It may be a New Year but same old, same old

It may be a New Year but same old, same old

If today’s conference call by Lilly (NYSE:LLY) is any indication of what 2012 will be like, it won’t be that much different than 2011. Diabetic Investor can’t say we were surprised when the company projected a lower than expected earnings drop for the upcoming year given the many issues facing the company. As for their diabetes franchise it was unfortunately more of the same, a series of me-too, copycat, late to market drugs that have no chance of reviving this once dominate franchise which is now on the verge of becoming irrelevant.

Yesterday we also learned that diabetes device companies have not given up on their quest to develop ever more sophisticated technology that only a handful of patients will use in the real world. Say hello to the mySentry™ Remote Glucose Monitor from Medtronic (NYSE:MDT). This fancy device was approved on Wednesday and according to a press release from the company:

“a first-of-its-kind remote monitoring medical device that could dramatically change nights for parents and other caregivers of people with diabetes (who currently get up several times a night to check their child’s blood glucose).  mySentry is available immediately.

mySentry™ allows parents and caregivers to see a child’s real-time glucose information and hear alerts/ alarms from their bedside while the child sleeps in his/her own room. For example, mySentry can deliver an alarm notifying parents in the middle of the night if their sleeping child’s glucose levels are falling and allowing them to take the action necessary to prevent hypoglycemia. “

While this is a very good idea and Diabetic Investor actually believes a system like this can be very valuable parents and caregivers will be paying a steep price for the mySentry, which according to the company the unit will cost $3,000. While most insurers do reimburse for insulin pumps and continuous glucose monitoring systems, it is unclear whether the mySentry will receive traditional reimbursement.

To illustrate just how expensive all this whiz bang technology is getting according to Medtronic a patient NEW to this system (pump, cgm and mySentry) would face a retail cost of $9,700 and this includes all the discounts and promotions the company is offering.  Even if insurance covers 80% of this cost, that means a patient would still have to a pay a whopping $1,940 out of pocket and this does NOT include the ANNUAL cost of pump supplies or sensors.

While Diabetic Investor likes the concept of the mySentry there are other issues besides the cost, not the least of which being the reliability of the CGM component. Based on our knowledge of the market and speaking with many patients who have used the Medtronic CGM system, reliability would not be considered one of its selling points. While no CGM system is 100% perfect the Medtronic system according to people who actually use it has had its share of issues.

This is something many seem to forget when they see these interconnected diabetes management systems, the many links in the chain that MUST function properly in order for the system to be of any value whatsoever. The mySentry is no different as if the CGM or pump fails the whole system fails. Now some may say that Diabetic Investor is being overly picky as there is no way any interconnected system can work 100% of the time which is exactly our point. Anyone who believes that pumps and cgms are fool proof should spend a little time on the FDA’s website and read the many adverse event reports related to insulin pumps and cgms.

Once again the companies who are developing all this whiz-bang and super expensive technology seem to have forgotten there is a real person out there who not only must learn how to use all this whiz-bang technology but who will paying a very steep price for the privilege, even when insurance pays a portion of the cost. Given this dynamic it’s not surprising that these patients, parents and caregivers just might expect that the system and all its parts actually work and work consistently.  Yes we know the people who actually use these systems are rarely thought about by the companies who develop and price these systems but maybe just maybe they just might realize there is a reason more people aren’t using all this whiz bang technology and cost is just one part of the equation.

Like we said when we started this piece it may be a new year but we’re not exactly off to a promising start.