Fighting words

Fighting words

“Diabetes technology is evolving in a very exciting way,” said Jeff Dachis, CEO and Founder of One Drop. “But not surprisingly for the vast majority of people with diabetes worldwide, expensive sensors, automated insulin delivery solutions, or call center approaches to care can create barriers and challenges to effective disease management.” This statement came from a MannKind (NASDAQ: MNKD) press release announcing a new clinical trial.

Per that same release;

“Appropriate people with type 2 diabetes who meet inclusion criteria will be randomized to one of two treatment arms: Afrezza® with One Drop | Premium — or — One Drop | Premium alone. Changes in hemoglobin A1C, quality of life, self-care, treatment satisfaction, and other metrics will be assessed. “

Now before we get into what’s really going on here a few quick thoughts here about this trial. First it is refreshing to see One Drop participate in a real randomized controlled clinical trial as they have been on of the biggest offenders of using “self-reported” data to prove their system works. Two, we suspect that when this trial is over both groups will show various levels of improvements in HbA1c. As we keep saying Afrezza does work, this has never been in dispute. The problems with Afrezza have nothing to do with whether it works. Third, the results of this trial will do nothing to change the fortunes of MannKind or One Drop.

What we found interesting was Mr. Dachis choice of words as he has drawn a line in the sand. “Expensive sensors, automated insulin delivery solutions, or call center approaches” is a clear slap in the face to Dexcom (NASDAQ: DXCM), Medtronic (NYSE:MDT), Abbott (NYSE: ABT), Insulet (NASDAQ: PODD) and Tandem (NASDAQ: TNDM) just to name a few. The statement is also highly inaccurate but more in that in a moment.

Basically, what One Drop is trying to do is position themselves as the solution for patients with Type 2 diabetes, patients who are not currently intensively managing their diabetes. Put even more bluntly One Drop is trying to outdo Livongo, another company big on “self-reported” data. Like Livongo they understand that payers don’t want to spend a fortune on these patients which is why Mr. Dachis went after CGM and insulin pumps. His audience wasn’t patients with diabetes but payers.

As much as we admire what Mr. Dachis has done, especially since he has done it with an AgaMatrix meter in a shinny new box, once again those pesky facts get in the way. Since there are several items misconstrued here let’s take them one by one.

“Expensive sensors”

At the moment, this is a semi-accurate statement as the One Drop system is “cheaper” than any CGM system. Now never mind that CGM provides better and more data than the One Drop system does. Or that patients with non-intensively managed diabetes hate conventional meters even when this data is analyzed. The fact is, Dexcom’s new slap it on turn it on disposable sensor will cost the same as conventional test strips, imagine that better and more data at the same cost as an old outdated technology that patients already hate. We find it laughable that any of these way cool whiz bang cloud enabled companies thinks they can compete with this.

“Automated insulin delivery solutions” i.e. Insulin pumps

Yep we agree pumps can be expensive but non-intensively managed patients don’t use pumps, hence the term non-intensively managed. Nor do we feel these patients on a mass scale will use Afrezza either. The reality is One Drop first must convince these non-intensively managed patients they need insulin, not any easy task by any means. Next, they must navigate the payer world and convince payers that Afrezza is the insulin these patients need, another not so easy task. If they can successfully jump over these two huge hurdles they must then somehow get payers to increase their reimbursement for Afrezza and that my friends ain’t happening.

The reality is if payers are going to move in any direction at all it will be the system we keep talking about- CGM/Smart Pen/App. The One Drop’s approach also ignores GLP-1 therapy and of course the biggest problem of all, getting these patients to take their damn meds. There is no upside for MannKind by taking a non-compliant patient and turning them into a compliant patient. And let’s be honest the clinical trial setting never matches what happens in the real world. Yep it will look good but it’s not scalable by any means which is another huge problem with all these way cool whiz bang cloud enabled companies.

“Call center approaches”

One Drop and Livongo both assume that these patients want to be engaged with their devices and/or smartphones. That they do not want to be called and given advice or coaching. The implication of the term call center is cold and impersonal while the One Drop system is supposed to be warm and fuzzy. Which of course is nothing but happy horse shit but it sure sounds good.

As we noted earlier today many of the functions now performed by a CDE will be replaced by technology. It is also true that yes, the patient’s smartphone will become the hub of their diabetes management. Yet what One Drop ignores, what all these way cool whiz bang cloud enabled companies ignore is the why. What motivation do these patients who were previously unengaged with their diabetes management will all of sudden turn them into engaged patients.

Now please do not insult our intelligence and 20 plus years in this business and tell us these patients care about outcomes. Do not further the insult and say that payers care about outcomes. Folks this is all about bucks, who makes them, who spends them and who saves them.

Listen we admire Mr. Dachis chutzpah and he does have panache for hyperbole but the facts get in the way of what is a really good fantasy.