members utilizing both standalone insulin pumps and pumps integrated with continuous glucose monitors (CGM).”

As the companies noted these results do not include any patients on the 670G but we suspect when this system is added to the analysis the results will be comparable or better.

Now some may consider this news groundbreaking we on the other hand don’t, here’s why. It won’t be long before Tandem has their closed loop system submitted to the FDA and Insulet will follow after that. What everyone seems to forget is that it doesn’t matter which pump is used when the system includes a sophisticated insulin dosing algorithm and solid performing CGM. The pump is basically a semi-smart device that does what the dosing algorithm tells it do.

Being smart people Medtronic is taking full advantage of being the only company with data on this subject. They know it won’t be long before everyone has data like this so why not run with the ball when they have open field ahead of them.

Perhaps the best analogue here is when Lantus was the only long-acting on the market. Just as Medtronic is taking full advantage of having the only FDA approved hybrid closed loop insulin delivery system, Sanofi took full advantage of having the only long-acting insulin. Just as Medtronic knows competition is coming which will take away this advantage, Sanofi knew Lantus would face competition.

The similarities don’t end there as both Medtronic and Sanofi, knowing competition was coming did everything in their power to lock up formulary position. Both companies understood that the competition may come out with a better mouse trap but that wouldn’t matter all that much if they couldn’t get this mouse trap into the hands of patients. Both companies understand that it’s not about having the best toy in the toy chest, it’s all about having the most patients playing with their toy.

The question is will Medtronic do a better job protecting their franchise then Sanofi did protecting theirs. It’s not necessary to review the numerous mistakes Sanofi made, suffice it to say they screwed up as only Sanofi can. We suspect given their huge size and vast resources Medtronic will not pull a Sanofi. They will continue to take full advantage of their huge installed user base and formulary position. They will force the competition to play defense.

This is not to say that Tandem and Insulet will not cut into Medtronic’s share. But as we have noted many times when a company has a monopoly as Medtronic does in the insulin pump market, it would take a herculean effort to break this stranglehold. Do we need to mention again how many companies have taken on Medtronic and failed? Frankly the only way this monopoly ends is when the government steps in and ends it.

Medtronic is to insulin pumps what Google is to internet search and let’s be honest without some sort of government intervention nothing will change. The fact is Medtronic does not have the best toy but they don’t need to have the best toy. Think for a moment what it would take to supplant Google in internet search and you have a pretty good idea what it would take to supplant Medtronic in insulin pumps.

Change is coming to the insulin pump market and the possibility does exist that Medtronic could be overthrown. However, we have seen this movie before and the ending so far anyway hasn’t changed.